Shane Oliver, Author at ShareCafe

Several positives suggest recession is unlikely: the current account deficit has collapsed; the $A helps stabilise the economy; the drag from falling mining investment is over; there is scope for extra fiscal stimulus; infrastructure spending is booming; there has been no sign of panic property selling; economic policy remains sensible; population growth remains strong; and the RBA can still do more.

Currencies / Economics / Interest Rates

The $A Still Has More Downside, But A Lot Of The Weakness Is Behind Us

June 14, 2019 - by Shane Oliver

Given the downside risks for the $A and that being short the $A is a good hedge against threats to the global outlook it still makes sense for Australian investors to maintain a decent exposure to foreign currency via un-hedged global investments.

Strategy

The Nine Most Important Things I Have Learnt About Investing Over The Past 35 Years

June 6, 2019June 6, 2019 - by Shane Oliver

My nine most important lessons from investing over the past 35 years are that: there is always a cycle; the crowd gets it wrong at extremes; what you pay for an investment matters a lot; getting markets right is not as easy as you think; investment markets don’t learn; compound interest applied to investments is like magic; it pays to be optimistic; keep it simple; and you need to know yourself to succeed at investing.

Economics / Interest Rates

RBA Cuts Rates To A New Record Low

June 5, 2019June 5, 2019 - by Shane Oliver

The RBA’s latest rate cut is aimed at heading off a further slowing in growth which would threaten higher unemployment and lower for longer inflation. For investors, it means low-interest rates for even longer.

Property

Australian House Prices Getting Closer To The Bottom

May 23, 2019June 3, 2019 - by Shane Oliver

The election outcome removed a key threat, but several other factors also suggest that property prices could be nearing a bottom. In this note, Shane Oliver looks at the key issues.

Strategy

The Trade War Is Back – What Went Wrong, What It Means For Share Markets & Australia

May 14, 2019May 14, 2019 - by Shane Oliver

After taking a back seat over the last six months as negotiations appeared to make progress the US/China trade war is back on with the President Trump – “tariff man” – ramping up tariffs on Chinese imports again and threatening more and China moving to retaliate. This note takes a simple Q & A approach to the key issues.

Shares / Strategy

Seasonal Patterns In Shares – Should We “Sell In May And Go Away”

May 7, 2019May 8, 2019 - by Shane Oliver

Seasonal patterns have long been observed in equity markets. Yet, despite the potential they provide for astute investors to profit from them – and in so doing arbitrage them away – they seem to persist.

Economics / Interest Rates

Inflation Undershoots – Why It’s A Concern & What It Means For Investors?

April 29, 2019April 29, 2019 - by Shane Oliver

Surprisingly weak Australian inflation has led to expectations the Reserve Bank will soon cut rates. But what’s driving low inflation? Is it really that bad? Why not just lower the inflation target? Will rate cuts help? And what does it mean for investors?

Economics / Interest Rates / Strategy

The 2019 Australian Federal Election And Investors

April 11, 2019April 11, 2019 - by Shane Oliver

Labor’s higher tax and regulation agenda may be a negative for Australian assets, but this could be partly offset in the short term by more targeted fiscal stimulus.

Economics / Interest Rates

The 2019-20 Australian Budget – The Long-Awaited Surplus & The Promise Of More Tax Cuts Ahead

April 3, 2019April 5, 2019 - by Shane Oliver

The 2019-20 Budget has a sensible focus on providing support to households at the same time as returning the budget to surplus. However, the actual fiscal stimulus is pretty modest – particularly for a pre-election budget – and comes with greater than normal uncertainty given the upcoming election.

Markets / Shares / Strategy

Global Growth Slowing, Plunging Bond Yields & Inverted Yield Curves

March 27, 2019March 27, 2019 - by Shane Oliver

The rebound in share markets since December has left them vulnerable to a short term pullback. Worries about global growth as evident in plunging bond yields and the flat/inverting US yield curve (and risks around trade) could provide the trigger.

Economics / Markets / Strategy

“Millennial Socialism” & The Swing Of The Political Pendulum Back To The Left

March 14, 2019March 14, 2019 - by Shane Oliver

Growing support for higher taxes on the rich and greater government intervention in the economy suggest median voters have shifted to the left. Support for economic rationalist policies has fallen.

Economics / Interest Rates

Australia Slides Into A “Per Capita Recession”

March 7, 2019March 7, 2019 - by Shane Oliver

Australian growth slowed even more in the December quarter. Growth may bounce back a bit this year, but the housing downturn will likely constrain it to around 2- 2.5%.

