Story Wealth Management | https://storywealth.com.au Story Wealth Management | Your values. Your goals. Your future. Thu, 07 Sep 2017 01:40:39 +0000 en-US hourly 1 Australia’s Top 50 Financial Advisers by Barron’s https://storywealth.com.au/australias-top-50-financial-advisers-by-barrons/?utm_source=rss&utm_medium=rss&utm_campaign=australias-top-50-financial-advisers-by-barrons Thu, 07 Sep 2017 01:38:58 +0000 https://storywealth.com.au/?p=18893 We are very proud to announce that Anne Graham was recently named one of Australia’s Top 50 Financial Advisers by Barron’s and the only female adviser in Victoria. Barron’s is a respected, 96-year-old financial news published by Dow Jones.

Every adviser reviewed by the survey answered more than 70 in-depth questions about their business covering the size of staff (relative to client list) professional credentials and a range of other key factors. It is important to note that investment performance is not a component of the rankings formula because advisers’ investing returns are mostly dictated by the risk appetite of their client base. Instead, Barron’s look for other indicators of client satisfaction, including the number of assets clients entrust to their advisers. It is an extremely thorough investigation.

What was interesting to note is that the survey suggests many of the best advisers have two jobs: guiding their clients through the challenges of life’s key financial decisions and building their reputation and the wider reputation of the sector. We believe you will agree that Anne plays a pivotal role in the profession by supporting and mentoring others. Anne has been recognised for her level of professionalism and client satisfaction many times before, and this latest achievement demonstrates her commitment to her clients, business and chosen profession. Congratulations Anne on your latest achievement.

 

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May 2016 – Knowledge Centre Newsletter https://storywealth.com.au/may-2016-knowledge-centre-newsletter/?utm_source=rss&utm_medium=rss&utm_campaign=may-2016-knowledge-centre-newsletter Tue, 17 May 2016 06:23:20 +0000 https://www.mcphailfinancialplanning.com.au/?p=2159 Welcome to the May 2016 Edition of our Knowledge Centre Newsletter. If you don’t have access to our Knowledge Centre or if you have forgotten your password, please contact us.

Give your insurance a 5-point check
Insurance is one of those things many of us set-and-forget, but a quick review of your insurance policies at least once a year is a worthwhile exercise that can help save costs and ensure peace of mind. So where do you start? Read more…

10 ways to protect yourself against identity theft
Identity theft cost Australians in excess of $1.6 billion last year. In this article, we explore ways to protect your personal information and reduce the risks of falling victim to this serious crime. Read more…

Drawing down your super
For most people, access to super starts at or close to retirement, but in extreme circumstances you may be able to access your super sooner if you meet certain requirements. This video looks at the different options that you have to draw down your super and when earlier access may apply. Launch video…

Checklist – Preparing for tax time the easy way
With tax time fast approaching, it’s a good time to start getting all the documents and records together that you will need in preparation for lodging your tax return. Our handy tax-time checklist will help make the process simpler, and ensure you are organised and have everything you need. Read more…

What happens when you reply to spam email
Suspicious emails: unclaimed insurance bonds, diamond-encrusted safe deposit boxes, close friends marooned in a foreign country. They pop up in our inboxes, and standard procedure is to delete on sight. But what happens when you reply? Launch video…

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April 2016 – Knowledge Centre Newsletter https://storywealth.com.au/april-2016-knowledge-centre-newsletter/?utm_source=rss&utm_medium=rss&utm_campaign=april-2016-knowledge-centre-newsletter Tue, 19 Apr 2016 03:34:48 +0000 https://www.mcphailfinancialplanning.com.au/?p=2154 Welcome to the April 2016 Edition of our Knowledge Centre Newsletter. If you don’t have access to our Knowledge Centre or if you have forgotten your password, please contact us.

