Financial Tools
  Client Portfolio Access
  New Client Kit
  Enquiry / Seminar Registration
Hot Issues
An investor's personal trainer
SMSF trustee penalties going up
Contraventions rife among non-advised SMSF trustees
Dealing with investor uncertainty
Reserve bank gives the economy a lift
Retirement planning: the gap between intention and reality
Market Update – April 2015
Budget 2015 - some professional opinions
Australian Government - Budget 2015
What does the ATO want from you?
Making sense of the new excess contribution rules
Greying, working and contributing
Simple-yet-smart investment housekeeping
Market Update – March 2015
Customer-centred innovation underpins high satisfaction among financial advice customers
Two sides to the age profile of SMSF members
Actuaries call for end to superannuation policy tinkering
ATO urges caution on pensions
Market Update - February 2015
Aussie economy shifts gears as structural changes take hold
The catch 22 of retirement savings
Are there reasons to help the tax man do his job?
Some financial terms explained
Small business paradox
Good financial planning finally has a value: 23% more income in retirement
Articles archive
Quarter 1 January - March 2015
Quarter 4 October - December 2014
Quarter 3 July - September 2014
Quarter 2 April - June 2014
Quarter 1 January - March 2014
Quarter 4 October - December 2013
Quarter 3 July - September 2013
Quarter 2 April - June 2013
Quarter 1 January - March 2013
Quarter 4 October - December 2012
Quarter 3 July - September 2012
Quarter 2 April - June 2012
Quarter 1 January - March 2012
Quarter 4 October - December 2011
Quarter 3 July - September 2011
Quarter 2 April - June 2011
Quarter 1 January - March 2011
Quarter 4 October - December 2010
Quarter 3 July - September 2010
Quarter 2 April - June 2010
Quarter 1 January - March 2010
Quarter 4 October - December 2009
Quarter 3 July - September 2009
Quarter 2 April - June 2009
Quarter 1 January - March 2009
Quarter 4 October - December 2008
Quarter 3 July - September 2008
Quarter 2 April - June 2008
Quarter 1 January - March 2008
Quarter 4 October - December 2007
Quarter 3 July - September 2007
Quarter 2 April - June 2007
Quarter 1 January - March 2007
Quarter 4 October - December 2006
Quarter 3 July - September 2006
Quarter 2 April - June 2006
Quarter 1 of 2011
Uninformed and impatient
Perspective on the tragedy in Japan.
The essentials of Corporate cash flow.
Out in the cold (the self employed)
Some terminology explained.
Market Updates - February / March 2011
Improving financial literacy is an objective we should all have.
Why baby boomers face a super sprint
Don't buy yet - first calculate the stock's P/E and PEG ratio
SMSFs:  Age matters
Some more terminology explained
Market Updates  -  January / February 2011
Secure File Transfer
CPI won't stop rate rises, says Economist
Super contender
Super birthday ahead
Some terminology explained
Market Updates -   December / January 2011
Perspective on the tragedy in Japan.

By Robin Bowerman
Smart Investing
18th March 2011
Principal & Head of Retail, Vanguard Investments Australia

Earthquakes, a tsunami, and nuclear emergencies have taken a toll on Japan's already beleaguered financial markets, with Tokyo stock prices experiencing major declines.

"We're witnessing a terrible human tragedy in Japan, and portfolio considerations are obviously secondary, but such upheavals are the reality we have to prepare for as investors," said Joe Davis, head of Vanguard Investment Strategy Group and our chief economist.

The outlook for Japan

With events unfolding rapidly, it's too early to assess the long-range implications for Japan's economy-let alone the world's-but some degree of volatility is to be expected in the near term.

In addition to the immediate humanitarian concerns, investors may worry that a significant downturn for the Japanese economy will have global ramifications. Despite a lengthy slump, Japan remains a major force in the international economic arena, boasting the world's third-largest economy in terms of gross domestic product (GDP)-recently ceding the number-two spot to China-and the country is a financial, industrial, and technological giant.

But from a purely economic standpoint, Japan's current troubles have come at a time when the country is already facing severe pressures, Mr. Davis said.

"Japan has spent 20 years struggling to regain its economic footing after the collapse of its real estate and stock-market bubbles in the early 1990s. Even before this crisis began, the Japanese government was carrying an enormous debt burden, and the country would have been fortunate to experience GDP growth in the 1 percent to 2 percent range for 2011. As a result of these tragic events, the risk of recession in Japan is markedly elevated."

However, Mr. Davis said, history has shown Japan to be remarkably resilient.

"Over the past century, Japan has bounced back from many disasters, both natural and man-made. While Japan may never regain the commanding position it enjoyed in the 1980s, there's good reason to think that the country will be able to rebuild and recover over time."

The importance of diversification

As with recent political unrest in the Middle East and northern Africa, the crisis in Japan underscores the value of portfolio diversification, Mr. Davis said.

"Whenever we see a significant downturn in one particular area, we're reminded of the need for broad diversification," he said. "Any market can experience financial and economic crises as well as natural or man-made disasters. Experience shows us that the best preparation is diversification-across countries, market sectors, and asset classes."

Japanese equities play a role in many Australians' portfolios, for example as of February 28, 2011, Japan-based equities made up 10.4 per cent of Vanguard's International Shares Fund.



  Financial Advisor | Financial Planner | Financial Adviser | Financial Planning | Financial Planner Sydney