Here are this week's investing and economic insights:
#MarketTrends
Major Asset Classes Are Outpeformed by S&P500
The S&P 500 has outperformed other major asset classes from 1970 to 2023, turning a $100 investment into $22,419.
Corporate bonds and gold also saw substantial growth, while real estate returns were more modest.
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The Insight: How To Find The Opportunities
The historical performance of the S&P 500 suggests strong long-term returns.
Corporate bonds and gold offer diversification, while real estate provides steady, if slower, growth.
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#QuoteOfTheWeek
“An investment said to have an 80% chance of success sounds far more attractive than one with a 20% chance of failure. The mind can't easily recognize that they are the same." - Daniel Kahneman
Perception plays a crucial role in investing. An investment’s potential success or failure is often the same, but our minds perceive them differently.
Always assess risks and rewards objectively, not just based on how they are presented or perceived.
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#What is happening this week?
ASX 200 Plummets: Interest Rate Fears Spark Panic!
In the face of a volatile week for worldwide markets, the ASX 200 encountered challenges, declining by 1.6% due to uncertainties surrounding interest rates and geopolitical conflicts.
The downturn was primarily felt by the Technology and Real Estate sectors, while the Energy and Utilities sectors demonstrated some robustness, recording positive returns.
On the financial policy front, the RBA adopted a prudent strategy, preserving a neutral position as indicated in the records of its March assembly.
Dow Jones and S&P 500 Tumble: Worst Week Since January!
In the United States, stock markets underwent instability, with the Dow Jones and S&P 500 falling by 1.0% and 2.3% respectively, indicating their poorest performance since January.
Nevertheless, a strong March Job Report instilled hope, triggering a 1% recovery on Friday.
Federal Reserve Chair Powell underscored the necessity for continuous proof of inflation approaching 2% prior to contemplating interest rate reductions.
Amazon Pumps $4 Billion into Anthropic: What’s the Catch?
Amazon has increased its investment in Anthropic to $4 Billion. Major tech firms find themselves in a distinctive situation: Each of them holds over $80 billion in cash, which they are unable to utilize for acquisitions due to regulatory constraints.
By investing in GPUs and AI startups, they can retain that value on their balance sheets, thereby preventing it from appearing on the income statement.
These companies are placing a wager with minimal downside and boundless upside potential, which is a highly logical move.
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Best Regards,
James Lim, SFA Founder
Disclaimer:
Stewardship Finance Academy does not provide financial advisory services. The content in this email/website serves solely for general educational purposes and is crafted without taking into account your specific objectives, financial status, or requirements. It is advisable not to depend on any guidance or information from this website. Prior to making any investment choices, it is suggested that you assess its suitability for your circumstances and consult with relevant financial, tax, and legal professionals.
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