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Introduction to Financial Planning

Jul 29, 2021 9:38:59 AM

Introduction to Financial Planning

Working with a professional financial planner can give you confidence and peace of mind that your financial future is secure.

There are many myths and misunderstandings about financial planning, that they are only for the wealthy, that they only push their products or the ones that make them the most commission, and even that they are expensive and a waste of time.

Firstly, all the above is not only false, but it is almost entirely the opposite.

Financial planning is about developing strategies to help you manage your financial affairs and meet your life goals – and the first step is to make sure you have access to the right advice.

An excellent financial planner sits down with you (and your partner if applicable) and sorts through your current financial situation, your future desires, and your capacity to bridge the gap from where you are now to where you want to be.

You should know that a financial planner can be beneficial to you regardless of your income level. But they’re most beneficial to someone seeking specific advice about their spending, saving, earning, or investing strategies (or lack thereof). A financial planner isn’t meant to teach you the fundamentals of personal finance but to show you how to use your money as a tool to accomplish what you want.

Your financial planner will form objectives to suit your short-, medium- and long-term strategies to achieve those objectives and recommend a range of financial services and products to achieve those objectives – hopefully, sooner rather than later.

To become a Financial Planner in Australia, one needs to meet the minimum standards set by the Australian Securities and Investments Commission (ASIC). From 1 January 2019 the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 requires new financial advisers to complete a bachelor or higher degree (or equivalent qualification).[1]

This new ruling requires even the most senior existing financial planners to meet the same minimum qualification standards that until the 2017 amendments were not in place. This is a great piece of mind for you as a client of the ‘new breed’ of financial planners.

In addition to their qualification, your financial planner should be a member of the FPA or the Financial Planning Association of Australia, which mandates that planners must, along with serving you as a client, complete a large amount of CPD or Compulsory Professional Development.

That means that they are going to be upskilled, trained and proficient in the newest and most advanced products and services to help you achieve the financial success and freedom you are looking to realise.

Financial planning is the sum of many parts, but most of all, as the name suggests, it is a plan.

Remove the subjectivity, look at your future through an objective lens.

If you are not from a business background, this may be a little hard to comprehend, but bear with us. So think of yourself as a business (and you as the CEO), and your financial planner, your CFO (chief financial officer) who has to map out the most prudent, logical and realistic roadmap for your business (you) to achieve the objective set by the CEO.

Every business has a business plan, a set of S.M.A.R.T Objectives (Specific, Measurable, Achievable, Relevant, Timely) that guide their strategies, their operations, marketing, sales, you name it.

[1] https://www.seek.com.au/career-advice/role/financial-planner

Apr 30, 2020 8:06:32 PM

2020 will forever  be the year COVID-19 gripped the world

2020 will forever be the year COVID-19 gripped the world and the sent global equities into free-fall.

Although many of us are not strangers to stock market crashes – there are some unprecedented circumstances around this particular COVID Crash which suggests that it may be more malignant and less temporary than its predecessors – leaving a lasting change on investor behaviours whilst hindering any chance of ‘quick knee-jerk recovery.’

Some prudent questions Investors should be asking themselves given the current circumstances…

What are the medium to long-term of effects of sustained quarantine?

The world has never endured a sustained quarantine where global economies have been stripped to bear essential goods and services only. A sustained quarantine – more aptly, sustained unemployment - could have devastating and permanent effects on both the micro and macro economy.Unlike the recent COVID19 Crash, immediately following the 2001 and 2008 Crashes, Consumers around the globe could return to work the next day and continue grinding the gears of their respective economies – with unemployment peaking at 7.1% and 5.9% in both 2001 and 2008 respectively(https://tradingeconomics.com/australia/unemployment-rate)

Treasury Data in Australia indicates that without the JobKeeper allowance unemployment rate could be as high as 15% as of April 2020 – for some context, during the Great Depression levels of unemployment hit 20-25%.

Is unemployment artificially supressed due to JobKeeper allowance?


Unemployment is a lagging indicator – Q1 unemployment was 5.1% which is forecasted to rise approximately 10% in the June quarter (https://www.abc.net.au/news/2020-04-13/coronavirus-unemployment-covid-19-treasury-figures-jobless-rate/12145542

Recipients of the JobKeeper Allowance are classified as employed according to ABS reporting - which leaves room for speculation that it could well in fact be a lot higher.

Moreover, there will a prolonged period between when the Government can no longer afford to continue JobKeeper Allowance payments and when we see aggregate demand restored to pre-virus levels.

