Ah MYEFO.
Of course, you're one of the cool kids, so you know that you don't call it M-Y-E-F-O.
Perish the thought.
You know it's actually pronounced as if it was a word:
MY-EE-FOH
And, of course, I don't need to tell you that it stands for the Mid Year Economic and Fiscal Outlook.
[cue readers suddenly losing interest faster than a New Zealand batting collapse.]
No wait, come back!
I promise I'm not going to get all economic-wonk on you.
And you know why?
Because — and I'll say this quietly so the economists and pollies don't all get deflated — it doesn't really matter.
Yes. I said it.
Okay, I'll hand in my membership card for the Economists And Other Wonks Club.
(I'm kidding. It doesn't exist. At least, I don't think it does. I doubt they'd let me in anyway.)
Now, before I get accused of not caring about economics (or politics), I want to reassure you that I do care.
A lot.
I think it's vital that our leaders make wise and thoughtful decisions about the future direction of our country. About the level of taxation and spending. About the incentives and disincentives they put in place. About things like equality, the environment and prosperity.
I have plenty of views on those things — just ask me! But I'll save you from them for now.
Because, as I said, they don't matter… at least for our purposes today.
You likely know the economy is growing relatively weakly.
You likely know that unemployment, while low in historical terms, has been rising slightly, and is higher than some comparative countries.
You surely know that the RBA has been cutting rates, so worried is it about the potential for an economic stall in future, were it to do nothing.
And yet…
And yet the ASX is up more than 20% this year, so far.
It's up more than 25% since just before Christmas last year.
Plus dividends.
But didn't I just tell a story of a weak and vulnerable economy?
Yep.
See, here's the thing: any correlation between the economy and the stock market is weak, at very best.
And, to add to the problem, both are completely uncertain.
So, not only did we not know, back in 2018 what the Australian economy would do this year (and what the RBA would decide), but if we did, many people would likely have made exactly the wrong decision about their investments.
And not just the amateurs.
Which stock market 'expert' predicted a 20%+ return for 2019.
None.
Me? Nope. I didn't either — but for a very different reason:
I don't do forecasts.
They're useless at best, and misleading at worst.
The only predictions I ever (and always) give are these:
1. The market will go up, meaningfully, over the long term; and
2. The market will be volatile and uncertain over the short term
Those two predictions have never yet failed to be true.
Now, I'm no master logician, but if they've been true in the past, would you really want to bet against them being true in future?
Moreover, if they are to remain true, why would you try to pick short-term movements, if the long term is far, far more reliable… and profitable?
So, I hope our pollies make some good decisions. I hope they are responsible stewards of our economy and our society. I hope our country continues to be one of fairness, respect and with a can-do attitude.
I have plenty of ideas as to what they should do — and find myself strongly agreeing (and disagreeing) with either side, depending on the issue.
But as for my investing?
Let's just say MYEFO and My Portfolio are two very, very different things.
I suggest you take the same approach.
Fool on!
