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Lessons From the Green Room - Money and Investing with Andrew Baxter

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Lessons From the Green Room - Money and Investing with Andrew Baxter

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A lot goes on backstage – particularly with some of the influential people that host and public speaker, Andrew Baxter, has had the pleasure of working with over the years. Here are 5 lessons from 5 influential people learnt in the greenroom:

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Lessons From the Green Room A lot goes on backstage - particularly with some of the influential people that host [...]

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The Asset Allocation, Risk Appetite Matrix

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The Asset Allocation, Risk Appetite Matrix

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As the perennial challenge for any financial advisor, ensuring your asset allocation matches your risk appetite is crucial for investors. As markets and asset classes change in shape and size, this is a much more challenging, philosophical question than most would suspect. Here’s why:

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As the perennial challenge for any financial advisor, ensuring your asset allocation matches your risk appetite is crucial for investors. As markets and asset classes change in shape and size, this is a much more challenging, philosophical question than most would suspect. Here's why: What is a Risk Appetite?
First deciphering your risk appetite, AKA how much spice you're willing to handle on your investments, is the first step to any asset allocation. In the financial planning space, typically this done via a 'fact find' where a prospective client would take a questionnaire in order to plot themselves on the scale of risk appetite. Host Andrew Baxter says it's important to understand how much of a drawdown are you prepared to accept, over what time frame and what it is that you are trying to achieve in terms of results. From here, matching your risk appetite with an appropriate asset allocation is the real challenge.
Buying Shares
Generally speaking, having direct ownership of shares is something you'd see for people in the mid-high range on the risk appetite spectrum. By owning direct shares, host Andrew Baxter says you have to be prepared to accept that stock specific risk that comes with doing so. Additionally, accepting market risk is also key. Events occurring such as corona virus or the GFC can cause markets to wipe off 30-40% in value over a short period of time to which investors have to be prepared to accept. Like anything, with risk comes reward - in the stock market, there is significant capital gains potential.
The Property Market
Buying and selling real-estate has been one of the few methods the majority of Aussies can hang their hat on as their money maker. The property market typically could suit anywhere from low to medium on the risk spectrum as it really depends on what you're doing. If you're buying real-estate from an investment perspective, this could be commercial or residential, single story, multi-dwelling, off the plan, new or old build plus a myriad of other combinations. Each are fraught with their own level of risk, albeit it's important to note that most people who buy property utilise a mortgage and are therefore into that investment. Gearing comes with its own set of risks for obvious reasons, however the popularity of the property market remains given the asset continues to perform well and price action remains relatively robust.
Cash at the Bank
As the age-old philosophy would argue, holding cash at the bank is typically your conservative 'safe haven' investment. This, in today's climate, is simply not true. As co-host Olarenshaw makes mention of - if you take a look at current returns on cash at the bank right now at 0.05%, once you factor in the current inflation rate of 3.8% and assume a 30% corporate tax rate, your real return on this money is -4.05%. Don't get us wrong, we all need to hold cash during periods of indecisiveness or to pay our bills, however, cash is not an investment! At least with a fixed interest investment, like a bond for example, you are paid a small coupon per annum in return for forgoing such cash. Ever so slightly higher on the risk spectrum, albeit a guaranteed cash flow.
Managed Funds
Investing your cash into a managed fund gives you a 67% chance of underperforming the overall market by default, given that's how many do so on an annual basis. Owning units in a managed fund is historically less risky than holding individual shares, sitting somewhere on the conservative to moderate end of the risk spectrum. Understanding that you could be paying a large in chunk of cash in fees or broker commissions, holding a managed fund may be a good way to gain broad market exposure. Just be careful as to who you select to manage this for you.
The Inflation Hedge - Gold or Crypto?
During times of market volatility and uncertainty, such as inflationary periods, usually we see investors retreat to holding physical gold. Professional trader of 27 years, Andrew Baxter, says the issue with holding gold is that you are basically long US dollars (given it is valued in USD) and you have to pay storage costs. In what is already an overinflated currency given the economy is printing money like it's going out of fashion; investors have since swapped to a riskier form of hedging outside the financial markets into crypto currency given the currency inflationary environment. As arguably the most volatile asset there is, crypto currency has become such a mainstream investment that despite it being on the upper end of the risk spectrum, more and more investors (even superfunds!) are gaining exposure to the various coins. As a finite resource not tied to any fiat currency, crypto is the new inflation hedge.
No One Size Fits All
When they say, 'one size fits all', this really isn't true in the world of investing. As we've talked of a multitude of asset classes above, there is no right nor wrong answer here - once again, it boils down to your risk appetite as to what you may choose to hold. The everchanging nature of financial markets and easy access to information has meant that investors can chop and change, pick and mix these asset classes as they please. Like knowing what coffee to order at the local shop, you have to know what your taste is - investing is much the same. For anyone unsure, reach out to Australian Investment Education to learn more.