Get a head start – 5 things you can do now to plan for financial year end
Tax time can be a breeze for some and a nightmare for others. As we are just a few months away from the end of financial year, now is the perfect time to organise your financial affairs with our end of financial year planning tips! Read more…

What is underwriting?
Why is it that insurer’s ask so many questions when you apply for cover? This month’s video explains the underwriting process that insurers go through and how it can influence the terms of your insurance policy. Launch video…

Surviving a critical illness or trauma
With early diagnosis and advancements in medical treatment, the chance of surviving serious illnesses such as heart attack, stroke or cancer is much higher than in years gone by. However, the process of recovery can be emotionally and financially draining. So how do we protect ourselves? Read more…

6 ways to support ageing parents
There are many different ways to assist ageing parents in better managing their financial affairs and even small things can make a difference. We provide you with some useful tips to help you through this process. Read more…

Remember to say Thank You
In this deceptively simple 3-minute talk, Dr. Laura Trice muses on the power of the magic words Thank You – to deepen a friendship, to repair a bond, to make sure another person knows what they mean to you. Try it. Launch video…

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Autumn 2016 – Investment Solutions https://storywealth.com.au/autumn-2016-investment-solutions/?utm_source=rss&utm_medium=rss&utm_campaign=autumn-2016-investment-solutions Tue, 29 Mar 2016 03:17:02 +0000 https://www.mcphailfinancialplanning.com.au/?p=2150 In this edition of “Investment Solutions”, you will find the following informative articles:

Economic outlook – BT Financial Group Chief Economist, Chris Caton, provides an update on the wellbeing of the Australian Economy.

Never too early to be tax-ready – We take a look at strategies to help you make the most of the end of the financial year.

The colour of your money – There are a range of ways to access income through your investments and we discuss some options that may be suitable for you.

The major signs you need a career change – Finally, we share some signs you’re in need of a career change and highlight 5 key steps to help you realise the move.

If you wish to discuss any of the topics within this newsletter or any other matter, please don’t hesitate to contact our office on 03 8560 3188.

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March 2016 – Knowledge Centre Newsletter https://storywealth.com.au/march-2016-knowledge-centre-newsletter/?utm_source=rss&utm_medium=rss&utm_campaign=march-2016-knowledge-centre-newsletter Thu, 17 Mar 2016 23:55:51 +0000 https://www.mcphailfinancialplanning.com.au/?p=2129 Welcome to the March 2016 Edition of our Knowledge Centre Newsletter. If you don’t have access to our Knowledge Centre or if you have forgotten your password, please contact us.

Taking a break? Don’t forget your super
People often take a break from work to manage changes in their lives. When this happens, they’re also taking a break from receiving super contributions, which may affect their retirement savings. But there are things you can do to help manage this gap. Read more…

Super splitting animation
Super splitting is a strategy that allows you to share your super contributions with your spouse. It can be a helpful way to boost your spouse’s super and may benefit you in other ways depending on your situation. See our video to learn more. Launch video…

Understanding Investment Styles
Different portfolio managers have different styles when it comes to how they invest. This article takes a closer look at active and indexed investing styles and the philosophies that guide them. Do you know the difference? Read more…

Changes to the Personal Asset Rules for SMSFs
New changes to the personal Asset rules for SMSFs will affect which assets count as investments and how they are to be treated if held by the SMSF. Review the changes to ensure you are across this before 1 July. Read more…

What’s your biggest regret?
A blackboard in the middle of New York City gives people a second chance at their dreams. Take a look at what these people would do differently – does it resonate with you? Launch video…

Property selling calculator
Thinking of selling your property? This calculator estimates the total cost of selling, including agent’s fees, lender fees, conveyancing, and removalist costs. Launch calculator…

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February 2016 – Knowledge Centre Newsletter https://storywealth.com.au/february-2016-knowledge-centre-newsletter/?utm_source=rss&utm_medium=rss&utm_campaign=february-2016-knowledge-centre-newsletter Tue, 23 Feb 2016 22:54:13 +0000 https://www.mcphailfinancialplanning.com.au/?p=2123 Welcome to the February 2016 Edition of our Knowledge Centre Newsletter. If you don’t have access to our Knowledge Centre or if you have forgotten your password, please contact us.

