How quickly things change

Have you been struck over the last couple of months by just how quickly things can change? It seems like no time since we were celebrating our all time high on the Australian Share Market and now we see the market 28% lower.

We have seen the RBA (Reserve Bank of Australia) swing from “there is no relief in sight” on interest rates, to admitting that the next move will be downward – and maybe very soon.

Many economists were predicting, around Budget night in May, that the $A and $US would be at parity within the next 12 months. Since then we have seen around 11 cents wiped off the value of the $A.

Most importantly, we have also seen a substantial reduction in confidence about the Australian economy after a seemingly never-ending run of good news!

The following table shows some of the recent movements that we have seen.

What is the message?

For investors, ensure that you don’t have all your eggs in one basket. Investing is very much about diversification and taking a longer term view.
For those in business there are various things we should take note of:

	Economic cycles can change very rapidly, having a significant impact on business. You need to be prepared.
	There are many things you can control in your business but there are many that are outside of your control. You must plan for them.
	You should regularly undertake a risk assessment of your business so that you are aware of and manage the relevant risks.

We would be pleased to assist you with undertaking a health and risk assessment of your business or a review of your investment strategy in this volatile environment.

Published : 2September 2008