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Hewison Private Wealth - Insights
Hewison Insights

Making sense of the madness

Andrew Hewison
Managing Director
16 Jun 2022

Whether you’ve been under the care of Hewison Private Wealth for a little, or a long time, uncertainty can breed fear and anxiety about what the future may bring. Let’s face it, external influences, such as the media feed off consumer fear and anxiety.

In September 2020, Australia entered its first recession since 1991, bringing an end to almost 30 years of growth. The reason for the recession is well known, a global pandemic and subsequent COVID-19 lockdowns resulting in large parts of Australia’s economy grinding to a halt.

Exceptional measures were taken to assist the most affected industries and workers with their survival. These measures included near zero interest rates, and the additional printing of money by the reserve Rank of Australia (RBA) which was then used to buy corporate debt. The corporate sector went on to use the money in a manner that saw wash back into the economy to keep it ‘ticking over’. This strategy is called ‘quantitative easing’.

These measures, coupled with supply chain issues and soaring energy costs, has resulted in an inflation figure akin to a runaway train.

The market uncertainty is surrounded by the following issues:

  • Just how fast is inflation going to continue rising?
  • Will raising interest rates have the desired impact? Especially given supply chain issues won’t be solved by raising interest rates, other than slowing down demand for non-discretionary items (gas and electricity not being one of them).
  • How high will rates need to be raised? In doing so making borrowing for consumers and businesses more expensive, which in turn will result in less money being spent within our economy.
  • Given this, just how much will the economy slow as a result?

Although we cannot answer the above questions, if you’re one of the many who feel anxious this week, the following words may assist to allay these feelings.

You are in good hands. Why?

The collective experience of the Hewison Private Wealth advice team totals 100+ years.

Our investment philosophy was born immediately following the 1987 stock market crash, where the ASX fell around 25% in a single day. Although our founder, John Hewison, knew he had to re-balance portfolios, he was unable to do so because client investments were essentially controlled by external fund managers.

Since then, the foundation of our philosophy is centred around client control and flexibility. No matter the situation we face, these foundations allow us to take affirmative and positive action where necessary within portfolios.

As a long-term investor volatility is more friend than foe.

As your adviser will have explained, volatility in almost every asset class is a reality of investing. History tells us that a significant market correction in some form occurs every 7-10 years.

As a long-term investor, your intention was not to sell during this time. You own quality companies, and should their share prices fall, it may have just provided an opportunity to purchase more shares at lower values dependent on your unique situation.

Corrections are a part of investing. You are prepared.

While all Hewison Private Wealth clients have a bespoke strategy, they are based on the same principals. Those being:

Diversification:  Your portfolio(s) incorporates varying asset classes and diverse individual investments. It allows for re-balancing to occur and opportunities to be taken.

Cash flow: Investments on the Hewison Private Wealth approved investment list predominantly provide strong and steady cash flow in the form of income, dividends, and rent. Your adviser cannot control capital fluctuations but can reliably predict cash flow regardless of market corrections.

You are guided by professionals: Your adviser’s approach to portfolio management is led by a structured and calculated approach. It’s an approach that successfully led our clients through many market corrections, such as the GFC and the initial COVID correction. Advice is provided using experience, not emotion.

While historical events provide no certainty of the future, economic cycles tend to repeat themselves in various ways. Our experience, longevity and expertise will ensure your best interests are always protected and most importantly optimised during times of volatility.

Disclaimer: Any information, financial product or advice provided in this website is general in nature.  It does not take into account your needs, financial situation or objectives.  Past performance is not a reliable indicator of future performance. Before acting on the advice, you should consider whether it is appropriate to you in light of your needs, financial situation and objectives.