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Ep 318: Why does Australia’s share market always underperform?

Stuart Wemyss Episode 318

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In this episode, Stuart delves into why Australia’s share market often seems to underperform compared to global markets, despite occasional bright spots. He reflects on the recent 6% market drop followed by a modest recovery in Australia compared to the US. While historical data shows a relatively small difference in long-term returns between Australian and international markets, Stuart highlights how recent years have been driven by the tech boom, particularly in the US. Companies like the "Magnificent 7" have propelled global indexes, but Stuart cautions that their future growth may already be priced in, making them riskier investments moving forward.

He discusses forecasts by Research Affiliates, predicting strong future returns for the Australian market, largely driven by high dividend yields. With expected annual returns of 7.9% for Australian shares, Stuart argues that Australia could outperform global markets in the coming decade. However, he advises against neglecting international exposure, as Australia makes up only a small portion of global markets and is heavily concentrated in sectors like mining and banking. This episode is packed with insights for investors looking to optimise their portfolios for the future.

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