Should we worry about the Shiller PE Ratio?

Shiller PE ratio

The rise in global equity prices in recent years has led to continued concerns over valuation levels. One indicator that appears to cause endless nervousness is the so-called “Shiller” PE ratio, which considers US stock prices relative to the rolling 10-year average level of earnings. As this note demonstrates, however, the Shiller PE ratio has proven to be a poor short-run market timing tool. And while it has proven to be a reasonable guide for likely longer-run returns in the past, allowance today needs to be made for the large structural decline in interest rates.


Left in the dirt: What’s driving our sharemarket performance?

Left in the dirt: What’s driving our sharemarket performance?

The Australian sharemarket has struggled to match the performance of global peers in recent years. While a number of theories have been put forward to explain our relatively poor returns, this note suggests two factors tend to dominate: trends in export commodity prices and the health of the global technology sector. On this basis, it seems likely our market could struggle against global peers for some time yet.


Which jobs in wealth management can’t be automated/ replaced by robots?

Which jobs in wealth management can't be automated/ replaced by robots?

Someone asked the question “Which jobs in wealth management can’t be automated/ replaced by robots?”. Below is my answer:

1. Portfolio construction: In future, artificial intelligence will be used to make better sense of the vast data available to us, and help us in determining good investment opportunities. However, portfolio construction is a subjective activity, and it is based on an investment methodology that is designed by human perspectives.


Steady as she goes: what’s driving the Australian economy?

what’s driving the Australian economy?

Despite sluggish overall growth reported in the National Accounts, a range of more partial indicators suggest the Australian economy is enjoying reasonable – though not robust – growth from a diversified range of sources. Continued moderate growth and low inflation appear the most likely outcome over the coming year, which would be consistent with steady local interest rates and a focus on income over growth opportunities in the Australian equity market.


Should I hire a financial adviser to help me invest a small amount, say $5,000, for the long-term?

Should I hire a financial adviser to help me invest a small amount, say $5,000, for the long-term?

This is a common question asked by many young people who have just started their journey to save for their future. If you have this question, then I am glad that you intend to invest for the long term. I am also glad that you are open to seeking the help of an expert to help you make your investments.

However, if you are considering to take the help of a high-quality financial adviser providing you the service face-to-face, then, unfortunately, the amount of investible assets that you have is not sufficient.


Geographic lending restrictions could provide scope for lower interest rates

Geographic lending restrictions could provide scope for lower interest rates

Contrary to the hopes of both the Reserve Bank of Australia and the Federal Treasury, economic growth is off to a bad start in 2017 so far. Importantly, however, the recent Federal Budget included new powers for the Australian Prudential Regulation Authority to impose geographic-based lending restrictions. If used, these new restrictions could allow scope for the Reserve Bank to further support the economy through lower interest rates later this year if need be, with less risk of further inflaming the already hot Sydney property market.