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The Asset Allocation, Risk Appetite Matrix

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As the perennial challenge for any financial advisor, ensuring your asset allocation matches your risk appetite is crucial for investors. As markets and asset classes change in shape and size, this is a much more challenging, philosophical question than most would suspect. Here's why: What is a Risk Appetite?

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Our Host Andrew Baxter recently travelled from Australia to the US on business. Aside from his reasons for being there, he made some observations he wants to share from his first hand experience in the US. Join us this week to gain some valuable insight into how the US economy appears to be fairing:

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Hot Off the Press – The US Economy
Our Host Andrew Baxter recently travelled from Australia to the US on business. Aside from his reasons for being there, he made some observations he wants to share from his first hand experience in the US. Join us this week to gain some valuable insight into how the US economy appears to be fairing:

Is the US Headed for Recession?
Over the last few weeks we have seen an inversion of the yield curve in the US. Without getting too technical, this is when short-term yields are greater than long-term yields, suggesting there is greater risk and volatility in the short-term than the long-term. The key takeaway here is that this is a common sign of an approaching recession. Host Andrew Baxter notes that when you consider the inversion along with some other observations from his time in the US, you get a pretty sinister recipe. The unemployment rate is a controversial figure, widely believed to be manipulated to paint a nicer picture than the reality. Although at 3%, Andrew points out the countless homeless he encountered while walking through the streets. With small wage growth and a surging cost of living, the economy could be in for a shake-up.

The Wealth Gap
Without doubt, there has always been a large gap between the rich and poor in the US. The last couple of years have created an opportunity for this gap to extend as those who have been able to invest have seen great returns on their investments as the market has continued to bounce back from the pandemic-lows of 2019. A rising cost of living for the little guy translates to less extra money to invest, so while those with plenty of money have an opportunity to capitalise on a bullish market, those with little are stuck scrambling just to survive their day-to-day spending. What we see as a result, as Host Andrew Baxter explains, is greater desperation in a broad sense, commonly reflected in an increase in crime rate in particularly harshly impacted areas. A very weak financial safety net for those that are struggling in the US is a very scary prospect for us here in Australia, but a harsh reality for those struggling in the States which is not likely to change any time soon.

The Delayed Fuse in Market Reactions
There’s always a lag between what we see in the real world until it is reflected by figures and statistics. Likewise, large statistical moves can quite often only be reflected in the real world in a delayed sense. Host Andrew Baxter explains that on our trading screens we can see a spike in the oil price, but it is usually a couple of months down the road until we see car sales figures drop off. When we look at the recent move from the US to release 1 million barrels of oil per day to bring the price down, we do not see an immediate impact. For months and months the cost of filling up the car for an average American will remain high but over time prices will steadily come down. This can be seen across financial markets as well and for the trained eye can be a good way of getting in early.

