E-news June/July 2011
Changing times means changing opportunities
When Bob Dylan told us “the times they are a changin’” way back in 1964 he was right. The 60’s saw the beginning of a new-found spirit of personal freedom and expression that swept across the US and the developed world. This wave of change spilled over into the 70’s bringing an end to the Vietnam War and the impeachment of US President Richard Nixon, among other previously unthinkable events.
We can only wonder what Dylan thinks of the world now. In almost 50 years since he released that seminal album, the times have continued to change at a pace no-one could have predicted.
According to well-known futurist, Dr Keith Suter, technology has been the major driver of change in our lives and will continue to do so. We only have to look at what’s happening in the Middle East right now to see how technology is shaping politics and indeed freedom in the region. The democracy of the Internet knows no bounds. People who’ve suffered for decades under repressive regimes have found a new voice and a new wave of people power, armed with mobile phone technology is slowly and painfully sweeping aside corrupt leaders.
The other thing that technology has done is ‘shrink’ our world through what we now call ‘globalisation’. It is not only easier to see and hear what other countries or regions are doing, but it’s also easier to trade or interact with them. The downside of this is that we have become more vulnerable to foreign financial fluctuations. “When the US sneezes, the rest of the world catches a cold,” is how some commentators have described our post-GFC world. By way of example, the Australian ‘All Ordinaries’ Index is heavily influenced by what happens to its US equivalent the ‘Dow Jones’, even though we have different economic indicators in this country.
Of course we can’t ignore the recent rise in economic growth of China and to a lesser extent, India. China has now surpassed the US as the world’s largest car market and is also the world’s #1 exporter of goods and services. China is also mobilising its considerable workforce and technical genius to find ways for our planet to survive when oil no longer runs everything and before someone sings “the climate is a changin’.”
We’re also hearing more about ‘the global economy.’ Dr. Suter describes the global economy this way: Australia is the mine, China is the factory, the US is the marketing department and India is the back-office.
So what does all this change mean for Australians? Should we be concerned about the implications of power shifts and economic rankings? Do we see these changes as threats or opportunities? In recent times our country has weathered some storms – both meteorological and financial - and learned some valuable lessons. We may only be a small player on the global stage, but we enjoy stability, freedom and relative wealth that are the envy of most countries.
Our view of change is a positive one. Where others might see threats, we see economic opportunities. For example, alternative energy sources need to be developed, information technology will continue to flourish and so will the sometimes controversial area of genetic engineering. There is also the need to develop more efficient and rapid transportation systems, the likely redevelopment of old industrial estates and many more possibilities.
We see these changing times as investment opportunities; emerging industries and emerging economies are possible avenues for investment. When the time is right we’ll move quickly to capitalise on healthy returns for investors. The times are a changin’ and so are the opportunities.
Don’t listen to the noise, just wait for the signal
There is nothing more pervading in this new century than the media. Technology has unleashed a torrent of media channels and created opportunities for ‘news’ like never before. We can even make our own news now, thanks to developments in mobile phone technology. Just ask a Gen Y!
This profusion of mass media is a double-edged sword. While it can be comforting to know that there are many more eyes and ears on our world, it also means that unless we hide under a bed or go and live in a cave we are subject to a daily barrage of stories. And if you can believe what you hear or see, most of them tend to be bad news!
The media is now an agenda setter. They don’t tell us what to think, but they do like to tell us what to think about. We already see this in the quality of communication we receive from our politicians as they bounce from one headline to the next. Just short sound bites without a hint of context. Like visual text messages. Or fast food for thought.
This media phenomenon applies to the financial world too. The media has had a particularly good time over the past couple of years as global markets went into a tailspin and some traditionally solid organisations faltered. Investors worldwide panicked on the basis of scant, media-driven information and sold down shares like there was no tomorrow.
Every day our news cycle continues with this financial ‘noise’. If they’re not careful, investors can find themselves on an emotional roller coaster ride as movements in currencies, interest rates, sharemarket indices and other key financial data are trotted out in a flurry of figures.
So what’s our message from all of this? Put simply, don’t let the noise distract you from your planned path. Let your financial adviser deal with it and keep you informed of what’s relevant to you. It’s their role to sift through the noise and take a longer term view. By all means, call if you’re seriously concerned and uncomfortable and let them help you stay on track, or make changes if necessary. Their job is to help you stay on track with your strategy and your investments, with your long term goals in mind. This should be ‘good news’ to everyone