Our very own Hugh Robertson provides his views on the year that was, where we’ve been and where we’re heading.
As always, the team at Centaur Financial Services are always here to help and answer any queries that you may have.
If you do have any questions or concerns, please reach out and get in contact with our team. We’re here for you.
Transcript:
Speaker 1: (00:06)
Hi All. It’s one year on and we’ve been reflecting a lot about this around the office, about how it felt this time just a year ago. There was all the uncertainty that was happening in both our personal and professional lives and we were starting to worry not only about our loved ones around us, especially the elderly, but also were starting to worry about our portfolios. In February, 2020, we’d hit our high, and were all starting to be very confident. We had a really good 12 months in front of us we felt, and by March 20, in just 20 trading days, over 35% of the portfolios of our direct shares and Australian shares, had gone down in value. It felt like what we’ve been calling the COVID cliff, and we really weren’t sure what to do. And just reflecting upon that is really valuable for us as a business.
Speaker 1: (00:59)
And for you guys as investors, just to remember those feelings and the fear, greed, the doom and gloom, everything that the media was telling us how bad it was going to be. It really looked like it was only going to go one direction and all the commentary everywhere was that it was going to be negative for a long time. But the market’s almost as in 20 trading days it lost 35%, and then it rebounded and really strongly in ahead of any of our expectations. I don’t think there’s anyone out there that could see the markets have rebound as quickly as possible and there’s valuable lessons to be learned in that. The three reasons when we reflect upon why did the market recover so quickly? And when we look at it, there was number one that was unprecedented amounts of government money, coming globally to fix this issue.
Speaker 1: (01:47)
The issue in two fronts, money for vaccine, but also money for economies to keep economies propped up and going, that was really important. On another point was that interest rates went to record lows globally again. So now there’s a disincentive when the government’s putting money in people’s pockets, there’s actually not the incentive for them to save. You also had another benefit of, especially on the Australian front where, government and big business joined forces. And what we think about with the big banks, being able to defer home loans, something that really helped a lot of people keep confidence so that they didn’t have to worry about not only just covid and what the consequences that would be, but they didn’t have to worry about losing their house. So, there’s some really good stuff there. And the third and final reason for the recovery and why it happened so quickly is the rate of change and to developing, trialling, and rolling out the vaccine.
Speaker 1: (02:41)
I don’t think there’s ever been a point in history where we’ve seen this come together for a common good and that’s proved really well. I think I heard the other day that America’s vaccinating 1% of the population per day. Don’t quote me on that. But if that’s true, that’s a remarkable achievement. So when we’re looking at the reasons why the market recovered well, they are the three main reasons why. And what it’s got is it’s meant that the lessons learned from that are even when there is massive volatility, we just need to make sure that we’re talking to an advisor, and that we’re having the courage, conviction, and discipline to stick to our long-term plan. And it also reinforces the need for us all to have our long-term investment plans so that we don’t get caught up in the short-term volatility or news cycles, which are going to obviously try and make us scared.
Speaker 1: (03:30)
So from the Centaur perspective, the things that we’re really proud of is that our flagship fund, our balanced fund, over five years now, has been inception and returned in excess of 9%. The common thing that we talk about internally around the office about how we’ve been able to deliver that is that at five years ago, we never would have felt that we could have done that well for our clients, given the amount of volatility, but through proactive management, through making sure we’ve got great investment options and through always looking at the portfolios, we’ve been able to get good outcomes. And if we want to quickly recap what we did well last year was in our investment options when the market went down and you can be able to see the chart, when the market started to go down around March was the bottom of it and although we didn’t like how far it went down, what we were able to do is we actually bought back into our portfolios here, as the market’s started to rebound.
Speaker 1: (04:44)
This took a lot of courage and conviction to do, but what we saw was around the 27th of March, we added more growth assets. So we actually achieve what the goal in investing always is; we bought low, and that is one of the reasons why our balanced fund has been able to do so well. And in the quarter, since the market’s gone back up, we’ve actually sold and we’ve taken profits out of the portfolio just so we always realign your portfolio to make sure that we’re not taking too much risk, so that you can get the best outcomes and also pass the all-important sleep at night test.
Speaker 1: (05:21)
Our view is and always has been, that a diversified portfolio makes a lot of sense for just about every single investor. What we need to always assess is the level of risk you want to take, your time frame and your level of comfort that you have in what we do. If we can use those three elements combined with all of your goals, with high quality portfolios, with great investment managers and ensure that we’re constantly rechecking and rebalancing to make sure it’s in line with your needs and objectives; I think everyone’s going to have a really good long-term outcome. So from us to all of our clients, thank you for the past year. We know it was so rough on you, it was certainly rough on us trying to get through and navigate and getting up at 3:00 AM / 4:00 AM to watch CNBC and Bloomberg just so that we knew all the knowledge out there, who knows what the next five years will have install for us. No one knows that, but what we’re getting the confidence and the conviction is that as long as we’re always managing, or we’re always talking with you, we should always be able to get you some really good long-term outcomes and reach your goals. Thank you very much for your time. Bye.
