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Investment Outlook: A cure for short-termism

Global economic indicators suggest that the outlook for the world economy is improving, providing further support for growth asset performance, but valuations remain expensive across many asset classes and investors appear to be under appreciating the potential for adverse economic or geopolitical surprises.

In Australia, equities have belatedly shown some signs of life, but it is still unclear whether this reflects the much needed improvement in corporate performance to
support further advances.

Low growth and low rate settings have made investing for yield a profitable strategy for much of the post-GFC period. In this environment, corporates have been conditioned to look
inward, improving productivity and lowering costs, while simultaneously lifting dividend payout ratios. This form of corporate short-termism comes at the cost of future profitability.
Companies will need to innovate and invest in the future to be relevant in an increasingly globalised world economy.

Read the full Morgans monthly Investment Watch update.

For investment advice call PPT Financial on (03) 5331 3711.

DISCLAIMER: The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.