Market & Portfolio Update - January 2021
January continued the eventfulness of 2020 with the US presidency and Senate elections being finalised, continued social unrest in the US, new strains of Covid-19 and the roll-out of vaccines around the world. The result for share markets was a slight easing in performance for the month. Arguably, a much-needed breather after strong returns in the second half of 2020.
Video game retailer GameStop stole headlines during January. GameStop, among several other companies, was subject to a ‘short squeeze’ where a large number of retail traders joined together to drive the share prices of these companies up, forcing several hedge funds to also buy the stock to close their short positions (a trading strategy where the investor borrows stock from another investor and sells it, betting the share price will fall).
The GameStop share price has since reversed much of its rise, causing a wild ride of gains and losses for those involved. For our Booster clients - these portfolios don’t have any exposure to GameStop – and Booster don’t use short selling either, so clients’ savings are not exposed to similar ‘short squeezes’.
Booster also took advantage of markets moving around as these events unfolded to tweak their funds’ Australian share investments more in favour of those businesses that are likely to benefit the most from the global economy reopening – from banks to travel and recruitment companies – adding to allocations that we bought during December.
Consilium’s approach reminded us that while Indexing can be an effective strategy, not all indexes are the same. An example is when Tesla was added to the S&P 500 recently, and the world’s largest index providers all scrambled to pay $4.6 Trillion in to buy shares of Tesla. This caused a huge surge in the price, however, Consilium portfolios were able to patiently wait until prices came down. This led to all 18 Consilium portfolios outperforming their respective indexes for the quarter.
How much money do you really need to retire?
“How much do you think you will need to retire?” It’s the kind of question that can spark anything from a shrug to a nervous laugh around the dinner table. After all, most of us are so busy working hard, raising families, and paying the bills that it is easy to put retirement in the “future me will figure it out” basket.
But those dreams, whether it’s more time with the family, travelling, or simply slowing down, all come with a price tag. The real question is: how do you make sure you will have enough to live the retirement you picture?
Lifetime Book Club: Dare to Lead by Brené Brown
“Leaders are not necessarily those with titles, they are the ones who take responsibility for finding potential in people and processes.”
That is the heart of Dare to Lead. This is not your standard leadership guide filled with generic advice and motivational quotes. It is a thoughtful, research-based exploration of what it really takes to lead with courage and authenticity in today’s world.