The 0.25% interest rate increase by the RBA on Melbourne Cup day caught the market by surprise. Commonwealth Bank’s decision to raise their variable mortgage rate by 0.45% has sparked widespread bank bashing and politicians are scrambling to “jawbone” the banks into line. With banks reporting huge profits there is an increased risk of banks being taxed on their super profits or the possibility that the government will seek to intervene. How they would do that is still unclear.
Many investors remain concerned about the market and with term deposits yielding 6.0%+ many are opting for the relative safety of cash versus investing in the volatile market. For my money I continue to accumulate shares in quality companies.
It is my belief that in the future the most successful money managers will be very active in managing money and be able to take advantage of the volatility in the current investment environment. Last month, I hinted at some exciting changes occuring at 2020. I can now tell you that recently we have increased the size of the 2020 management team, bringing together a highly skilled team of professionals who have operated successfully at the highest levels of the banking and wealth management industry. Together we will tap into our experience and networks with a view to providing our customers with unique investment products that fill some of the gaps in the market. We expect to launch the first of these innovative investment products early in 2011.
Michael Lannon
Executive Director