Many popular structured products from the past years are sitting under water. Our ‘capital’ doesn’t feel very ‘protected’ now that most of them aren’t making money for us and if we close them out it
will actually cost us money. As the share market finally shows some signs of life and old simple managed equity funds roar back into life, there are a lot of capital protected structured products
that have left it all behind and are just invested in a bond or a term deposit or whatever the product issuer calls it. And doing no more or no less than they ever were set up to do.

So far there have been no bankruptcies of the banks providing the capital protection on sale in Australia, so the products are still on track to give investors the 100% of capital back at the maturity
date. A great investment to brag about it isn’t, but it isn’t Armageddon either. If the equity markets had continued to rise, the structured products would have continued to make good returns. Those popular products were almost all designed for a bull market, and bullish investors. The structured products that would have produced good returns when equities fell just weren’t very easy to sell, back then.

READ MORE

The recent share market rally of the last two weeks (All Ords 14.3%, S&P 20%) has inspired people to speculate that this bounce may lead us on the inevitable road to recovery that will return to markets and economies one day. While it is difficult to say for sure that this is the start of the next great bull run, many commentators do believe that we are unlikely, in this cycle, to see the lows experienced at the start of March.

In our last article for BDM Direct we discussed the Armageddon model and how we looked at pricing shares based on peak to trough analysis.  If in fact we have seen the lows of this current cycle, the model proves even more valuable in assessing what shares look attractive on a valuation basis, the Armageddon price that might be achieved if you get price/earnings multiple expansion on an expected recovery, and base case dividend yield assumptions.

READ MORE

The media is a hub of negative sentiment because bad news sells. Certainly the media has been particularly critical of the financial status and future of Australia and Australians. So is it our own obsession with other people’s misfortune that is pushing the market lower and lower? Who knows! The fact is we are hearing many people, who are NOT at the frontline, argue that the world is over; and the readers are lapping it up.

So it’s time to find out whether or not they are correct by reaching out to some people that live, breath and sleep the “financial crisis” - Craig Hughes (Genesys Financial Planning), Chris Heyworth (Pentad Group) and Brian Willet (Private Wealth) answer our questions about the current economy.

1.      Do you feel that the financial world as we know it is   ending?

READ MORE