Retail Troubles
On his visits to LA, Host Andrew Baxter tends to head to one specific shopping centre for his shopping fix on his trips. Much to his disappointment, Andrew  found that a lot of brick and mortar shops had in fact closed in the midst of the pandemic and had not yet re-opened. With earnings reports looming for American companies over the next few weeks, we can likely expect to see the brick and mortar retail space struggle and on the back of that see their stock prices struggle. Many had tipped the retail sector to bounce back strongly after the pandemic as they hadn’t been getting their fix of shopping over the lockdown and restriction era. What we have now seen is in fact that more and more people discovered online shopping, and have decided that this is the best way to shop, leaving in-person shopfronts in the pre-pandemic past.

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Our Host Andrew Baxter recently travelled from Australia to the US on business. Aside from his reasons for being there, he made some observations he wants to share from his first hand experience in the US.

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Initial Public Offering – A Risky But Rewarding Grind

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Initial Public Offering – A Risky But Rewarding Grind

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When a private company decides to go public and list through an Initial Public Offering (IPO), many investors salivate at the prospect of turning water into wine. It’s a risk vs. reward decision that can either be extremely lucrative or a devasting disaster.

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Money and Kids: The game of winning money can become all the more harder when you factor in having kids, so how do you plant the right DNA within them to set them up to be reach the goal of financial freedom?

It all starts with your financial DNA

Truth be told – having kids is not easy. Especially when you are trying to teach them to have a good relationship with money from an early age. Money and kids can spell disaster if you haven’t planned properly for it. The decision to support them fully, maybe give them pocket money or simply let them fend for themselves is arguable amongst varying families.

As host Andrew Baxter highlights, the example we give our kids through our own relationship with money serves as a DNA plant, often determining their future habits. If you want to learn more about YOUR financial DNA, check out My Financial DNA. It is true that history does have a tendency to repeat itself.

Baby Budgeting

How and where you chose to spend your money can leave you in vastly different financial positions. As we all know, having savings for both safety and for investing is the smart way to play your income game, getting your money to work harder for you. (For tips on how to allocate your money properly, check out Andrew’s first podcast: Asset Allocation – where to put your money).

Spending less than what you earn may seem trivial to most, but is one of the biggest problems facing modern-day Australian families. By teaching our kids to both save and budget from an early age, their money can start working harder much quicker than yours did. This ultimately sets them up for financial success in the long-term.

Pocket money or child-welfare?

If you find your kids week in and week out, asking for money without doing anything for it – be careful because you may be teaching them to fail. We all live in the real-world therefore all know that money for nothing simply doesn’t exist. So the question to follow, why do that for our kids? Therefore it is important to teach them that money just doesn’t grow on the bank of mum and dad. That being said, pocket money in exchange for chores and good behaviour will help them see that hard work equals good rewards. It will also make them feel both independent and appreciated.money and kids

Incentivised Income

When it comes to money and kids, the balance can be difficult. If your child is too young to get a job but you are still looking to teach them the value of money – incentivising them for actually doing something beneficial may be the better way to go. For example, rewarding your kids for reading a book or doing house-hold chores are a betters ways to make them earn their cash. Plus, who wouldn’t like their windows cleaned or lawn mowed – especially when it teaches kids that money has an inherent value.

Co-host Mitch Olarenshaw shares his childhood experience where he was remunerated for getting A’s on his report card by his parents – no wonder he is so smart today!

Support their dreams – don’t steal them

There is no doubt that we want our kids to have dreams in life, especially some strong aspirations in a money sense. However, by spoon feeding our kids these dreams of cars, toys or other things that they probably don’t necessarily need, you may be stealing their drive and their hunger to do well. You always want what you can’t have, so by giving your child a Range Rover at 17 years old may teach them poor a work ethic. Especially given that they already have everything – there is nothing to work for.

As Andrew Baxter highlights, it is about creating a solid unit within your family that has strong values surrounding work ethic and money. By teaching our kids a balance between hard-work and reward from an early age is what he believes to be the strategy to set your kids up for financial success. Who knows – maybe one day they will be able to manage their money better than what you do.