Making Your Estate Plan Count
Do you have a robust estate plan and is it up to date? There are important things to consider as you go through the process of developing or reviewing your estate plan. These can make a big difference to your dependants and loved ones. Read more…

Love Me, Love Me Not: Financial Considerations for Moving in Together
Moving in with your partner can be an exciting time, but don’t just jump in. Take the time to think upfront about the financial practicalities and what it could mean if things don’t go according to plan. This might apply to you or a loved one. Read more…

Back to School: Teaching Gen Y About Money
If you have a Gen Y in your family, you may have noticed that their attitude to money is different to yours. Here are some things you can do to help your Gen Y stay on track financially. Read more…

5 Point Check for Super
Has it been a while since you looked at your Super? Check out our newest animation to see what are some important areas to focus on when reviewing super accounts. Launch video…

Decoy – A Portrait Session with A Twist
Ever wondered just how much your perspective influences an outcome? Have a look at this experiment where six people photograph the same man and produce very different results. Launch video…

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How to Achieve Anything https://storywealth.com.au/the-wheel-of-life/?utm_source=rss&utm_medium=rss&utm_campaign=the-wheel-of-life Wed, 20 Jan 2016 23:23:45 +0000 https://www.mcphailfinancialplanning.com.au/?p=2101 fp
How to achieve anything you want this year!
This is an excellent article for all of us to read! Sometimes in life there are things that we want to achieve. It doesn’t matter the size of the goal, what matters is how we approach it. Are you someone who keeps thinking about achieving the same thing over and over? Perhaps you start something new and then life just gets in the way? We trust that this short article gives you some motivation to achieve whatever it is you want this year.

Is there a goal you want to accomplish, but just cannot find the time to start it? It might be something trivial like, to reduce the amount of TV watching, or time spent browsing the Internet. It might be, to become an early riser, or to quit drinking alcohol, or to start a home business. Whatever it is, what is keeping you where you are instead of reaching your desired destination?

I have several such targets in my life that I often think about, but rarely take action on. Each time I’m reminded of one of them, I would guiltily say, “I really should do [blah]”, and then forget about it until the next time guilt creeps back into my head.

One such target I have is to exercise, I’ve been talking about wanting to get in shape for about two years now, I even setup an arbitrary goal of doing a triathlon to get me excited. I did start go running shortly after setting that goal, which lasted for about a week, before I became distracted with another target.

I like to think of myself as a pretty disciplined and motivated person – I mean, I write about this stuff! But, something about this particular target has been very psychologically challenging for me to take consistent action on. And I want to understand it.

Overcoming the mental blocks and actually taking action towards this outcome has been my focus over the past few weeks. I am proud to announce that I have been doing 5-mile walk-runs, every other day, successfully for fourteen days now.

I’m confident that since I have kept it up for two weeks, then surely, I can keep it up for a month. And if I can consistently do it for a month, I will have habituated the activity into my daily rhythm and be able to keep it up indefinitely.

The point of this article isn’t about running, but rather, extracting lessons from achieving a goal, and applying them to other areas of our lives.

Analysis of ‘why it didn’t work’
Looking back over past failed attempts at this target, I realised that I didn’t have enough reasons to keep myself motivated, thus I wasn’t fully committed to making the change. Here are some observations.

1. Excuse: ‘I don’t have enough time’
I used to assume that I was working too much and simply did not have the time. Well, I’ve come to learn that ‘I don’t have the time’ is the biggest lie we can tell ourselves to justify for the lack of action towards activities that can [sometimes] significantly improve the quality of our lives. If we added all the time we spend on unimportant and not urgent things – like web browsing or TV watching – we would have the time, easily. We do have the time!
I used to tell myself, ‘When I leave my day job, I will have much more time to pursue the things on my lists, which I don’t have time for now.’ Things like exercising.
You’d think, now that I’m in a position to create my own schedule (or lack thereof), surely, I should have enough free time to exercise. Well, ladies and gentlemen, I still don’t have enough time. It’s become obvious that without a measureable target and a reasonable plan, life has a way of magically inserting random (often unimportant) activities to fill up our day. The same items on my list while I had a day job are still on the list.
We don’t have time for things, until we create time for these things. If something is important enough to us, we will find the time, regardless of how busy we are. End of story.
It’s a matter of finding the compelling reasons why something is important to us – enough of a nudge to drive us to lasting change.

