MARX, MASKS & MASKING TAPE - Financial Services Melbourne | Kuda Wealth

MARX, MASKS & MASKING TAPE

07-Aug-2020
Lifestyle
by Michael Davie

We have several clients that are living alone and want to let you know we feel really awful about the degree of isolation you may be facing with these increased lockdown measures imposed by the Andrews Government.

When Kellie tells me that the highlight of her day is driving to collect the mail from our post box, I realise just how quickly we’ve adjusted to this new environment. And just as she began to accept the changes to her social calendar, she was eclipsed by the speed of the 180-degree change in health advice regarding face masks!

Speaking of masks, the performance of the technology Mega-Cap companies of the United States have been masking the real damage to the U.S economy as it experiences bubble-like highs while unemployment has simultaneously risen faster in the past three months than over two-years during the Great Depression. And then we’ve seen Black Lives Matter protests masking the motives of a small number of Marxist-loving individuals more interested in disruption and chaos than the plight of those in black communities.

It was Karl Marx himself who claimed, “history repeats itself first as tragedy then as farce” and we are no doubt witnessing this in the reckless behaviour of corporate America. The cowboy, back-slapping, risky behaviour of the boardroom was meant to stop with the global financial crisis of 2008. Back then, we had corporate American greed pushing un-regulated borrowings upon people who could not afford lending, leading to the sub-prime problems causing the economic crisis. Now we’re watching history repeat itself with active deployment of the Fed Reserve and the central bank bailing out companies considered too big to fail, ensuring that corporate governance continues to not matter and masking the ongoing viability of many American companies.

Closer to home and without sounding crass, the Covid-19 virus has done to the Victorian economy what the security guards were doing to some of those in quarantine hotels…

Since the beginning of March, these restrictive changes have not been easy. However, I say that coming from a family of six, where we are still able to have my three older children in Ruby, James and Thomas joining Milly, Belle and me on a week-on, week-off basis. At a minimum, we’ve had the benefit of close family engagement inside the home, despite exhausting most of the good material on Netflix and the usual feelings of cabin fever.

My kids have been working through their online learning material, the school has been very supportive, adaptive and flexible and Kellie, Milly and I are all in the rhythm of working from home.

I know several of my clients are not so fortunate. Some have even lost loved ones recently; the current situation no doubt magnifying the degree of loneliness, isolation and grief experienced.

Our thoughts are with those of you who may be suffering during this extended period of lockdown. Please know that we are only a phone call, skype or zoom meeting away, should you wish to discuss your finances, or simply re-connect during this difficult time.

One thing I’ve learnt through this experience is that a political role is certainly not on my agenda. It is the ultimate lose-lose situation; balancing the health and safety of your citizens against the enormous financial, emotional and commercial consequences of your decisions. Personally, I struggle enough just trying to find a balance disciplining my children!

No matter which side of the political spectrum you fall into, these decisions are complex and the costs astronomical. I understand the argument for increased lockdown measures from the broader health containment perspective, but also see the argument against them from a long-lasting financial, economic, emotional and mental health perspective.

My old boss was infamous for his constant use of the phrase “it is what it is” – inferring we should simply accept existing circumstances and policies rather than expend energy trying to enact change to potentially improve the situation. Whilst I found his use of the cliché frustrating at the time, unfortunately I’ve had to adopt this mindset in relation to the next 6 weeks, whilst still ensuring I do all I can to support small business throughout this period.

However, as business owners and employees are facing despair, the markets have been extremely resilient as evidenced by the fact the U.S Nasdaq has reached all-time highs, led by gains in the mega-cap tech stocks. Gold is showing the strength of an ICU nurse working a double shift and Bitcoin has come off the respirators and is showing a remarkable recovery, although I must admit that my faith in cryptocurrency is about as strong as our health minister’s faith in hydroxychloroquine for treatment of Covid-19.

Despite the growing backdrop of mounting economic damage to the broader economy, the gap between Wall Street and Main Street has continued to expand; the masking tape holding Wall Street and Main Street so tight that it’s almost at breaking point. This, in my opinion, should result in a pull-back in equities in the near to medium term.

If you believe the polls, Joe Biden appears to be leading Trump as we head towards November’s election. I’m not sure what that says about the polls, what that says about Trump or what that says about America, however when we have a heavily-scripted guy locked in his basement away from cameras leading the incumbent, it shows that this election is really just a race between Trump and Not Trump.

Whilst a Democrat victory is likely to place further downward pressure on Wall Street, central bank intervention cannot continue at its current rate and we are likely to see a pull-back in markets no matter who takes the reigns. And if you do not agree with anything I have said above, that’s okay - in the words of Joe Biden, you’re simply a “lying dog-faced pony soldier”.

Micro-cap Monopoly Update

We introduced a competition at the start of the year to showcase small Australian companies that trade on the Australian Stock Exchange. Many of these companies get little to no media coverage and due to the smaller value in their business model, they are both risky and volatile.

The winner of the Micro-Cap Monopoly competition will win a $2,500 flight and accommodation voucher. The criteria is based upon clients and Kuda Wealth Facebook followers randomly allocated micro-cap stocks at the start of the Calendar year. The client or follower with the stock that demonstrates the greatest capital uplift for the 2020 Calendar year will be declared the winner.

The winner will be able to use their voucher in 2030 when Dan Andrews lets us all out of the house for travel once again 😊 By the way, I hear that cruises are going cheap at the moment.

  1. Sonya S – AUTECO MINERALS LIMITED (AUT) +2,100%Auteco Minerals Ltd (AUT, formerly Monax Mining Limited) is an ASX listed Company with a focus on copper-gold nickel and diamonds on the highly prospective Gawler Carton, South Australia. Company has acquired a large tenement holding in the highly prospective and underexplored Fowler Domain in western South Australia.
  2. Julian B – AURIS MINERALS LIMITED (AUR) +900%Auris Minerals Limited (AUR, formerly RNI NL) is a West Australian mineral exploration company with a primary focus on copper-gold projects in Western Australia. It has also acquired Chunderloo area.
  3. David P – TBG DIAGNOSTICS LIMITED (TDL) +800%

TBG Diagnostics Limited (TDL, formerly Progen Pharmaceuticals Limited) is a biotechnology company focused on the global molecular diagnostic industry and is involved in the development, manufacture and marketing of molecular diagnostic kits, instruments and services. With its research and development based in the US, Taiwan and China, TDL manufactures its products in its ISO13485 certified facilities in Xiamen, China serving the clinical labs of both hospitals and independent reference labs, blood centers and bone marrow registry labs around the world.

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