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The key focus of Alliott Investments is the prudent and disciplined approach to the creation and protection of our clients wealth.
Rarely does one see such a bi-polar set of opinions about the economic and investment outlook as we do now.
On one side we have a marriage of two factors. First, after more than 2 years of economic mayhem people are hanging out for good news. Second, governments want to be bearers of positive news. In October 2008, Governments waded in and wrested control of the financial/banking sector in an effort to rescue the world. But now they sense they have thereby taken on responsibility for the outcomes.
This combination is a spin doctor’s heaven. The people want to hear good news and, in keeping with their new leadership role in the financial sector, governments want to supply it. “We’re out of recession”, “Property stabilises”, “China to grow at 10%” etc etc. And there are elements of truth in all of these. But wait, there’s more.
On the other side, we have many highly regarded economists and others warning not all is well and rosy. The problem of massive debt has not gone away, just shifted. Effectively governments worldwide moved it from banks to tax payers. Unfortunately debt makes the system more fragile and less able to withstand shocks. Not too many more Dubai/Iceland type defaults please, nor scares like Greece teetering on the brink. And debt means growth can no longer be funded by borrowing. Oh bother, because that one used to be Plan A.
While governments are tending to emphasise only the (crumbs) of good news, many seasoned analysts see the situation like someone carrying all the eggs in one basket, whilst roller skating on a greasy linoleum floor. If the skater keeps balance, we’ll get though to better ground. All agree on that. But if there’s a slip, we really could be back in dire straights.
Statements now seem bi-polar because so often they focus on one side of the coin; the skater will make it, or the skater will not. And the two outcomes are radically different. We are not looking at the usual debate of “Will growth be 2.2% or 2.5% this year?” (little difference), but looking at “Will it be 1.5% or -2.0%?” (good or shocking).
We think that by far the more likely scenario is that the world will manage to slowly grind through to a lethargic recovery. But at the same time we are wanting to see robustness in clients’ investment strategies, taking account of the fact that even modest growth for the foreseeable is by no means a given.
Email db@alliott.co.nz or phone Alliott's on (09) 520 9200 and ask for David Burt, Alliott Investments Limited.
Gerard is an insurance consultant who operates his own independent brokerage company specialising in both business and personal risk protection and KiwiSaver advice.
In 2008 and 2009 Gerard was named Professional Investment Services (NZ) Adviser of the Year.
David is an independent investment specialist with responsibility for managing portfolios for many of Alliott NZ's clients.
He offers a consultancy service advising on such matters as reviewing the investment strategies of a family trust, appraising managed portfolios and calculating retirement or other personal funding needs.
David also can assist with the migration of UK pension funds to New Zealand and has found that, in most cases, a proportion of the funds can be immediately freed up as ready cash.
David Burt’s Disclosure Statement is available free of charge upon request.
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