Market & Portfolio Update - March 2021
For The Financial Year Ended 31 March 2021
The March market update reflects a theme of ongoing strength in global sharemarkets, but weakness in assets whose value is mainly driven by changes in long-term interest rates. Overall returns for the year ended March have been very strong, despite some recent drag on portfolios with high allocations to fixed interest securities (bonds). These have seen some weakness as long-term interest rates have risen, and a little softness in NZ shares lately.
The first quarter also saw the anniversary of the fastest market correction ever seen - during February and March 2020. The subsequent 12-month returns for many asset classes reflect the sharp recovery from those lows, providing a vivid reminder of the merits for a disciplined long-term investment approach.
Central banks and governments are committed to continuing their support for the global economic recovery for some time, thereby keeping short-term interest rates very low and fiscal policies expansionary. This provides investors with both unprecedented challenges and opportunities, “the risk is to search for yield in all the wrong places”. Financial research company DALBAR, has attempted to quantify the effects of poor behavior on investors’ long-term returns. According to their 2016 study, the average individual investor underperformed the broad share market by 2.89% over the past 20 years. The lesson of course is to work with an Adviser who understands your goals and can keep you on track.
Do You Have a Toxic Relationship with the Phrase “Treat Yourself”?
The phrase “treat yourself” has become a modern mantra. It’s a great way to celebrate a milestone, reward a job well done, or break free from your everyday routine. However, when it comes to our bank accounts, treating yourself can sometimes cause more harm than good.
One small indulgence leads to another, and before you know it, the lines between self-care and overspending blur. You might walk away from the register with a bag in hand but a sinking feeling in your stomach. Sound familiar?
Scroogenomics at Christmas: Finding Joy Beyond ‘The Extravagance’
Gazing through the dimly lit windows of his modest office, Ebenezer Scrooge pondered the modern-day Christmas, “Ah, Christmas – each December, a tide of frivolity sweeps the world, with consumers collectively parting with an estimated $1 trillion globally on holiday spending.”
Reflecting on this, the Scroogenomist wonders, “What if Christmas were not marked by gaudy extravagance, but by acts of kindness? A season where gifts are not measured by their price tags, but by the care and thoughtfulness behind them. A handmade scarf, a heartfelt letter, or simply the gift of time – all these carry more value than gold. How uplifting it would be if people prioritized what truly matters: love, compassion, and the joy of giving.”