The longer this period the higher the potential unemployment rate will climb – especially pertaining to small to medium sized businesses who cannot afford to absorb demand lag.

Is there sufficient room for effective Monetary Stimulus?

In short, NO.

The Modern Monetary Theory adopted by Central banks the world over, have become solely reliant on the swift adjustments of interest rates to remedy any economic downturn.

However, it seems this trend is simply no longer viable.

During Recession, Central Banks reduce interest rates and increase the Monetary Supply -  through Quantitative Easing – which in turn increases inflation and drives up asset prices. This has become known as expansionary monetary Policy – and has been the Get-Out-Jail-Free Card for central banks for the past 40 years.

However, nothing is free in this world…

Expansionary monetary policy has ultimately increased global debt and has now pinned global interest rates to near zero.


In May of last year Ray Dalio, CEO of Bridgewater Hedge Fund, described the diminishing effectiveness that Quantitative Easing and lowering interest rates has on stimulating an economy in downturn. Ultimately foreseeing a monetary apocalypse in which there would be an i) economic down-turn and ii) where interest rates would be pinned to zero.

Lo and behold here we are 1 year later….

It may be quite dry to those of other affinities, but I  encourage you all to read it: https://www.linkedin.com/pulse/its-time-look-more-carefully-monetary-policy-3-mp3-modern-ray-dalio/

Dalio goes on to detail that in this scenario there is little to no room to lower interest rates and that QE effort would only lead to hyperinflation. He describes how Governments and central banks would need to move to a new version of Modern Monetary Policy – which he calls Monetary Policy III – more reliant on fiscal stimulus rather than monetary.

As investors, you do not need to need to concern yourselves with the minutiae of this inevitable cataclysmic shift in global monetary policy – all you need to know is that such a change would be lengthy, arduous and will riddle global equities in speculation for a continued period.

 Can we find refuge in Gold and Silver?

To an extent…

Investors tend to change asset classes depending on the perceived risk in the markets. Stocks are considered to be riskier assets than bonds, precious metals and cash. Therefore, ‘a market where stocks are outperforming bonds, precious metals and cash is said to be a risk-on environment’. https://www.investopedia.com/terms/r/risk-on-risk-off.asp

Precious metals are what we call Inflation hedged assets which means they are risk-off and as such are negatively correlated to stocks.

Whilst a portfolio which is negatively correlated to the stock market is great during crashes, it is adversely susceptible to quick changes in investor sentiment should the market consolidate sideways – which is what can be expected as the stock market treads water or tapers back-and-forth whilst trying to find its bottom.

Investors would be wiser to achieve a portfolio that is NON-CORRELATED as opposed negatively correlated to the equity market.

Instead of backing a horse to win or not to win – it’s sometimes best to bet on sport or some other unrelated event.

Since winding down our ASX portfolio last year, we have had been steadfast in achieving returns uncorrelated to the Global Equities – we feel our Swing Strategy has best achieved this.

Here is another great source of uncorrelated assets from Guggenheim Investments: https://www.guggenheiminvestments.com/mutual-funds/resources/interactive-tools/asset-class-correlation-map

Is Property a viable alternative in Australia…?

High unemployment leads to reduced household income which ultimately reduces serviceability of debt for the average Australian investor – ultimately causing a drop in housing demand.

Historically, demand-driven crashes are quickly recovered provided there are no extraneous inhibitors of demand… such as sustained employment and the stoppage of immigration.

Previously under these circumstances, the RBA would cut rates to increase the availability of credit which would inturn prop up demand – however with  current cash rate set at 0.25% leaves little room for a rate cut, with evidence supporting  “monetary policy transmission of rate cuts is indeed weaker when interest rates are persistently low”. https://www.rba.gov.au/publications/confs/2017/pdf/rba-conference-volume-2017-borio-hofmann.pdf

More concerning is that the key driving force behind Australian Residential housing market strength has been Australia’s net immigration. 

It’s no secret that migration increases house price.

“The pick-up in immigration coincides with Australia’s most recent housing price boom. Sydney and Melbourne are taking more migrants than ever. Australian house prices have increased 50% in the past five years, and by 70% in Sydney.” (https://theconversation.com/how-migration-affects-housing-affordability-92502)

One can only speculate how long Australia’s border will be closed and  what the immediate effects a zero-immigrant economy will have on residential housing market…

Coupled that with a potential 15% unemployment rate and ineffective monetary stimulus – we may see a slide in both demand with a potential increase in supply as Australian Households seek to ration assets.