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Money & Kids: Teaching Your Kids to Manage Their Money

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Money and Kids: The game of winning money can become all the more harder when you factor in having kids, so how do you plant the right DNA...

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Superannuation Today – Sustainable Economic Policy

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Superannuation Today – Sustainable Economic Policy

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As we delve deeper into the Coronavirus Pandemic recession. The need for sustainable economic policy and legislation is pivotal. With ever changing policies such as the early access to Superannuation or the legislated increase in mandatory employer contribution. This leaves us with a double-edged sword and awfully confused as to where we’re headed.

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As we delve deeper into the Coronavirus Pandemic recession. The need for sustainable economic policy and legislation is pivotal. With ever changing policies such as the early access to Superannuation or the legislated increase in mandatory employer contribution. This leaves us with a double-edged sword and awfully confused as to where we’re headed. Here are the three biggest talking points regarding Superannuation right now.

Early access to Super – is it being well spent?

In spirit, the government has tried to create beneficial policies. To help those in need put food on the table during these challenging times. Specifically, this came with the ability to early access your super. As one of the three main headlines surrounding super. This caused an awful lot of controversy due to where this money is being spent. If you haven’t already heard. Aussies are now able to withdraw $10k from their super last financial year and a further $10k this financial year.

Interestingly enough, as host, Andrew Baxter explains. This money is being used for all the wrong reasons. The majority of this money being spent on electronics, homeware, 4WD accessories, and camping equipment. Are these funds being well spent? Most likely not.

Additionally, the main issue comes at retirement. When there is little left in your nest egg and now more of a reliance on the state pension. Currently, there is no legislation against ‘double dipping’. As you can withdraw your super now, but still receive a full pension when you retire.

Super contribution from employers on the rise

As every employee knows the current mandatory employer contribution to super sits at 9.5% of your wage. Now, the government has passed legislation. That states that over the next 3 years this will increase to a whopping 12.5% contribution from employers.

Great for employees, but probably not the best time to be increasing employer expenses, right? Despite the dire environment in which we operate amidst the coronavirus, the Labour party insists on this policy coming into effect immediately.

As host, Andrew Baxter states, we have varied so far from the Keating Governments’ origins of super. Which was initially suppose to 3% from each employee, the employer, and the government. Now, the onus wholeheartedly relies on the employer in already challenging times making it all the more difficult to keep people in jobs.

Employers are now force to cut staff in order to make up for the short-fall in business cash flow. Increasing unemployment and thus the reliance on government stimulus. It a vicious cycle to say the least.

Salary sacrifice short-falls

The idea of the salary sacrifice scheme is to provide everyone with a better-quality nest egg for when they retire – this comes with the allowance of a maximum of $25k per financial year that you can put into your super, tax-free.

Despite the mandatory employer contribution rising by nearly 30%, we have seen nothing but the maximum salary sacrifice amount decline over the years. Say for example you are a high-flying executive or CEO pulling down $600-700k per year, putting $25k into your super each year is the equivalent of a week’s wage.

Dialing this back to a more modest level – most Australians, due to such a small salary sacrifice amount, are going to end up more reliant on the government’s purse rather than on their own dough. Host Andrew Baxter claims that this kind of policy, amongst others, is way too ancient for the current environment and there needs to be an overhaul of the current legislation.

As the whole notion of Superannuation is to allow Aussies to provide for themselves in retirement, making the rules more succinct but more flexible will ensure our economy remains up-right and healthy. Less political bickering, more movement towards a brighter future.