2. Focus on pain
The more I focused on the uncomfortable factors associated with exercise, the less motivated I became, and the more excuses I made to skip workouts – before I stopped completely.
Here are my favourite excuses to justify not exercising:
• It’s hard! I can’t breathe.
• My leg hurts
• It’s cold outside
• It’s raining (I do live in Seattle, after all)
• It’s late, if I go jogging, I wont have enough time to do X.

3. Lacked motives to action
Although I kept telling myself that I should go jogging, I wasn’t fully clear on why I wanted it. I wasn’t overweight, and didn’t have an explicit incentive to get active. I didn’t have the motives to justify the necessary action for a vaguely defined goal.
Did you know that we will do more to avoid pain than we will to gain pleasure? In this case, the affects of not doing it, was not painful enough to drive me to get it done. In my mind, the pain of doing was greater than the pain of not doing.

4. Language, focus & priority
The goal was a should and not a must. ‘I should go jogging’, I would say, when it’s better to say ‘I must go jogging, in order to gain the energy I need’. When something is a should, it is wishful thinking, and we don’t get it done. When something is a must, it becomes a priority that deserves our attention. Because the target was a should, I never gave it the focused attention necessary for it to become a reality.

The art of change: From desire to result
The actual change happened very quickly – the moment I decided to change instead of thinking about it, and silently beating myself up for not doing it, I just did it. It was beautiful!

Sometimes, the best motivators are the ones we find when we hit a personal low point. My low point came a few weeks ago, when I realised that I hadn’t been outside for seven days straight (Eeeek!). I felt groggy, my body was aching, my energy level was low and I felt a slip in my grip on clarity.
When my clarity is threatened, I start to take notice. I now had a strong motive. I got up instantly and went for a run – a long one.

The system of OPA
OPA is a trick I picked up from Tony Robins, which when applied, will assist us in achieving the results we desire. It stands for:
• Outcome (O) – Having a clear vision
• Purpose (P) – Focus on results and purpose
• Action (A) – Create a massive action plan for meaningful results
Let’s expand on these and apply them to the jogging example.

O, Outcome
Most of us have vague ideas on what we want. WE know roughly the direction we want to go, but because we aren’t clear on the vision of our destination, we get pushed into whichever direction the wind is blowing. Without a vision, we will obsess over ‘the how’, and will often overanalyse and fail to take action, or take ineffective action.

In the jogging example, ‘wanting to go jogging’ is not the ultimate vision. The ultimate outcome I am seeking is actually mental clarity and physical energy. One activity that contributes to this outcome is regular exercise. Additionally, because I am focused on the desired outcome and not on the how, I have realised that there are other things I can do which will contribute towards this outcome, such as deep breathing, swimming and yoga.
What is the ultimate vision for what you want? Be specific in describing the outcome you desire.

P, Purpose
Knowing what we want isn’t enough to give us the push towards massive action. We must know why we want it. Why is it important that we achieve our desired result? When we achieve this outcome, what will it bring us? Without strong enough reasons, we simply will not be moved into action.
In the jogging example, my reasons for wanting mental clarity and physical energy are:
• To feel physical wellbeing. To live fully and consciously.
• To have the clarity to write articles that serve others. To empower and inspire readers towards a fuller life with more joy and passion.
• When I have energy, I can get more out of my day. I can do more activities which will benefit my personal wellbeing, and in turn make more contributions to others.

Why must you achieve the target outcome? What are the reasons most important to you? What does achieving the outcome mean for you?

