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Yesterday I attended a ONEPATH presentation regarding their new Life Insurance offer for those who work in Mining and Oil & Gas. Historically Mining and Oil & Gas workers had a real struggle getting the cover they need as most insurers are not interested in covering their risks. Onepath has made a firm commitment to be in that market. If you know of anyone who works in Mining or Oil & Gas in WA, feel free to let them know that I can help them secure comprehensive Life and Income Insurance. First consultation is Free and my fees are paid by the insurer. |
Friday, 21 October 2011
Life Insurance for Mining and Oil and Gas workers
Wednesday, 5 October 2011
Australian Share Market Performance
Permalink: http://financialadviceperth.com.au/australian-share-market-performance
Written by Paul Hodson, October 5, 2011.
The Australian share market is currently in a slump, having fallen 21% since April (6 months ago at the time of writing this post) see Figure 1.
Figure 1 – Source Incredible Charts
This is obviously not a good thing (for those already invested) but how does this recent slump stack up against other market corrections?
If we look at the worst period for Australian shares in history, the severe bear market of the early 1970s, you can see from Figure 2, that the recent correction pales by comparison. You will notice that the All Ordinaries fall by over 50% at that time and importantly the peak to trough fall took over 18 months. Another thing you will notice is the price index only returned to its pre-crash level in mid 1976 over three years from when the fall began.
Figure 2 – Source Finametrica (www.riskprofiling.com)
Financial Planners often recommend their clients invest a ‘diversified’ portfolio, rather than in one asset class or another – why is that? Figure 2 illustrates the very reason why. If you look at the blue line, this is the performance of a 50/50 portfolio (a portfolio which is 50% shares and 50% defensive assets such as bonds and cash) and you can see that the peak to trough fall is around 20%, which is less than half of the fall suffered by an investor who only held shares.
Figure 3 – Source Finametrica (www.riskprofiling.com)
Figure 3 illustrates the point even better around the time of the ’87 crash. A shares only investor took over 6 years to recover the losses of the crash, while an investor in a 50/50 portfolio took less than 2 years to get back to break-even.
The pain of the recent rout in the market is more acute as the Global Financial Crisis is still fresh in all of our minds and investors have not yet fully recovered from that set back. Looking back at Figure 1, you can see that the All Ordinaries price index (ignoring dividends) is approximately 33% above the low point of March 2009, but still well below the peak of 2007 (in fact 40% down) in 4 years. This makes the bear market somewhere between the crash of ’72 and the crash of ’87.
Figure 4 – Source Finametrica (www.riskprofiling.com)
A summary appears below, which shows the recent market weakness (but only up until April this year and as we know things have worsened since then). The All Ords is currently 41% down, 35 months since the fall began, so this is the second longest period (so far) the index has been below a previous high since 1972 (the longest was after the crash of ’87 where the recovery took 63 months).
Figure 5 – Source Finametrica (www.riskprofiling.com)
In this post, I do not intend to go into the future outlook; there are plenty of opinions (both for recovery and against) to be found if you look around. My purpose here is simply to put the recent movements into context with other bear markets and to highlight the relative safety offered by having diversification (spread) of investments, rather than trying to pick ‘the’ one to invest in.
Written by Paul Hodson, October 5, 2011.
The Australian share market is currently in a slump, having fallen 21% since April (6 months ago at the time of writing this post) see Figure 1.
Figure 1 – Source Incredible Charts
This is obviously not a good thing (for those already invested) but how does this recent slump stack up against other market corrections?
If we look at the worst period for Australian shares in history, the severe bear market of the early 1970s, you can see from Figure 2, that the recent correction pales by comparison. You will notice that the All Ordinaries fall by over 50% at that time and importantly the peak to trough fall took over 18 months. Another thing you will notice is the price index only returned to its pre-crash level in mid 1976 over three years from when the fall began.
Figure 2 – Source Finametrica (www.riskprofiling.com)
Financial Planners often recommend their clients invest a ‘diversified’ portfolio, rather than in one asset class or another – why is that? Figure 2 illustrates the very reason why. If you look at the blue line, this is the performance of a 50/50 portfolio (a portfolio which is 50% shares and 50% defensive assets such as bonds and cash) and you can see that the peak to trough fall is around 20%, which is less than half of the fall suffered by an investor who only held shares.
Figure 3 – Source Finametrica (www.riskprofiling.com)
Figure 3 illustrates the point even better around the time of the ’87 crash. A shares only investor took over 6 years to recover the losses of the crash, while an investor in a 50/50 portfolio took less than 2 years to get back to break-even.
The pain of the recent rout in the market is more acute as the Global Financial Crisis is still fresh in all of our minds and investors have not yet fully recovered from that set back. Looking back at Figure 1, you can see that the All Ordinaries price index (ignoring dividends) is approximately 33% above the low point of March 2009, but still well below the peak of 2007 (in fact 40% down) in 4 years. This makes the bear market somewhere between the crash of ’72 and the crash of ’87.
Figure 4 – Source Finametrica (www.riskprofiling.com)
A summary appears below, which shows the recent market weakness (but only up until April this year and as we know things have worsened since then). The All Ords is currently 41% down, 35 months since the fall began, so this is the second longest period (so far) the index has been below a previous high since 1972 (the longest was after the crash of ’87 where the recovery took 63 months).
Figure 5 – Source Finametrica (www.riskprofiling.com)
In this post, I do not intend to go into the future outlook; there are plenty of opinions (both for recovery and against) to be found if you look around. My purpose here is simply to put the recent movements into context with other bear markets and to highlight the relative safety offered by having diversification (spread) of investments, rather than trying to pick ‘the’ one to invest in.
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