|
Hedge Clippings | Friday, 15 January 2021
Happy New Year, and welcome back to Hedge Clippings for 2021. Although it is still in that traditionally quiet time between Christmas and Australia Day, we hope you will excuse a briefer than usual commentary. You might even enjoy a briefer than usual commentary, but that would be a cruel comment this early in the New Year.
Whilst the world has been in turmoil since the last edition of Hedge Clippings, yours truly has been in slow motion, to say the least. A planned Christmas Day on the Northern Beaches was disrupted by the Avalon cluster, and planned visits to the beach or the golf course were disrupted by incessant rain. This left little choice but to watch in dismay at the antics of Trump and his supporters, and attempts by Boris to put a positive spin on the U.K.'s efforts to handle COVID.
It is difficult to use the words riveting or fascinating when describing either of the above, but at least the remote control allowed both to be switched off, with Twitter and Facebook each doing the honours as far as Donald's online exposure was concerned.
As such, plenty of time was spent reading. We can recommend Matthew Syed's "Black Box Thinking" (available as an audiobook), or for a different pace and a different era, the story of Edward John Eyre, the first European to traverse the coastline of the Great Australian Bight and the Nullarbor Plain by land in 1840-1841. Whilst Eyre's name is well known for his exploits in Australia, what is less well known is that in 1846 he was appointed Lieutenant Governor of New Zealand, and in 1861 he became acting governor of Jamaica. It's amazing how much time one has to discover such things when not engrossed in managed funds.
Speaking of which, fund managers have a challenging year ahead, both economically, politically, and navigating a market which some believe to be in extreme bubble territory. From a price perspective that may well be. However relative to interest rates at zero, and the guarantee of trillions of dollars of government support globally distorting the normal economic indicators, there are those that believe the party is likely to continue for a while yet.
One caveat to that may be the emergence, or re-emergence, of inflation as a reaction to rising interest rates as an antidote to easy money.
More than ever before 2020 will go down as a year of two halves, or possibly quarters, and not only based on COVID and economic activity. Managed funds will be divided into those that made the most of opportunities in 2020 and significantly outperformed market indices, and those that failed to do so. We will include more details and examples of these in future editions of hedge clippings, so "stay tuned" as they say.
It won't be the last time that we mention "there has never been a more important time for investors to be fully informed".
|