‘Some economists, such as AMP’s Shane Oliver, estimate that prices could fall as much as 20% if the recession lasts more than six months’ https://www.theguardian.com/australia-news/2020/mar/20/australian-housing-market-will-hit-the-wall-in-coronavirus-recession-experts-say

What should my portfolio look like in  2020?

A bear market is hard to predict – it’s turn-around even more so. One thing that can be predicted with confidence is the prevalence of market volatility as investor sentiment switches back and forth from risk-on to risk-off.

The dynamic shifts between risk-on and risk-off sentiments require portfolios which are actively traded and directionally unbiased – can profit in up and down markets.

Walker Capital’s current strategies are actively traded currency and commodity portfolios. It is our objective to achieve returns uncorrelated to the stock and property markets in order to provide investors opportunity to diversify risk and maximise returns.

Whilst there are there are correlations between certain stock indices and currency pairs – provided we actively trades both directions in currency prices the returns we yield are uncorrelated the stock markets.

Our strategies should be considered as an alternative to investments into the stock market given current market conditions


Aug 15, 2019 4:49:11 PM

Sharemarket wiped out $50 Billion - Where to Now?

“The Australian share market has wiped out $50 billion worth of gains it made in the past two months “ 1

The benchmark ASX 200 has fallen 2.6 per cent to 6,427 points by 2:00pm (AEST), with nine out of every 10 stocks in the red” 1

The recent decline in the domestic stocks is part of a global sell-off amidst recession fears in the US coupled with trade-war speculation along with all-in-all lacklustre economic forecasts.

China experienced its weakest factory output in 17 years, with its latest official figures showing that industrial production grew by an annualised 4.8 per cent in July”

“The cause of the market panic was a bond market phenomenon known as the "inverted yield" — when interest rates on America's long-term (10-year) government bonds fall below short-term (two-year) rates.

It has been regarded by traders as a reliable predictor of US recessions in the past few decades. Furthermore, this "inversion" in bond markets has not occurred since 2007, just before the global financial crisis.” 1

A more chronic - and local - cause for concern is the 12-month -8.37% decline in house prices across Australia. 2

The RBA also cut the cash rate to all-time lows in July to 1.0%3  - leaving little-to-no room for monetary stimulus – which may signal that the worst is yet to come.

After enjoying years of expansionary monetary and successful performance of Risk-On assets – it appears the tide may be turning…

“You only find out who is swimming naked once the tide goes out…” – Warren Buffet

As we enter the contractionary phase of the credit cycle, we will see capital flight away from traditional risk-on assets - like shares and property – and increase investment into inflation-hedged assets – like bonds and alternatives.

For investors, it may be prudent - and timely - for a re-appraisal of your portfolio’s nakedness…

We here at Walker Capital have held the belief all year that the domestic stock market is overpriced - beckoning a long overdue correction. As such, we remain steadfast in our absolute return investment style and will be looking to capture market volatility in either direction.

Walker Capital provides investments uncorrelated to shares and property. Given Walker Capital’s MDA products are aggressive, we recommend no more than a 10% allocation of a client investable net assets.

If you missed our Audit Report 2018-2019 you can  access it here

See what our clients have to say review our testimonials.

If you want to know more we have specialised investment managers ready for a free one-on-one session with you to discuss your investment possibilities

Talk to us Now about Alternative Investments!

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1. https://www.abc.net.au/news/2019-08-15/asx-tumbles-on-us-recession-fears/11416348)

2. https://www.rba.gov.au/statistics/cash-rate/
3. 5-capital-city aggregate house pricing index
4. https://www.corelogic.com.au/research/monthly-indices
5. Warren Buffet

Dec 29, 2018 9:40:35 PM

What is Fundamental Analysis?

Fundamental analysis is another technique used to trade. Fundamental analysis is a technique that is used to determine the value of an asset by focusing on underlying factors that affect the company’s future aspects and its actual business. With this technique,
you need to analyze the economic well-being of a financial entity as opposed to its price movements alone.

Fundamental analysis is used to identify those assets which are under-valued in the market, which means that they are selling at a lower price than the asset’s intrinsic value. This analysis assumes that buyers would be attracted by the low prices, and this would make them buy the asset in a sufficient enough amount to increase its price.