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Superannuation Today - Sustainable Economic Policy

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Confused as to where we’re headed, here are the three biggest talking points regarding Superannuation right now

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If you’re unfamiliar with it, the financial markets can be a scary concept. Many everyday people have preconceived fears surrounding the stock market when they don’t really understand it. Join us this week as we jump into some of the major myths surrounding the financial markets and how you can figure out what’s true and what’s not:

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5 Most Common Financial Market Myths
If you’re unfamiliar with it, the financial markets can be a scary concept. Many everyday people have preconceived fears surrounding the stock market when they don’t really understand it. Join us this week as we jump into some of the major myths surrounding the financial markets and how you can figure out what’s true and what’s not:

Is Your Money Safe in the Bank?
We all know that the bank is a safe place to keep our money, but is it a viable way to make our money work for us in the long-term? We should always have enough money in the bank to pay our bills and buy our groceries, but the returns on your savings over time are so small and at times actually lose you money. For example, a term deposit is a long-term agreement for you to keep your money in the bank and receive interest on that money. This sounds like free money to a regular person, but the reality with such low interest rates over the last few years, and with inflation ramping up, Host Andrew Baxter points out that it is almost certain that the amount of interest you will have made on your money is totally outweighed by the amount it has devalued by way of inflation. So perhaps your money is “safe” in the bank as  far as it is secure, but you will not be rewarded for your time and you are certainly not protected from the effects of inflation.

Are Stocks Riskier Than Property?
We often hear the sentiment that property prices simply go up indefinitely and that it is perfect as an investment. Host Andrew Baxter notes though, the reality is however, property has its downfalls just like any other asset. Just like the stock market, property prices do fluctuate despite what you may think. The only difference is that with the stock market, you can track the price in real time and know where you stand. In most instances, purchasing property involves taking out a loan which is inherently risky. There are many forces at play when you have a mortgage which directly impact your repayments that are out of your control. In th estock market, although price fluctuations are out of our control, at the very least we can ensure that we are not taking leverage and do not owe anybody anything. One other key difference is insurance. We can insure our home against damage, but we can not insure the market value of our property. If we choose to sell our property, we are only able to get what someone else is willing to offer for it. In the stock market, if managed in the right way, we can lock in a sale price for our shares should we find ourselves holding a dud.

“The Wealthy Don’t Use Super”
One of the best kept secrets in Australia is just how effective superannuation is and the scope of its uses. Some believe that the super wealthy do not use super because they have more than enough money as it is. The reality is however, super is one of the greatest tools at the disposal of the super wealthy. Australia’s largest super account is worth well above $500 million. For most people, the purpose of super is to set yourself up for retirement and have some income coming in, but the other use is for setting up the generations after you. Host Andrew Baxter explains that superannuation offers major benefits for protecting your assets in the long-term so that as it is inherited down the line it is well insulated. Superannuation is only liable for about 15% tax where the corporate tax rate is 30%, so you can make the same amount in a super account as with a standard trading account, but pay half the tax. The ins and outs of superannuation are highly nuanced and complex so many consumers make assumptions before being well-informed.

Dividend Income – The ‘Best’ Income on the Stock Market
Investing in dividend stocks is known as a great income strategy, but the ins and outs tell a different story. Dividend payments are paid out from companies to shareholders, usually as a ‘thank you’ for investing, when a company has been profitable. The money for the payout is taken from the capital, so you see a loss in the share price when the dividend is paid out. So in a sense, the investor isn’t actually making anything. They may be taking some cash, but the value of their shares in the company drop by an equal amount. Using the power of options, we can generate real cash flow in the stock market – a skill Andrew Baxter  and his team at Australian Investment Education can help you learn.

Should We Blindly Trust the Pros?
Too many people fall into the trap of thinking “this is all too difficult, I just want to give my money to a pro to handle”. The reality, however, is that the pros don’t always get it right. Host Andrew Baxter points out that 80% of Australian fund managers underperformed the market over a 5 year period. We may put this down to bad luck or carelessness, but we must remember that you are the one who cares most about your money and therefore you will look after it better than anyone, it is just vital that you are educated and informed before doing so. Invest in yourself, trust your knowledge of the market and use the great tools at your disposal to make your money grow.

