Results for July were mixed, with the increasing Australian dollar having an impact on some asset returns for the month.
Emerging markets was the best performer, up +1.6% in the month due to better-than-forecast China GDP figures and improvements in commodity prices.
International shares and global property were the worst two performing assets. The Australian dollar rose 4.2% which is great if you’re heading overseas, but it reduced the value of overseas investments in terms of Australian dollars and these two assets were affected.
Australian shares were flat for July but reporting season in August has provided plenty of hits and misses. Whether you like the pizzas or not, Domino's pizza has been one of the best performing stocks on the ASX for many years. It’s still a great business, but there’s a difference between a great business and a great stock – and that is the valuation.
Domino's shares have consistently demanded a huge premium, but the market sold it off after its recent results were slightly off. Other companies such as BlueScope Steel and Telstra, once considered market darlings, also had big sell-downs. Even "blue chip" stocks can be fraught with danger, which is why we prefer a low-cost passive strategy to get our clients exposure to growth in shares.
I’m currently reading a book called Gut by Giulia Enders. As much as it’s a fascinating book about bacteria and how the digestive system works, I’m not even going to bother to try and find a segueway between the digestive system and investing! So there’s no book of the month this time, instead I’m going to nominate a podcast of the month.
You may have heard of or read an interesting book called Freakonomics. Well, the smart people that put that together also have a podcast called Freakonomics Radio. Just over a month ago they released an episode called ‘The Stupidest Thing You Could Do With Your Money’.
It’s a really well constructed podcast that could be the best 45 minutes you’ve ever invested in yourself. I highly encourage you to have listen - you’ll learn a lot about investing your own money, and it won’t cost you a cent!
On the topic of podcasts, and here’s a legitimate segueway, I’ve released the latest episodes of my podcast, a two-part interview with former AFL great Chris Judd. We discuss the fascinating strategy Chris uses to manage and invest his own money, as well as the best and worst advice he ever received about investing.
“The miracle of compounding returns is overwhelmed by the tyranny of compounding costs.”
- Jack Bogle, Vanguard founder
Jack Vogel created the first Vanguard index fund more than 42 years ago, and knows all too well the way compounding can work for you or against you. Keep your compounding costs low so your compounding returns can work to their full potential for you.