– Investors update for 31/12/2023

Whilst the major conflict continues in Ukraine, it has become increasingly clear that Russia has been motivated more by it’s strategic and economic gains as being worth the significant costs in both funds and people. President Putin consolidates his power and even changes the Russian constitution such that he now has powers equal to Stalin (his idol) and even Tsars of old! Apparantly, more than 100 statues of Stalin (i.e. about 90% of all Stalin Statues in Russia today as many were taken down many decades ago) have been erected throughout Russia since Putin became President too. This also betrays Putin’s intentions and the astounding stories we hear, almost daily, of how the Russian system has been deliberately targeting any type of media or political opposition to Putin’s war.

Then, when we add the constant political divisions in the USA between Trump’s views on NATO and Ukraine, and Biden’s administration to assist Ukraine, it’s becoming increasingly gloomy that Putin could be allowed to retain his ill gotten gains and avoid the consequences of his “war crimes” – if Trump somehow wins the next election? It’s still very hard to predict the outcome due to the number of court cases against Trump but it seems that, despite having so many reasons to deem him “unfit for office”, he may still able to gather enough support from these right wing voters to beat Biden.

It’s with these over riding factors and high inflation pressures (some of which is caused by wars) that interest rates will continue to remain high for the year ahead and put pressure on the share markets in general. This has meant that only the larger companies are able to generally do well because they are well established and able to withstand these market pressures for now. However, when interest rates finally do start to fall, investors will start to become less risk averse and small companies could do well once again. That’s when we hope to recover some of our losses.

As a result, our results of a mere 0.5% return has been disappointing but should always be taken as only part of our total financial position because we all have other Superannuation and other investments that complements this portfolio and the higher risk it is exposed to. On the other hand, we have retained significant cash reserves as we wait for better opportunites to increase our portfolio. You can review our current holdings in our spreadsheet here. Aware Inv Portfolio 31-12-23

Although, as we don’t know when the war and interest rates will immprove, we have made a new investment in the Perennial Income Generator Fund (EIGA) which can be invested through the ASX via a CHESS broker and MFUNDs. You can see more about this fund here. We expect this will help to generate a better income whilst interest rates are also higher and grow the portfolio at the margins better than cash. Despite using a Broker, these fund managers often require additional documentation and identification is provided for them to manage our investments and distributions – eg. ABN, TFN, Directors, Beneficiaries, and bank accounts.

Despite the insignificant changes in the total portfolio over the half year, it’s notable that Archer (AXE), ADN, ZIP, and Tesla set us back whilst FMG, BOE, and WBT gains helped us. This is how a portfolio is meant to smooth out returns over time but ordinarily I would have expected a somewhat better result overall. However, as investors, we are in this for the long term and the bounce back could be large when it eventually arrives.

The positive news is that Cryptos value recovered to the point where we were breakeven by late February 2024. This shows that patience sometimes pays off and highlights just how quickly things can change. You can see the chart here: Crypto Wallets 12-3-24

Looking forward, the world remains in a sort of limbo whilst global conflicts interfere with international trade and law. For example the Israeli war in Gaza has resulted in Cargo shipping being diverted from the Suez canal and increasing costs as they travel around Africa instead. Investing internationally always has risks but it’s made worse by the difficult political situation and uncertainty of what the economic superpowers of China, Russia, and USA will do over the next few years? We are all at their mercy and can only hope that they learn to resolve things through peaceful means instead of using their growing military to force their ways?