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If you're unfamiliar with it, the financial markets can be a scary concept. Many everyday people have preconceived fears surrounding the stock market when they don't really understand it.

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Oil Prices Are Soaring: Why? - Money and Investing with Andrew Baxter

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Oil Prices Are Soaring: Why? - Money and Investing with Andrew Baxter

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What’s the Story with Oil So Far?

To put this into perspective for you right from the get-go. And the price of oil has crossed above $86 a barrel for the first time in nearly 4 years. As it’s added on nearly 20% since the start of September. Now, we’re paying nearly $2/litre at the bowser just to fill our cars up given increased fuel prices. Also putting a lot of stress on household budgets.

Host Andrew Baxter attributes the soaring oil prices to the very tight balance of supply and demand. With OPEC (AKA the governing body for oil producers) limiting supply. And a coal shortage in China and India plus an increasing energy demand for travel and heating. Also, for those in the northern hemisphere entering into the colder months. And you’ve got a situation where the demand for oil is far greater than supply. Also, the ramping prices up to multi-year highs. In something that may seem relatively short-term and trivial. And it’s the broader economic affect that’s the scary part.

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At a whopping $2/litre at the bowser, oil prices have been soaring to multi-year highs. With inflationary and broader economic [...]

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How to Overcome Guilt with Spending Money

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How to Overcome Guilt with Spending Money

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We’ve all had experiences in our life pertaining to money. Stemming from when we were children. Our core values around spending, budgeting and money overall is formed. As a result of what we see from our parents. And how we view our friends and what we are taught in school. Maybe you grew up with a lot of money, or maybe you had none. However host Andrew Baxter says a common feeling around money is the guilt of spending it. We’ve all got hang ups around money being such an emotive object. Nonetheless, it’s using such emotion in a positive way to overcome these feelings. And treat the greenback boogie more objectively.

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How to Overcome Guilt with Spending Money

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Are you the kind of person who spends money, and then instantly regrets it? If so, you may have some [...]

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Globalisation and its Effect on the Stock Market

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Globalisation and its Effect on the Stock Market

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Put simply – globalisation is the interconnectedness of domestic economies to a more ‘global’ economy. Now due to the rise of globalisation. And what happens across the world offshore in one economy. And can have major consequences locally in another economy. As host Andrew Baxter says – this wasn’t always the case. Once upon a time here in Australia our main export was wool. And really our only trading partner was the UK. 50 or so years ago. Also, it was a narrow channel. And we didn’t really care what was going on elsewhere given it had no real impact on us. How times have changed, right?

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Never before have our global economies become so interconnected.  As the flow on effects of financial contagion, sovereign risks. And supply chain disruptions continue to dominate the headlines of our global economies. Here’s how globalisation effects our stock market:

What is Globalisation?

Put simply – globalisation is the interconnectedness of domestic economies to a more ‘global’ economy. Now due to the rise of globalisation. And what happens across the world offshore in one economy. And can have major consequences locally in another economy. As host Andrew Baxter says – this wasn’t always the case. Once upon a time here in Australia our main export was wool. And really our only trading partner was the UK. 50 or so years ago. Also, it was a narrow channel. And we didn’t really care what was going on elsewhere given it had no real impact on us. How times have changed, right?

Financial Contagion

A big part of our newly interconnected economies is the notion of financial contagion. Financial contagion, put simply, occurs when one financial event in one country has impacts on other countries. This is the ‘tidal wave’ effect that we see across various economies. With the primary example being the GFC in 2008. When US investment bank, Lehman Brothers, fell over. And couldn’t meet their debt obligations. This caused a massive flow-on effect in both international stock markets and housing markets.