A, Action
Armed with your clear vision of the outcome and with the burning reasons why it is important to you, come up with an action plan for achieving the results you seek. Once you have your action plan, take one small action immediately. Then commit yourself towards taking some action regularly (everyday, if possible) towards your target. Regardless of how small the action may seem, it will move you one step closer to your outcome, and – importantly – help build the momentum you will need to reach your destination.
In addition to knowing what you want, why you want it, and having a battle plan, the following are tips to overcome potential pitfalls on the road to lasting change.

Quantify & measure – What gets measured gets managed. It’s important to be able to quantify results, so that we can evaluate our improvements and effectiveness. For my jogging example, I got the Nike sport kit for iPod nano – which allows me to measure distance ran, duration and calories burnt. Once I had the numbers after each workout, I just wanted to beat them! As if playing a video game and trying to beat the top score.

Know your excuses – List out all the excuses you’re known to use in order to avoid action for a particular result. Now come up with an antidote for each excuse. Even without an antidote, at least, now you’re aware of which excuses might come up, and you’re ready to ignore them. For myself, ‘I am committed to going jogging every other day, regardless of weather, or how late in the day.’

Focus on one target at a time – When we try to focus on many results at the same time, rarely will we succeed. When we focus on one thing at a time, we can devote our undivided attention and energy on realising the single result, thus giving it a higher chance of actualisation. Move on to other targets only after we’ve successfully reached or habituated the current target. I’ve found it helpful to write the targeted outcome on a piece of paper, and posting it on a wall where I can see it regularly.

Change your language – Turn ‘should’ into ‘must’. The language we use carries with it energy. Notice that if you must do something, suddenly you feel a sense of urgency and priority? What is that thing that you’ve wanted to complete, and if you got it done will improve the quality of your experience? Now say, ‘I must do , because it will give me .’ See how much more energy this sentence has, versus ‘I really should do .’

Consistency – When cultivating a new habit, consistency is more important than quantity. Have you noticed that when we skip a routine activity even once, it’ll be harder to get back into it? And the more we skip, the easier it is to skip it again the next time. Before we know it, we no longer have the habit with which we’ve worked hard to create.

Fun ingredient – Find ways to make the experience fun and enjoyable. For example, I will listen to motivational audio books or personal growth seminars when I run, and it really enhances both experiences. This added enrichment to the running experience, makes me look forward to the activity.

The 30 day challenge – If you can repeatedly do an activity for 30 days, it will become a habit, and will integrate automatically into your routine. Take it one step at a time, first commit yourself to following something for 7 days, then extend it to 14 days, then 21 days and 30 days. If you can do it for 30 days, you can likely continue it indefinitely (if you want to).

Change your questions – If you’re not getting the kind of results you’re looking for, perhaps it’s the questions you are asking yourself. Ask questions which lead to possibilities instead of limitations. Here are some examples of the limiting questions vs. more resourceful alternative:
• Why can’t I do this? Vs. How can I make this work?
• Why can’t I make more money? Vs. How can I add even more value?
• Why is this happening? Vs. What can I do to help change this?
• How can they do this to me? Vs. How can I use this?
• What is wrong with my life? Vs. What am I grateful for?

Parting words
We are the ultimate author of our life story. Within each of us, we hold the power to change anything in our lives, and in doing so, experience more joy and fulfilment. Lasting change starts with a change in the way we think – a clear vision for our desired results, meaningful reasons why we must have them, and building momentum towards massive action to make our visions a reality.

With meaning, understanding, awareness, and conscientious planning, we can turn massive responsibilities into actual possibilities, we can incorporate healthy habits, we can realise dreams, and we can live more deliberately and intentionally shape our own destiny.

Thank you for listening to my jogging story and allowing me to share my own life victories, regardless of how trivial they may seem. Through observing this experience, the jogging example accentuated some simple fundamental principles of achievement that can be applicable to other outcomes in our lives. I wish you success!