The Objectives of Fundamental Analysis

The objectives of this analysis technique include the following:

  • To conduct an asset valuation and predict where its price will go;

  • To make a projection on its business performance;

  • To evaluate the management of the property and make internal financial decisions;

  • To calculate credit risk of the asset;

  • To find the intrinsic value of the property.

    The Mechanics of Fundamental Analysis

    To conduct this analysis, you need to complete an in-depth and all-around study of the asset and its underlying factors. This would help you determine future prices and market developments. A combination of data is used to establish the actual current value of assets, whether they are overvalued or undervalued and the future value of the assets.

The Role of Fundamental Analysis in Trading

The first factor that you need to take into account when making use of fundamental analysis in trading17 are the pro t sources that you are targeting as these can help you understand how to make someone else’s money on your own. There are three kinds of pro t sources that are crucial to understanding:

  • When your fellow traders (with less knowledge and experience as compared to you) become a source of pro t for you. You can bene t from their losses by using better trading skills.

  • Initial public offerings and issuing additional stocks can give you the chance to cash in on the discrepancy between the price of the stocks or assets and the prices at which they will settle.

Established companies, mutual funds and other financial organizations can act as portfolio builders for traders. The trader’s pro t will then become the compensation for the risks he or she has taken.

However, fundamental analysis is not suitable for any short-term decision-making methods. Thus, you should make use of it in a strategical manner for longer periods of times.

A fundamental analyst would believe that the real value of an asset is based on its stability, earning potential and ability to grow. By exploiting the mispricing that occurs when an asset is priced at a value under or over its real value, the principal analyst seeks to pro t by utilizing one of the two main schools of thought: growth investing and value investing.


The 2 Approaches

Fundamental analysts make use of two different methods:

  • The top-down approach makes the analyst start their analysis with global economics (like GDP growth rates, inflation, interest rates, productivity, etc.) and then narrow their research to regional or industry analysis (like total sales, price levels, entry or exit from the industry, etc.).

  • The bottom-up approach is when the analyst starts with a particular business and then moves on to a more macro analysis.

The Problems with Fundamental Analysis

There are some serious drawbacks to making use of fundamental analysis:

  • There are an in nite number of factors that can affect the earnings of a company, its assets and price over time and take them all into consideration when conducting this analysis can be tough.

  • The data being used to carry out the analysis may be out of date.

  • The earnings that have been reported by a company might be deceptive and dubious.

  • Giving proper weightings to the different influencing factors may be difficult.

  • The results obtained from this in-depth analysis only remain valid for a short period and forecasts may become downgraded.

  • The rules of this analysis are always changing as a way to suit the trading game.

  • The fundamental analysis assumes that the analyst is completely competent, which is not

    always the case.

  • A single fundamental analyst will understand that other analysts will form the same point of view of the asset, and this will cause the value of the asset to be restored. Again, this may not always be the case.

  • This analysis technique does not take random events into account, like oil spillages, etc.

  • It also assumes that there is no monopolistic power over the markets.

    It does not indicate anything about the timing of trade, and you might have found an asset whose value has been falling for quite some time and will continue to fall, but you would not know when to make the trade.

Criticisms of Fundamental Analysis

Followers of the efficient market theory believe that fundamental analysis is awed because
it is not possible for someone to outsmart the market and identify mispriced assets using information that is available to the public.

Another source of great criticism of fundamental analysis is the fact that many believe that it is impractical. It causes analysts to come to vague conclusions about an asset and the number of variables that should be studied.

Thus, you need to apply fundamental analysis appropriately as it does not suit all market conditions and the fact that it is quite time- consuming means that you need to make sure that fundamental analysis is the option you want to go with. You should keep all of the problems under consideration before

you decide to apply fundamental analysis and it would also be best for you to make use of another technical analysis technique as a way to ensure that the decisions you make based off of the fundamental analysis are not misguided.

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Stock market graph

Dec 29, 2018 10:34:05 AM

What is Technical Analysis?

The technical analysis makes use of past data to predict future prices. It employs methods, tools and techniques (like the use of charts) to identify price patterns and market trends. Technical analysts also make use of different market indicators which help assess whether an asset is trending, the probability of its continuation and direction. Technical analysts (or technicians) are only interested in the price movements in the market. Technicians identify patterns within the market that may suggest future activity as well. This analytical technique is based on three main assumptions:
  • The market discounts everything, which means that an asset’s price reflects everything that has or could affect the company and thus there is no need to consider these factors separately;
  • Price moves in trends, which means that any future price movement is more likely to be in the same direction as the trend;
  • History has a tendency of repeating itself, which means that a consistent reaction is given to similar market stimuli over time.

