Kicking off the new roaring twenties

Thursday, 2 January 2020
Adelaide, Australia
By Bernd Struben

  • Starting points
  • In the mailbag…war on cash, alive and well

Welcome to 2020!

I hope you’re as excited as we are to usher in the first trading day of the new year…and new decade.

Yes, we’re aware there’s some controversy over when the new decade officially commences. But as this is the start of the 10-year period we will all call the ‘20s, we’re happy to go with ‘new decade’.

Sticking to the year ahead, our editors and analysts look forward to bringing you a range of new opportunities to help grow and secure your wealth. I’ve had a sneak peak at some of the investment ideas you’ll be hearing from them in the weeks ahead. Whether you choose to run with these opportunities or not is up to you. But they’re all well worth looking into.

Now, if you’ve read the mainstream financial news today it may have dampened your enthusiasm for the potential returns the new year offers.

Like this, from The Sydney Morning Herald:

Share markets are coming off a fabulous 2019, where stocks around the world climbed in concert. But for the next year – and decade, in fact – Wall Street traders are telling investors to set their expectations considerably lower.

“People need to have a more realistic expectation of what returns are going to be,” says Greg Davis, chief investment officer at Vanguard. “That means those saving for retirement will likely need to set aside more, because returns won’t be as generous as what we’ve seen over the past decade.”

Greg Davis does have a point. But don’t abandon hope of making outsized gains in 2020 just yet.

Remember, the stock market is just that. A market of stocks. Even if the overall returns from an index falls from 20% to say 5%, there will be some stocks that return far less and others that return far more.

In 2019, for example, the ASX 200 climbed 18.4%. Add in dividends and it gained 25%. Certainly you won’t hear anyone with an index tracking fund complaining.

But those gains pale in comparison to the 144.0% gain in 2019 from fintech disruptor Afterpay Ltd [ASX:APT].

Or EML Payments Ltd [ASX:EML], which gained 206.8% in 2019.

(You can find Ryan Dinse’s top financial sector disruptor stock picks for the year ahead here.)

Of course, the leading prospects in 2020 go far beyond the fast moving fintech sector. There are select opportunities in small-cap miners alongside technology, commodities and medical stocks…to name a few. Of course they won’t all perform like Afterpay and EML, but even as you read this, our editors and analysts are running their slide rules over the lot of them.

Now a pause for a look at the markets.

Markets

On Tuesday, the Dow Jones Industrial Average rounded off 2019 by closing up 76.30 points, or 0.27%.

The S&P 500 closed up 9.49 points, or 0.29%.

In Europe the Euro Stoxx 50 index closed down 3.32 points, or 0.09%. Meanwhile, the FTSE 100 lost 0.59%, and Germany’s DAX closed down 88.10 points, or 0.66%.

In Asian markets Japan’s Nikkei 225 is closed for the New Year holiday. China’s CSI 300 is up 1.42%.

The S&P/ASX 200 is up 18.60 points, or 0.28%.

West Texas Intermediate crude oil is US$61.43 per barrel. Brent crude is US$66.00 per barrel.

Turning to gold, the yellow metal is trading for US$1,518.87 (AU$2,164.25) per troy ounce. Silver is US$17.92 (AU$25.53) per troy ounce.

One bitcoin is worth US$7,203.43.

The Aussie dollar is worth 70.18 US cents.

Starting points

When it comes to stock markets’ potential upside in 2020, you also need to keep in mind that the big market gains in 2019 all came off the back of the big correction we had in late 2018.

That correction saw the ASX 200 shed 14% from mid-August through mid-December.

The US S&P 500 lost more than 17% over roughly that same period.

And the tech heavy NASDAQ — 2019’s stellar performer, gaining a whopping 35% — lost over 21% in the final months of 2018.

That perspective puts a different spin to the Wall Street traders’ advice that you must set your expectations ‘considerably lower’ in 2020.

And nothing says you must hold onto your entire current stock portfolio for the duration of the year.

After a stellar 12 months run up in share markets, we could well see another sharp sell-off this year. What event — or events — spark any potential sell-off remains to be seen. But it will likely be from that new low point that the next big run of gains will be made. And like the rebound of 2019, I expect the new run up will be fuelled by even more easy money flowing from the world’s central banks. Enough, at least, to see us into 2021.

The point here is that you may want to be nimbler with your investment strategies this year than last. That doesn’t mean you need to be trading in and out of stocks every day. But if you’re prepared to go partly to cash, or even short the market when it looks set for a prolonged slide, 2020 could prove to be even more lucrative than 2019.

Port Phillip Publishing’s stock trading services are designed to help you do just that.

Like Murray Dawes’ Alpha Wave Trader. Using what he calls the ‘slingshot method’, Murray aims to keep you one step ahead of any big stock or index moves. Be they up…or down.

You can find out more here.

In the mailbag…war on cash, alive and well

We’ve spilled a lot of digital ink over the years warning of the global war on cash.

That war has nothing to do with fighting terrorism, paedophiles, or drug crimes. And everything to do with handing governments and their central banks total control over your financial transactions and privacy.

Once cash is abolished, your every purchase can be duly tracked and recorded. Access to your own wealth can be restricted at the stroke of a key. And you could find yourself enjoying a world of negative interest rates. One where the bank takes some of your money from you each month, with no recourse to withdraw your money in cash and bury it in your garden.

Global governments, including here in Oz, look to have slowed down their race to abolish cash this past year. Likely bruised by pushbacks from business groups and some vocal libertarians.

But that doesn’t mean they’ve taken their eyes off the prize.

Shortly before Christmas, we received this letter from subscriber Rick:

Again you are correct… I went to the ANZ here in Tasmania on Friday. First time ever, the teller asked to see my driver’s license for my cash withdrawal.

I asked what for. She replied we have to push these two buttons now which notifies the Govt of my withdrawal and it now wants to see your license and took details.

I withdrew 5 grand for Christmas and bills. I asked what’s the minimum you can withdraw without the ID? She didn’t know. An ID to withdraw cash. OMG.’

Thanks for writing in Rick. Last I checked the idea was that government should be ‘of the people by the people’. Maybe we need to hold government to the same standard. Meaning every time any government funded agent or agency — of any form — wants access to cash, we should all receive the details.

That’s a wrap for today.

Cheers,
Bernd