Tina Su, http://thinksimplenow.com/motivation/how-to-achieve-anything/

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January 2016 – Knowledge Centre Newsletter https://storywealth.com.au/january-2016-knowledge-centre-newsletter/?utm_source=rss&utm_medium=rss&utm_campaign=january-2016-knowledge-centre-newsletter Wed, 13 Jan 2016 01:01:08 +0000 https://www.mcphailfinancialplanning.com.au/?p=2098 Welcome to the January 2016 Edition of our Knowledge Centre Newsletter. If you don’t have access to our Knowledge Centre or if you have forgotten your password, please contact us.

New Year, New Direction
The New Year is here! Perhaps you are considering some changes this year – a new job, business venture, study or even a sea change? See our four steps to help you make it happen. Read more…

Energy Efficiency: Saving over Summer
Making your home more energy efficient is a good way to save on bills and reduce environmental impact. Read more about what you can do here. Read more…

Mind Games: What’s Your Bias?
You may have heard about investor bias, but do you know how it affects you? Have a look at these common investor biases and see how they may influence your financial decisions. Even having awareness of them can help. Read more…

Healthy Financial Habits for 2016
Time for a health check on your financial habits? Check out our video on what makes for healthy financial habits for a positive start to the new year. Launch video…

The Power of Time Off
We know that taking time off is good for our health, but did you ever think it could good for your work too? In this interesting video, designed Stefan Sagmeister discusses how powerful his time off has been for his business. Launch video…

Insurance Planning Module
If you’re thinking about reviewing your insurances, don’t forget to have a look at our insurance planning module. It can be challenging to plan for the unexpected, but you can put yourself in a better position to act if you know what each of the terms means and how the different types of cover operate. Read more…

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David Graham Earns Prestigious CIMA® Certification https://storywealth.com.au/david-graham-earns-prestigious-certified-investment-management-analyst-certification/?utm_source=rss&utm_medium=rss&utm_campaign=david-graham-earns-prestigious-certified-investment-management-analyst-certification Wed, 06 Jan 2016 03:18:20 +0000 https://www.mcphailfinancialplanning.com.au/?p=2089 We are pleased to announce David Graham CIMA®, Senior Financial Planner at McPhail HLG Financial Planning in Melbourne VIC, has attained the Certified Investment Management Analyst® certification. Only 2 percent of financial services professionals hold CIMA certification, which is delivered by Investment Management Consultants Association® (IMCA®) and is the only credential designed specifically for investment advisors and consultants.

The CIMA® certification identifies individuals who have met extensive experience and ethical requirements and successfully completed advanced investment management consulting coursework. CIMA® professionals must pass a qualification exam and a certification exam covering a wide range of in-depth investment topics. Additionally, those who earn the certification must agree to meet ongoing continuing education requirements, and adhere to IMCA’s Code of Professional Responsibility and Standards of Practice.

In 2011, the American National Standards Institute (ANSI) recognized CIMA® certification as the first financial services credential in the United States to earn accreditation under an international personnel certification standard. ANSI is a private non-profit organization that provides third-party accreditation services and oversees a broad array of standards development processes in the United States.

“The CIMA® certification program represents high standards in each of the ‘Four Es’—experience, education, examination, and ethics,” said Sean R. Walters, CAE, IMCA’s executive director and chief executive officer. “As a result, the certification consistently qualifies investment advisors, investment consultants and investment managers as advanced practitioners in their field.”

IMCA was established in 1985 to set the standards and practices for the investment management consulting profession and to provide investment consultants with the credentials and tools required to best serve their clients. Visit www.IMCA.org for more information.

IMCA® and INVESTMENT MANAGEMENT CONSULTANTS ASSOCIATION® are registered trademarks of Investment Management Consultants Association Inc. CIMA®, CERTIFIED INVESTMENT MANAGEMENT ANALYST®, CIMC®, CPWA®, and CERTIFIED PRIVATE WEALTH ADVISOR® are registered certification marks of Investment Management Consultants Association Inc. Investment Management Consultants Association Inc. does not discriminate in educational opportunities or practices on the basis of race, color, religion, gender, national origin, age, disability, or any other characteristic protected by law.

