In creating our C-Suite Outlooks with our Collective, it became very obvious to me that the thinking we have as Australian investors, and possibly even as an industry, will have to change considerably over the coming years.
By this, I am mainly talking about our delusional thinking. The delusion that Australia can keep avoiding an economic downturn that other western countries have experienced; our delusions that what we are doing at the moment is more than enough to keep us ahead of the game; (it’s not) and the delusion that China is the next big thing – it’s the story of the century, not the year.
Human beings are funny things. As a rule, we generally move toward pleasure and away from pain, even when those decisions cost us. Sam Hallinan of Nikko Asset Management talks about the fact that investors who are getting the confidence to participate in a market that has been running for some time could be a bad decision. In fact, he top of the market is the worst time to start to invest. An obsession with value is driving his view of the delusion that it’s all going well, and we should continue as we have been.
This comes on the back of Bryce Doherty of UBS Asset Management debunking the delusion that we can continue to succeed by focusing our investments predominately in Australia. He believes with a population of only 24 million there is no way Australian companies can provide enough opportunities for growth for investors the way a country like China can.
Douglas Isles at Platinum talks about the lack of investment we have in Australian infrastructure, education and our future prosperity compared with countries like China. He believes that out of crisis comes excellence and sites some great examples where pressure and hard times resolved in better policy and decision making, meaning better yielding investments.
Our delusion that the good times are going to keep coming in Australia is definitely debunked when you hear this conversation.
Jenny Josling of Orbis Investments discusses the delusion we have as a society around easy access to credit. Our country has one of the highest debt ratios in the world (in fact our net public debt rose to 121.90 per cent of our GDP in the second quarter of 2017¹), which led Jenny to ask if credit cards even have a meaningful place in our society? She also addresses the delusion that equal representation on boards will happen on its own, and asks if perhaps quotas are the answer?
The role of advisers is never more important in these times. For those already invested, they need wise counsel as the world continues to change, and for those who are thinking about it, they need their expectations reset from the possibility that the next 5-10 years will be like the last: they need to be going into investing with their eyes wide open.
We have always had a big goal ahead of us, which is to make our educational content engaging, and entertaining. While we don’t always get it right, I believe the caliber of conversation and people in this series will get you thinking differently about what lies ahead – or confirm the suspicions you may already have.
As usual, I will be out in the public arena talking about the good work and vital role advisers play. Because if our delusions are about to be smashed, your communication skills are going to be in very high demand before people make poor decisions without you.
Sometimes the truth is hard to hear, but there is always opportunity in change. I look forward to helping you identify where those green shoots are, and guiding Australians to join you.
Until next time,
¹https://tradingeconomics.com/australia/households-debt-to-gdp