Shares / Strategy

Why I Still Love Dividends & You Should Love Them Too

February 27, 2019February 27, 2019 - by Shane Oliver

Dividends are great for investors. They augur well for earnings growth, provide a degree of security in uncertain times, are likely to comprise a relatively high proportion of returns going forward and provide a relatively stable source of income.

Economics / Interest Rates / Strategy

Five Charts & A Table That Are Critical To Watch

February 21, 2019February 25, 2019 - by Shane Oliver

Five key global charts to watch as to whether this will be the case are: global business conditions PMIs; global inflation; the US yield curve; the US dollar; and global trade growth.

Strategy

Five Great Charts On Investing – Why They Are Particularly Important Now

February 14, 2019February 14, 2019 - by Shane Oliver

These five great charts focus on critical aspects of investing: the power of compound interest; the investment cycle; the roller coaster of investor emotion; the wall of worry; & time is on your side when investing.

Shares / Strategy

Why Growth In China Is Unlikely To Slow Too Far

February 8, 2019February 8, 2019 - by Shane Oliver

A sharp slowdown in China would be a double whammy for the Australian economy coming at the same time as the housing downturn. But while it’s a risk it’s not our base case. Rather our outlook for China’s economy to stabilise and growth to pick up a bit in the second half implies a reasonable – but not spectacular – outlook for commodity prices

Interest Rates / Property / Strategy

Australian Housing Q&A With Shane Oliver

January 24, 2019February 4, 2019 - by Shane Oliver

A Q&A on the Australian housing downturn: what’s driving home prices down; how far will they fall; what’s the impact on the economy.

Economics / Markets / Strategy

2019 – A List Of Lists Regarding The Macro Investment Outlook

January 17, 2019January 17, 2019 - by Shane Oliver

Despite continued volatility, 2019 is likely to be better for diversified investors than 2018 was. Watch the US trade war, the Fed, global business conditions indicators, Chinese growth, politics and the Sydney and Melbourne property markets.

Economics / Interest Rates / Strategy

The Fed And Market Turmoil

December 20, 2018December 20, 2018 - by Shane Oliver

A more cautious Fed should provide some support for markets although more falls are possible into early next year before markets bottom and head higher as investors realise the US/global economy is not going into recession soon.

Economics / Strategy

The Australian Economy In 2019 – House Prices, Growth & Interest Rates

December 14, 2018December 21, 2018 - by Shane Oliver

Australian growth has slowed again and while local shares are still great for income, global shares are likely to remain outperformers for capital growth in 2019.

Economics / Strategy

Review Of 2018, Outlook For 2019 – Another Cycle Extension

December 7, 2018December 18, 2018 - by Shane Oliver

After the turmoil of 2018, the outlook for 2019 comes with greater than normal uncertainty. Here are the main things to keep an eye on in the year ahead.

Strategy

13 Common Sense Tips To Help Manage Your Finances

November 15, 2018November 15, 2018 - by Shane Oliver

Getting your personal finances right can be a challenge. Here are 13 tips that may be of use.

Economics / Markets / Strategy

Rising US Rates, Trade Wars, US Election Results – Should Investors Be Worried?

November 9, 2018November 9, 2018 - by Shane Oliver

It’s still too early to be sure that last month’s pullback in shares is over but we remain of the view that it was not the start of a deep bear market and that the trend in shares remains up.

Shares / Strategy

Are Shares Expensive?

October 25, 2018October 26, 2018 - by Shane Oliver

Developed market shares are not dirt cheap (and haven’t been for several years) but on most measures they are not at overvalued extremes. US shares are most at risk, but other markets are reasonable.

Economics / Property

Whereto For Australian Home Prices & What’s The Impact On The Economy?

October 18, 2018October 22, 2018 - by Shane Oliver

Prices are likely to perform a lot better in Adelaide, Brisbane, Canberra & Hobart as they have not seen anything like the boom in Sydney & Melbourne.

Shares / Strategy

The Pullback In Shares – Seven Things Investors Need To Keep In Mind

October 12, 2018October 12, 2018 - by Shane Oliver

Shares may still have more downside, but we are of the view that it’s just another correction.

Strategy

Successful Investing Despite 115 Million Worries & Truth Decay – How To Turn Down The Noise

September 27, 2018September 27, 2018 - by Shane Oliver

A surge in financial information and opinion combined with our inclination to focus on negative news risks making us worse investors: more fearful, more jittery, more reactive, less reflective & more short term. This is potentially harmful to our long-term financial health.

