The 2021 Vanguard Index Chart: Australian Edition

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Vanguard Australia has published the 2021 Vanguard Index Chart. This powerful chart shows the importance of long-term investing and the benefits of diversification over various asset classes. In the long run, US stocks beat Australian stocks and other investment types. An A$10K investment on July 1, 1991 would have grown to over A$217K if invested in US stocks. That equals to about 10.8% per year. Australian stocks earned 9.7% per year over the same period. An investor that simply kept the money in a bank would have seen the initial A$10K grow to just about A$39K.

The chart also shows the leadership changes in the US and Australia since 1991 and major events such as the Global Financial Crisis(GFC), Brexit, etc.

The following chart from showing the returns of various asset classes from July 1991 to June 2021 for the Australian market:

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Note: The dollar figures shown above are in Australian dollars

Source: Vanguard Australia

Related ETF:

  • iShares MSCI Australia ETF (EWA)

Earlier:

Disclosure: No Positions

Fact of the Day: Number of Stocks Bought Back by Apple

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US tech giant Apple(AAPL) is the most valuable company in the world. Currently Apple has a market capitalization of $2.50 Trillion. On Tuesday the company has scheduled its latest hardware unveiling event. Some investors are hoping the upgrades to iPhone and other products would help propel the market cap to $3.0 Trillion soon.

Apple is one of the top companies to buy back its own shares. According to a journal article this weekend, over the past decade has bought back $442 billion of its shares. The current total outstanding stock count is 16.5 billion. Over the past 5 years, outstanding shares have decreased consistently from over 21.0 billion to the current 16.5 billion. This is due in part stock buybacks.

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Source: YCharts

On Friday Apple closed at $148.97 and has a current dividend yield of 0.59% or $0.88 per year.

To put Apple’s market cap in perspective, the GDP of the US in 2021 is estimated to be around $22.7 Trillion.

In the past 5 years, the stock has shot up by over 418% excluding dividends:

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Source: Google Finance

Disclosure: No Positions

Related:

The Historical Annual Total Returns of Australian Stocks From 1893 To 2021

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Stocks are the best asset class to own especially over the long-term. Equities not only provide superior returns but also help beat inflation. For income investors, well established high-quality companies can offer excellent dividends. Stocks outperforming other assets has been proven by studies in many major markets. In this post, let us take a look at the example of the Australian equity market.

The following chart shows the historical total annual returns of the Australian equities from 1893 thru 2021:

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Source: Three all-time best tables for every adviser and investor by Romano Sala Tenna, Katana Asset Management

The following is an excerpt from the above linked article:

Crashes are inevitable. Be ready and don’t panic at the bottom. In fact, the best time to panic is at the top.

Case in point. There has only been one (calendar) year in the 146-year history where the market fell by 30% or more, in 2008. But if you panicked and sold during that crash, you would have missed an extraordinary recovery. In 2009 the market was up by 39.6% and rose in 11 of the 13 years following the crash, including by 18.8% in 2012, 19.7% in 2013 and 24% in 2019.

Know thyself. If you are prone to doing the wrong thing at the wrong time, stay out of the stock market. Or work with a trusted financial adviser who can coach you through such periods.

As I mentioned in the introduction, the author also notes that the only way is up in the long-term. However in the short run markets can be volatile.

Earlier:

Related ETF:

  •  iShares MSCI Australia ETF (EWA)

Disclosure: No positions

Mexico vs. China – Top 10 Reasons To Nearshore Manufacturing: Infographic

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Mexico and China compete to attract foreign direct investment especially from US multinationals. While labor in China is much cheaper than in Mexico, Mexico has many advantages over China. For example, China’s labor practices are much to be desired to say least. A few years ago a spate suicides by workers at Foxconn, a contract manufacturer of Apple(AAPL) in China led to the installation of anti-jumping nets in factories. Incidents such as this are the known cases. Nobody knows what other slavery-like conditions exist there and hidden from the outside world. Another factor that ethical investors would consider is that China is a communist state with a one-party rule. So by having factories in China some multinationals indirectly support the single party regime. Mexico on the other hand is a democracy despite having its own issues such as the violence of the drug cartels and corruption.

While researching the advantages of Mexico over China for manufacturing I had saved the following infographic. Though it is a bit old many of the reasons noted still applies.

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Source: Co-Production International

Disclosure: No positions