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Market Commentary – ‘Tis the Season…’ https://storywealth.com.au/market-commentary-tis-the-season-2/?utm_source=rss&utm_medium=rss&utm_campaign=market-commentary-tis-the-season-2 Thu, 17 Dec 2015 22:45:59 +0000 http://www.mcphailfinancialplanning.com.au/?p=2068 The following is a summary of our key observations from the current year and assessment of the year to come. As you may be aware some of our commentaries get a little heavy at times. Therefore, the following bullet point summation will allow you to absorb our key points without wading into the minutiae of our musings. For those of you with the time and patience, the comprehensive version follows.

Executive Summary
• Greece remained ‘the word’ at the start of the year but was resolved once again. In the end the firebrands of Syrizia were restrained by fiscal realities.
• China became the focus of attention with an extension of the 2014 market melt-up, followed by an unsurprising meltdown in July. Nonetheless the Chinese market remains one of the best performers for the calendar year.
• Chinese growth became the main concern given the impact on global growth over the past 7 years. We need to get used to slower (but still relatively robust) growth from China. Moreover, the shape of growth will change i.e. less building and more services.
• OPEC failed to address falling oil prices in December 2014 and virtually fell apart in December 2015.
• The above points combined to deliver a price crash across hard commodities and energy. The former legends of the Australian bulk export industries appear to be on a similar path as those who came before. Remember Bell Resources, Bond Corp etc. The game is the same, only the players have changed.
• Global growth remains patchy and spasmodic. Once coordinated global economic policy has splintered as growth expectations diverge. Debt that was never addressed after the last crisis continues to hobble those economies relying on the lending maxim ‘extend & pretend’.
• Australian economic growth, slowly readjusts to the new post-commodity boom reality.

The major themes for 2016 include;
• Still lower commodity prices. However, we expect these will bottom out within the year.
• Elections in the U.S. and Australia will see economic realities put on hold while the campaign circus is in town.
• Divergence in interest rates as U.S. rates rise and most other countries remain on hold or are cut further. This will cause considerable volatility in interest rate markets and currency markets.
• Continuing moderation of Chinese growth. The may see further devaluation of the Yuan and other policy adjustments by Chinese authorities to soften the impact of slower growth.
• Unhedged global shares may continue to provide some growth due to continuing weakness in the AUD. However again returns will be idiosyncratic – companies, industries and countries will be subject to their own specific issues.
• While commodities and Australian shares may continue to suffer for a time, value is starting to appear. Strong balance sheets, reliable cashflow and high return on equity will endure short term cyclical issues.
Successful investing depends upon looking beyond short term distortions and distractions. Lift your eyes and focus on the longer term objective. Let the traders speculate and the media postulate. We will stick to investing.

Reflections & Refractions
Albert Einstein’s General Theory of Relativity turned 100 years old last month. One of the fundamental assertions of the theory is that gravity is not so much a force, as described by Isaac Newton, but a distortion of space/time. While light may travel in a straight line, gravitational distortion will appear to bend light, giving a false impression of the location of an object.

In reviewing investment markets in 2015 and trying to determine the outlook for 2016, we find the above somewhat analogous to the more prosaic world of finance. The object of observation may be a retirement plan or wealth generation goal. The temporal distortions along the way tempt us to vary the journey towards our objective. 2015 has been replete with these distortions and 2016 looks no less so.

The geopolitical highlights of 2015 included another Greek default drama, a Chinese market meltdown, following the melt up prior to May and possibly the biggest mass migration of refugees in the past 70 years. In economic terms the highlights (depending on your perspective) were the continuing fall in commodity prices and anticipated changes in the path of monetary policy across major economies.