A more recent worry that many investors have presently is the potential effect. That the Chinese megadeveloper, Evergrande. And could have on international markets. Responsible for 2% of the world’s second largest economy’s GDP as co-host Mitch Olarenshaw points out. And a potential fall over of a company so large could have dire effects for us here in Australia. A collapse of a megadeveloper like Evergrande would result in a slowdown in construction within China. To which steel production would drop. And the demand for iron ore to lessen as a result. Thus, your holdings in FMG, BHP and RIO in your Retail Superfund. And have lost value and your portfolio slammed. All from something that happened many many kilometres away.

Supply Chain Disruptions

The quality and length of a supply chain for a particular commodity has had major impacts across global markets. In particular, the addition of COVID-19 into the mix. And has stirred up some issues on the supply side as ports shut down and air freight slows. Also, not to mention hurricanes in the Gulf of Mexico. And wild weather across the world. All of these factors limit supply and when supply is limited – prices rally.

A prime example of this is the oil shortage throughout Europe. Punters in the UK are literally queuing up for hours at the bowser trying to grab what is left of their very little oil supply. What does this do for oil prices? Well, as of right now, they’re currently at an 8-year high trading for over US $80 a barrel.

Another example is thermal coal prices which are at their highest price point since 2008 for the simple reason. As host Andrew Baxter outlines, that China no longer has a stockpile to supply the Northern Hemisphere. As they head into the winter months. And Elongating the supply chain for one country causes prices to rise in other countries. As a prime example of globalisation.

Risk On vs. Risk Off

Think of risk like driving a car – there’s a big difference in driving through extreme rain. And hail versus driving through sunshine and rainbows. Economies have much the same change in terms of the risk of their environment. Also, which in turn effects stock markets globally across the world. During what Andrew Baxter calls ‘risk on’ times is when you’re hitting the brakes. To ensure you aren’t driving too quickly through tougher conditions. This typically would most likely mean parleying into more defensive businesses. Or dialling back your exposure altogether.

Conversely, when Andrew sees a market as ‘risk off’. This is an opportunity to load up. And gain exposure to a range of different stocks and sectors. Also, Every investor wants their alpha (AKA – outperformance). And albeit there are times when to gun for this. And times when to lay off a little. Right now. With so much going on in the world economically. We appear to be in a risk-on time. And is hence why Andrew is playing more defensive in the grocer, utilities. And healthcare space for his stock portfolio. Understanding global markets. And how volatility comes into play is crucial here.

Globalisation and Your Portfolio

Evidently, there is a lot to consider from a broad economic. And standpoint when so much is going on in the world. The effect of globalisation has truly exacerbated how our stock market reacts. To global news events and economic data. So, how do you position your portfolio. And digest all of this information? Well, having an understanding of fundamental analysis is crucial. And to be able to connect the dots. Secondly, understanding the notion of volatility. And the risk-on, risk-off method is paramount when considering your asset allocation. How do you learn about all of this? Reach out to Andrews team at Australian Investment Education for more.

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Globalisation and its Effect on the Stock Market

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Never before have our global economies become so interconnected. As the flow on effects of financial contagion, sovereign risks. And […]

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Turmoil Opportunity - Money and Investing with Andrew Baxter

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Turmoil Opportunity - Money and Investing with Andrew Baxter

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Earlier episodes have touched on the changing market conditions and the need for adaptation. Nobody could have predicted just how tumultuous the market has become, resulting in a choppy landscape. In this week’s episode of the Money and Investing podcast, join Co-Hosts Andrew Baxter and Mitch Olarenshaw as they dive into some particular places they see opportunity amidst the current turmoil.

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Turmoil Opportunity
Earlier episodes have touched on the changing market conditions and the need for adaptation. Nobody could have predicted just how tumultuous the market has become, resulting in a choppy landscape. In this week’s episode of the Money and Investing podcast, join Co-Hosts Andrew Baxter and Mitch Olarenshaw as they dive into some particular places they see opportunity amidst the current turmoil.

