We should all continue to expect, embrace and ultimately take advantage of volatility from future unforeseen events and themes. Good luck trying to predict them.
We can, however, take tremendous confidence in the experienced management teams of our core investments, all of which have significant skin in the game and have sailed through tough times like the ones that will inevitably come .. only to come out the other end stronger and more profitable.
(Fortitude’s 2019 Christmas note, 12 December 2019)
Well, what a year it has been!
This time last year, the market was riding the crest of an ever-positive wave with the ASX200 at all-time highs, around 6,850, up over 20% for the 12 months.
The RBA cash rate had halved to a then record low of 0.75%pa, which, when combined with expectations of a positive reporting season to 31 December, fuelled markets to further record highs throughout January and into late February of this year.
Our mantra with markets is to “expect the unexpected”, and to “expect and embrace volatility”, and boy didn’t we get that in spades in 2020. From devastating drought and fires, to the worst South Coast flood since 1991, and in late February, the one in a hundred year coronavirus was upgraded to a global pandemic and COVID-19 swept the world, sending us all into lockdown and a global recession.
Fast forward to now and our ASX200 index is around 6,450, down just 6% (less when you include dividends). This is just incredible when you consider what the world has been going through since early March, with economic mayhem and heightened public fear as governments scrambled to make decisions amidst a pandemic not seen before in any of our lifetimes. Government support packages have resulted in record government debt levels to be dealt with by future generations to come, yet, interestingly, the main US index (the S&P500) is actually back to pre-pandemic all-time highs and the technology rich NASDAQ has surged to giddy new heights. This reflects the fact that markets are forward looking and hopeful that, perhaps with the help of vaccines and improved treatment of COVID-19, business will get back to normal over the next few years. Record low interest rates (RBA cash rate now just 0.1%pa) of course help to fuel the market as investors pay up in their search of both income and growth.
Despite all that is afoot across the globe, we remain optimistic for the world and indeed the lucky country we live in, Australia. After all, it’s in our DNA to survive, look for solutions and strive for a better life! We also warmly welcome a new and likely less divisive US President elect in Joe Biden.
Sincere thanks to all our investment partners for your cool heads, your shared wisdom and collective scar tissue, which has seen you calmly manage portfolios in extremely volatile markets. Special mention to those who generously gave their time in the three webinars we have rolled out since March lockdowns, for which all presenters received glowing reviews; Rob and Tom Millner (Soul Patts, Brickworks, BKI, Contact Asset Management inter alia), Brendan O’Dea (Milton), Angus Gluskie (Whitefield), Peter Thornhill (Motivated Money), Stephen Ng (Ophir) and just recently, Hamish Douglass (Magellan). We are so blessed to have the opportunity to co-invest with you. And to you, the amazing families we have the pleasure of working with, Team Fortitude is very thankful for your support (and referrals!) over the last 12 months, and especially over the last 9 months since COVID kicked in. Just recently, we were privileged to be chosen by our 100th family to engage our services, and a very special family they are …. as are you all. It’s been an amazing personal and business journey since I started Fortitude nearly 12 years ago, and the whole team and I feel very privileged and delighted to be working with each and every one of you.
Our client services hub is now a full-time team of three, ensuring that we continue to be well resourced to look after you. We have Kylie at the helm, along with Brad and Anna keeping everything humming in the engine room, along with our very capable undergrad Lachie providing additional support. Of course, Huw, Ollie and I continue to be at call to assist you in any way, shape or form that we can.
Treasure this special time of year, stay healthy, cuddle your family and we look forward to enjoying with you everything that 2021 has to offer.
Our very best wishes,
Luke and all at Team Fortitude
Managing Director, CA, CFP, B.Com, F Fin, SSA™, GAICD