Praemium Ltd · ASX:PPS
Praemium — Praemium Business Solutions Conference 2010
13 slides from Praemium's conference presentation, Mar 10, 2010
Slide 1: Praemium Business Solutions Conference: Independent Economic Overview
PRAEMIUM BUSINESS SOLUTIONS CONFERENCE SESSION 1 INDEPENDENT ECONOMIC OVERVIEW Dr Don Stammer 10 March 2010
Slide 2: Disclaimer
Disclaimer The views expressed are general and do not constitute investment advice. These are personal views and not attributable to any of the organisations with which I am associated.
Slide 3: Lessons from the GFC
Lessons from the GFC #1: sustained easy credit and lax supervision lead to boom then bust #2: when banking systems are in crisis, economies are seriously threatened – and policy reactions must be quick and big, even if this creates other problems #3: both the boom of 2003 to 2007 (the “great m
Slide 4: Lessons from the GFC
Lessons from the GFC #4: strong recovery in shares from March 2009 #5: recovery in global economy from 2009H2 – but a two-speed recovery #6: in the US and Europe, pace of recovery has paused – investors are concerned. In leading emerging economies, pace of recovery is quick – investors are con
Slide 5: Lessons from the GFC
Lessons from the GFC #7: stimulus from easy policies will continue in US and Europe until those economies are clearly on course to grow: double dip is unlikely #8: danger that policies stay too easy for too long, producing a wide economic cycle and inflation #9: RBA: it was a global crisis for
Slide 6: World recession hit quickly and deep: but now it's looking V-shaped
World recession hit quickly and deep: but now it’s looking V-shaped
Slide 7: The Australian economy
The Australian economy The mildest postwar recession Reasons: reforms; China; big fiscal stimulus; potent monetary policy; strong banks; immigration Now, a powerful rebound in commodity prices and in business capital spending as a ratio to GDP But low savings, especially relative to Asia B
Slide 8: Inflation: a medium-term risk?
Inflation: a medium-term risk? Inflation averaged 8% over the 1970s and 1980s Inflation has averaged of 2.5% since 1991 Likely to be low over 2010, given the lagged effects from the global recession But risks over the medium term: - policies staying too easy in big economies - monetisation o
Slide 9: The share market
The share market Returns were -55% in the slump; then +60% 3/09 to 10/09; then volatile around a flat trend February reporting season better than expected on average: NPAT +3% relative to expectations EPS -19% on pcp (shows huge dilution) DPS -9% on pcp Strategists are now suggesting following
Slide 10: Interest rates
Interest rates Short-dated interest rates - cash rate raised 4 times over recent months - also, borrowers feel effect from wider margins - the cash rate to be a percentage point or so higher in twelve months time? Medium-dated and long-dated interest rates - have increased since the lows of Q1 2
Slide 11: Australian and US Cash Rates
Ne Australian and US Cash Rates % % 16 16 Australia 12 12 8 8 US 4 4 0 a | oe os | oe oe | a oe oe os | 14 yn 0 1986 1990 1994 1998 2002 2006 2010 Sources: RBA; US Federal Reserve
Slide 12: Does the GFC require us to re-consider the golden rules of investing?
Does the GFC require us to re-consider the golden rules of investing? Invest for the medium and long-term: OK still Diversification: Let us down in 2008, 2009 Have a buffer of safe assets to draw on in the tough times: More important than was often recognised
Slide 13: Does the GFC require we change the golden rules of investing?
Does the GFC require we change the golden rules of investing? Be careful with debt and with opaque investments: another lesson often forgotten during booms Time in the market is more important than timing: yes, but it’s also a good idea to lighten off on growth investments in a boom and add in t
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