This time last year OPEC indicated they were going to continue producing oil at existing rates despite the fall in prices to that time. Last week OPEC effectively admitted they had lost control of oil prices, due to a fundamental change in the supply/demand equation. Metal prices continue to adjust to a supply/demand imbalance typical of the commodity cycle. In both cases, increased supply was a response to relative shortages and prospective demand growth beginning a decade ago. The laws of supply and demand are immutable – if prices are high you will get a supply/demand response and vice versa. Errors of judgement, or temporal distortions, occur when these principles are forgotten. Who now remembers ‘peak oil’?

Over the year the bias towards easing of monetary policy by central banks continued. The only stand out from this was the impending increase in U.S. rates by the Federal Reserve. The continued tendency towards easing reflects the underwhelming global growth experienced since the GFC. In their 2009 book ‘This time is different’ authors and academics, Ken Rogoff and Carmen Reinhart proposed that economic growth is hampered by excessive amounts of debt. This has proven to be the case since 2008. Like Japan, since 1990 much of the world still carries excessive debt and excess capacity relative to demand. If demand cannot be increased, a residual of excessive debt, capacity must be reduced – financial Darwinism.

Australia is at the forefront of the excess capacity question. Once again having relied on and extrapolated the growth of the commodity cycle ad infinitum, we are somewhat at the mercy of the downturn in the cycle. Nonetheless, despite our reliance on commodities we are a modern diversified economy. Modest growth and relatively low unemployment are testament to the resilience and adaptability of the Australian economy. Moreover, our commodity producers are amongst the most efficient in the world. Additionally, we are among the few developed countries with remaining capacity to further stimulate the economy if needed. It is our hope that the Reserve Bank has finished cutting rates for this cycle as this will be indicative of the underlying strength of the economy as we pivot away from the commodity export complex.

2016 is an election year here and in the U.S. so you must anticipate some uncertainty arising as opinion polls wax and wane. We do not expect Donald Trump to become President – current probabilities suggest a risk of about 5%.

We believe the current short term pressure on commodity prices will continue through the first quarter of 2016. However, we believe a shakeout of weaker producers will herald a bottom in commodity prices later in the year.

A key component of global growth and the commodities complex is China. The start of a new 5-year plan is likely to see the continued restructuring of the Chinese economy. The ongoing pivot towards consumer spending and away from capital investment will continue, but not at any cost. The Chinese will not risk killing off the major engine of growth before other sectors are ready to carry the load. Nevertheless, lower growth can be expected. You can also expect to see stresses within the Chinese debt markets and further devaluation of the Yuan.

The past year has seen unhedged global shares remain the best performing asset class. The persistence of this thematic has surprised us but the reasons for this are sensible. While the increase in U.S. interest rates has been well communicated, the rate at which this continues is the variable with which we need to be concerned. The divergence between U.S. policy and the rest of the world will see the continuing fragmentation of individual country and regional economic outcomes. This is likely to be reflected in a similar diffusion of investment outcomes.

The convergence in Australian/U.S. interest rates implied above and the ongoing weakness in commodity prices is likely to keep pressure on the AUD. This means unhedged global equity exposures may continue to provide some upside, if in a more selective manner. This also means the price of Australian shares will become more attractive in relative terms. On a relative valuation basis, the Australian share market is currently amongst the most attractive of developed markets. While short term pressures will remain, a long term view is likely to be rewarded.

Rising U.S. interest rates will cause distortions across fixed interest markets – or rather undo some of the distortions created over the past 8 years. This is likely to feed into increased volatility in an asset class not usually subject to high levels of drama. If U.S. rate rises prove to be slow and peak well below previous cycle highs, opportunities to add value will arise for astute managers.

Virtual gravitational distortions affecting financial markets are a constant. Where one is distracted by these distortions the risk of navigational error is heightened. If objectives change, then clearly a change in direction is required. Furthermore, if something is clearly not working, change is the rational response. Our point is the decision to retain or change a strategy should not be reactive in nature, it needs to be considered in a systematic and objective environment.

We thank you once again for sticking with us throughout the year and allowing us into your lives. We continuously seek to improve our skills and service to give you the confidence to pursue what is important to you.

Be safe, be healthy, enjoy.

David Graham® 16/12/2015.

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