A global approach is key to higher returns

Australian investors would be well served investing portions of their equity investment portfolio into global equities to take advantage of the fall in the Australian dollar and falling interest rates. Karl Siegling from Cadence Capital explains how you can profit from these downward trends.

Karl Siegling, Cadence Capital
Cadence's top picks to benefit from a falling dollar and falling interest rates

Investors have seen the Australian dollar move, over a decade, from around 60 cents against the US dollar to $1.10 and back to 78 cents. We hope it does not go lower.

Over that time the iron ore price has moved from around US$30 to US$190 a tonne and back to US$47. It is to be hoped that iron ore does not go lower, especially if we own iron ore stocks.

In a decade the oil price has risen from $40 a barrel to $140 and back to $45. Again, we hope the price does not fall further, especially if we own oil or energy stocks.

The three most dangerous emotions for investing are hope, fear and greed. This means our hopes for the Australian dollar and iron ore and oil prices, while based on “wishful thinking”, should not influence investment decisions. Investments based on hope alone most often prove to be poor choices.

The fact is, the Australian dollar, interest rates, the iron ore price and the oil price are currently in downward trends.

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