Recent Opportunities in the Midst of Turmoil
The attack on Ukraine coordinated by Russia and Vladimir Putin are gravely tragic and have had a major impact on financial markets as well. Despite the overall market suffering, there are sectors and commodities that have benefitted and could continue to benefit from the geopolitical issues currently plaguing Europe. Host Andrew Baxter highlights some of the trades he and his team recognised which allowed their clients to get some positive results in spite of major economic turmoil. Namely, USO (the US Oil Fund) and XLE (an energy sector ETF) have been benefactors of the increased oil and gas prices brought about by sanctions against Russia, Europe’s largest oil and gas producers. These are just a couple of the ways in which turmoil can be turned to your advantage when it comes to trading.

Choppy Markets – Our Approach as Traders
Adaptability is a core skill for any successful trader and recent events show you exactly why. We are not always going to be blessed with a nice upward trending environment where we can simply buy and hold and watch our accounts grow. Co-hosts Andrew Baxter  and Mitch Olarenshaw point out that trading in a market requires agility and the tools to address different types of markets. What we have seen recently, and what we may continue to see for a while to come, is a market floating more or less sideways with big jumps and dips along the way. Buy and hold trades are not the right strategy for that kind of market, so we need to find some other means of profiting from the landscape we find ourselves in.

The Importance of Fundamental Analysis
Looking at a chart, it is easy to tell whether the stock has moved up, down or sideways. Figuring that out before it is visible on the chart is where money is made. Host Andrew Baxter discusses how strong fundamental analysis and a solid understanding of how different asset classes are affected by certain factors and events provides direction for traders in markets where trading is not simply following an overall upward trend. A topical example of this is the way gold behaves in inflationary periods and how it has been performing in the midst of the recent Russian invasion of Ukraine. Many have deemed cryptocurrency as a substitute for investing in gold, however Ukraine and Russia are key centres for crypto mining, and the recent conflict has led to huge losses in the cryptocurrency space. Due to this fundamental aspect, investors have reverted back to the safe haven of gold in this inflationary period.

Opportunities in the Medium-Term
Trading commodities is not for the faint-hearted, but the profit potential can be enormous. The turmoil across global markets will no doubt cause some grief to some sectors, and yet others will benefit – it is just a matter of figuring out which ones. Listen in as Andrew Baxter walks you through what he feels might just be the best opportunity to profit in the medium-term, and why he believes the price of wheat is set to rise. Russia and Ukraine are two of the biggest wheat producers in the world and it would not be surprising to know that wheat farmers in Ukraine are not able to be farming in the midst of the fighting while the west imposes sanctions on Russian wheat. The demand may remain the same, but supply shortages could lead to colossal price increases in wheat futures over the next few months.

Energy – Does it Have Anymore Gas?
You may have begun noticing the increased cost of filling up your car recently, particularly in flood-affected areas. This is largely to blame on the supply issues that come from the sanctions imposed on Russian oil. Host Andrew Baxter points out that although prices have already hiked, there is a very real chance that energy can continue to move higher and perhaps even a substantial amount.

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Turmoil Opportunity Earlier episodes have touched on the changing market conditions and the need for adaptation. Nobody could have predicted [...]

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What is ESG Investing? - Money and Investing with Andrew Baxter

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What is ESG Investing? - Money and Investing with Andrew Baxter

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Put simply, ESG investing is buying responsible assets for the right reasons on an environmental. And social and corporate governance level. For this topic, host Andrew Baxter has called in long-time friend and fund manager from Russel Investments, James Harwood. James manages over $7B of client funds to which $3B of that is invested in ESG funds and has a huge reputation in the financial services industry with a strong track record.

In Australia, the materials and mining stocks make up around 20% of our market. Thus, finding ESG stocks that are likely to perform well is a harder task than what most would first think. As a relatively new sector of the stock market.The ESG investing continues to grow in demand. As more and more investors become environmentally and socially aware. And leaving this one of the best performing sectors in markets over the last 5 years.

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As one of the fastest growing trends in markets - environmental, socially. And corporate governance aware investing (ESG) is something [...]