Shares / Strategy

Five Charts To Keep An Eye On Regarding The Global Economy

September 20, 2018September 20, 2018 - by Shane Oliver

Five key global charts to watch in getting a handle on whether a major downturn is on the way are: global business conditions PMIs; global inflation; the US yield curve; the US dollar; and global trade growth.

Strategy

Seven lessons from the Global Financial Crisis for investors

September 13, 2018September 13, 2018 - by Shane Oliver

The key lessons for investors from the Global Financial Crisis (GFC) are that: there is always a cycle; while each cycle is different, markets are pushed to extremes of valuation and sentiment; high returns come with higher risk; be sceptical of financial engineering or hard-to-understand products; avoid too much gearing or gearing of the wrong sort; the importance of proper diversification; and the importance of asset allocation.

Economics

Five things you need to know about the Australian economy

September 11, 2018September 11, 2018 - by Shane Oliver

While recession remains very unlikely, the combination of a slowing housing cycle, constraints on consumer spending and still subdued business investment will likely see growth slow going forward to around 2.5-3%.

Shane Oliver

Investment Returns Over The Next Five Years Are Likely To Slow

August 29, 2018September 8, 2018 - by Shane Oliver

The key for investors is to have realistic return expectations; allow that inflation is also low so real returns aren’t down as much; and focus on assets with decent and sustainable income.

Shane Oliver

Why The $A Is Likely To Fall Further

August 23, 2018September 8, 2018 - by Shane Oliver

This note looks at outlook for the $A and why it makes sense for Australian-based investors to hold a decent exposure to foreign exchange.

Fixed Interest

What Happened To All The Worries About Rising Inflation And Bond Yields?

August 15, 2018September 13, 2018 - by Shane Oliver

US bond yields have struggled to stay above 3%, German bond yields are around 0.3%, Japanese bond yields are around 0.09% and Australian bond yields are around 2.58%, with most well below their highs seen earlier this year. So, what happened? Should we still worry about inflation?

Shane Oliver

Nine Keys To Successful Investing

August 9, 2018September 19, 2018 - by Shane Oliver

In the rough and tumble of investment markets its very easy to get distracted: by talk of the next best thing that will make you rich, by the ever-present predictions of an imminent crash, by the worry list that constantly surrounds investment markets relating to growth, profits, interest rates, politics, etc.

Shane Oliver

Trumponomics And Investment Markets

July 26, 2018September 19, 2018 - by Shane Oliver

Since Donald Trump was elected President back on November 8, 2016 we have focussed on whether we will see Trump the rabble-rousing populist or Trump the business-friendly pragmatist.

Shane Oliver

The US Economy – Does The Flattening Yield Curve Indicate Recession Is Imminent?

July 19, 2018September 19, 2018 - by Shane Oliver

Ever since the Global Financial Crisis (GFC) there has been an obsession with looking for the next recession. In this regard, over the last year or so there has been increasing concern that a flattening yield curve in the US – ie the gap between long-term bond yields and short-term borrowing rates has been declining – is signalling a downturn and, if it goes negative, a recession in the US.

Shane Oliver

2017-18 Saw Strong Returns For Diversified Investors

July 5, 2018September 19, 2018 - by Shane Oliver

The past financial year saw solid returns for investors but it was a story of two halves. While the December half year was strong as global share markets moved to factor in stronger global growth and profits helped by US tax cuts, the last six months have been messier and more constrained – with US inflation and interest rate worries, trade war fears, uncertainty around Italy, renewed China and emerging market worries and falling home prices in Australia.

Shane Oliver

Should The RBA Raise Rates To Prepare Households For Higher Global Rates?

June 29, 2018September 19, 2018 - by Shane Oliver

It’s nearly two years since the Reserve Bank of Australia last changed interest rates – when it cut rates to a record low of 1.5% in August 2016. That’s a record period of inaction – or boredom for those who like to see action on rates whether it’s up or down.

Shane Oliver

Trade War Risks Are Escalating – But A Negotiated Solution Remains Most Likely

June 26, 2018September 19, 2018 - by Shane Oliver

The threat of a full-blown trade war has escalated in the last few weeks with the G7 meeting ending in disarray over US tariffs on imports of steel and aluminium from its allies and more importantly President Trump threatening tariffs on (so far at least) $US450bn of imports from China, and China threatening to retaliate.