In the latest edition of the Sound Investing podcast, published by FundAdvice.com, Paul Merriman, Tom Cock and Don McDonald share their insights into the last six months of poor share market returns, the outlook for the future, the returns from residential property in the US and comment on how to judge the quality of the advice you are being given.
One warning, the radio show is 51 minutes in length and will suck up 23MB of download.
If these constraints are not a problem, I recommend you take a look at the latest podcast - Sound Investing - July 11, 2008
For those who have limited time and/or limited download capability the following is a brief summary of the more relevant material that was covered:
Investment Returns for the last 6 months
Tom Cock provided a run down of the recent market returns with some interesting low-lights for the past 6 months - particularly the Chinese stock market being down 43% and India's SENSEX down 29%.
However, earnings growth is expected to be 8.1% in the US over the 2nd quarter of 2008, up from 7% last year.
The presenters conclude by suggesting that young investors are benefitted by the strong falls in markets as they are temporary set backs and younger investors have the advantage of picking up these cheap stocks - "The Ultimate Sale".
What worked in the first 6 months of 2008?
Investing in commodities was the stand out performer over this period. For those invested in index funds you were exposed to these gains without having to take a speculative "bet" on commodities.
How to judge the quality of financial advice
The key conclusion from the discussion was not to base your judgment on the current market environment. Rather, what were advisers recommending in the past and do they have a strong conviction as to what to recommend rather than jumping on to band wagons once the bull has bolted e.g. now recommending that investors buy into energy stocks when they weren't doing this a year or so ago.