10 Rules of Technical Trading

To perfect the art of trading using technical analysis, here are some crucial rules that you must keep in mind:

  1. Map the trends by studying long-term charts. Start a chart analysis with weekly and even monthly charts that span over several years as a large scale map of the market provides the trader with a greater amount of visibility and a better perspective on the long-term market. Short-term market views can be deceptive.

  2. Spot the trend and follow it. Market trends come in many sizes (short, intermediate and long-term), and you should determine which one you’re going trade and then trade in the direction of the trend. Also, make sure that the charts you use are by the trend.

  3. Find the support and resistance levels, as the best place to buy is near support levels and the best place to sell is near the resistance levels. This rule functions on the concept that the old highs become the new lows.

  1. Understand how far to backtrack. Measure the percentage retracements. A 50% retracement of a prior trend is most common, and a minimum retracement is usually one- third of the prior trend.

  2. Draw trendlines. These are the most simple, yet effective charting tools that are available as all you need is a straight line and two points on a chart. Uptrend lines are drawn along two successive lows, while downtrend lines are drawn along two successive highs. When a trendline is broken, it usually shows a change in the trend.

  3. Follow the averages. Moving averages are your source of objective buy and sell signals, and they help in confirming a trend change. The most popular way of finding trading signals is by combining charts of two moving averages.

  4. Track oscillators. They help traders identify markets that are overbought or oversold. They also help warn traders of markets that have rallied or fallen too and may turn soon. The most popular oscillators are Relative Strength Index (RSI) and Stochastics.

  5. Know the warning signs by using MACD. The Moving Average Convergence Divergence (MACD) indicator combines an average moving crossover system with the overbought
    or oversold elements of an oscillator. A buy signal may be justified when the faster line crosses over the slower, and both of the lines are below zero; while a sell signal may be warranted when the faster line crosses the slower line and both of the lines are above zero. An MACD histogram plots the difference between the two lines and provides even earlier warnings of any changes.

  6. Use ADX to determine whether it is a trend or not a trend. The Average Directional Movement Index (ADX) line helps in determining whether a market is in a trending or trading phase. It measures the degree of trend or direction within the market. By plotting the direction of the ADX line, a trader can determine which trading style and which indicators are suitable for the current market.

  7. Know the confirming signals. Volume and open interest are the most popular indicators. Volume precedes price and it is crucial to make sure that heavier volume is taking place in the direction of the prevailing trend. Rising open interest ensures that new money is supporting the current trend.

Popular Technical Analysis Tools

These indicators and tools are used to predict future movements of prices in the market, and they are the reason for technical analysis gaining increasing popularity in the trading domain:18

  • On-Balance Volume,

  • Accumulation/Distribution Line,

  • Average Directional Index,

  • Aroon Indicator,

  • MACD,

  • Relative Strength Index,

  • Stochastic Oscillator. 

Critique of Technical Analysis

Criticisms of technical analysis include:

  • It works only because it is self-fulfilling. It only works because traders believe it works and acts by this belief.

  • There is no hard proof that technical analysis works. There seems to be evidence which indicates that the kinds of technical analysis that work change over time with different markets and time periods being suited to different methods of technical analysis.

  • Price changes are random and cannot be predicted. This belief, held by the efficient market hypothesis, states that markets react immediately to information affecting an asset’s intrinsic value.

    Thus, the technical analysis also has its drawbacks, but this does not stop it from being one of the most popular trading analysis techniques and the scientific approach that is used in this analysis with the use of tools, makes it quite efficient and effective in the prediction of future price movements.19

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Oct 6, 2017 8:16:00 PM

Corporate Member of Institute of Managed Account Professionals – IMAP

Corporate Member of IMAP

Walker Capital is an accredited and recognised as a corporate member of the Institute of Managed Account Professionals (IMAP).

IMAP was formed to bring together advisers, managers, platforms and other managed account service providers to help build a better industry.

The role of IMAP

Institute of Managed Account Professionals (IMAP) is the industry organisation for advisers, managers, providers and other businesses actively involved in offering or supporting Managed Accounts.

IMAP provides association members with access to the latest developments in the industry; education and training and access to industry professionals at all levels.

IMAP is the voice of the managed accounts industry and represents its interests to regulators such as ASIC.1

1. reference  https://www.imap.asn.au/

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