If not, sign up now for our latest news, views and insights.
By Manuel Greenland, Senior Portfolio Manager, Australia
07 February, 2017
Do these famous opening lines of a nineteenth century novel describe Australia today?
"It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness… it was the spring of hope, it was the winter of despair. . . ."
Referring to Europe just before the French Revolution, the lines from Charles Dickens' A Tale of Two Cities depict a moment where popular discontent with wealth inequality was about to drive a major change in politics (peasants versus the aristocracy). Is history repeating itself?
In a 2014 report, Oxfam found the top 1% of the wealthiest Australians own more than the country's poorest 60%; resulting in a tale of two countries. It may well be that rising inequality and social polarisation drove the surprise results in both the US election and the Brexit referendum.
While politics again seem on the precipice of change, the impacts have already been felt in Australia. Politically, a string of Prime Ministers have left their terms in office prematurely. The economy, once buoyed by a strong mining sector, has had to rely on other industries to drive growth. Jobs have shifted back from West to East. Investors have to choose between growth or value stocks; volatile or stable industries; and domestic or export sectors. With sharp changes in what the market likes, these choices have had a dramatic impact on share prices. Yesterday's losers can easily become today's winners.
While share prices may swing around with sentiment, the capacity of companies to generate earnings does not. Earnings power depends on a company's strengths versus its competitors, suppliers and customers — in a word, its quality. Our focus remains on selecting the best quality companies for our Australian portfolio.
Subscribe to receive
our monthly newsletter
Disclaimer: Fisher Funds Management Limited ("Fisher Funds") is the issuer of the financial products referred to on this website. A PDS for each of the financial products is available here and also on the relevant scheme's offer register entry at companiesoffice.govt.nz/disclose. The information, calculations and any opinions on this website are based upon sources believed reliable, but Fisher Funds, its officers and directors make no representations as to their accuracy or completeness. All opinions reflect our judgment on the date of communication and are subject to change without notice. Professional investment advice should be taken before making an investment. Past performance is not a reliable guide to future performance. A disclosure statement is available from your financial adviser, on request and free of charge.
© 2017 Fisher Funds - Website Design & Development 3webfeet Limited