Four years, and still not back to normal

This week, we've seen more mooted changes to Superannuation.

man and woman discussing superannuation

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I'm writing this from Tamworth, where my young bloke and I are taking in a few days of a school holiday road trip for the Country Music Festival.

We saw Troy Cassar-Daley play yesterday, The Bushwackers at lunchtime, and we're off to John Williamson tonight and Colin Buchanan tomorrow.

I haven't seen any numbers, but the place has been packed. And, as ever, the drive itself was wonderful.

Of course, business and investing is never far from my mind.

More changes mooted for Super

This week, we've seen more mooted changes to Superannuation.

Yes, more.

This time, the potential changes do seem reasonable – to legislate a 'single purpose' test to make sure Super isn't misused, and to limit the size of Super funds, with apparently some 10,000+ funds having balances of more than $5m.

Super is a wonderful system to both relieve pressure on the pension system, and to improve standards of living in retirement.

But it's too easily seen as a honeypot by pollies and vested interests, and the 'single purpose' legislation should hopefully reduce that risk.

And while more is better than less when it comes to Super, the cost to the Federal Budget of multi-million dollar Super balances, taxed at remarkably generous rates, is too high a price to pay. 'Enough' is important. But over that level, I think fairness dictates that people with very high balances contribute more.

(And, yet again, we've seen an OpEd from former MPs Tim Wilson and Jason Falinski, continuing their argument for undermining Super to use for housing – something that would all-but hollow out the enormous benefits of Superannuation. Yes, we have housing problems, but Super isn't the answer. I've still never seen them explain why there are no other solutions to that problem…)

Retail sales surge

I've written already this week about a strong set of retail results, after a bumper Christmas. DJs was the latest to add to that, though in its case, the sales growth was strongest earlier in the company's first half.

It's a reminder that, even as we emerge from the worst of COVID, the year-on-year comparisons are still impacted by the ebbs and flows of the economy this time last year (largely the impacts of the Delta and Omicron waves).

So be careful what you read, and make sure you take those impacts into account. We're more than halfway through the 2023 financial year, and 2019 remains the last 'clean' year, from which to make comparisons.

We've been doing just that, recently, comparing retailer share prices to their 2019 earnings bases (and applying a conservative 'business as usual' growth rate since then).

The good news is that there appears to be some good value still in this sector, despite some of the share price gains over the past couple of weeks.

Beware the 'honeymoon'

Many savers will be excited to see the banks finally pumping up their interest rates for deposits.

Many home-buyers will be encouraged by getting some money from the plethora of 'cashback' mortgages being offered.

But both groups should be very, very careful.

On the deposits front, some of those higher rates are just honeymoon rates for a few months before they then fall, in some cases precipitously.

When it comes to cashback mortgages, banks are presumably hoping that a little cash in the hand might make us less likely to focus on the interest rate. I wouldn't call it a bribe, exactly, but…

Or maybe they're just being kind? No? I don't think so, either.

On one hand, banks are entitled to do whatever they want (within the law) to attract customers. On the other… well, they might just realise that we don't change banks as often as we should.

And don't get me started on those products that sell themselves as akin to bank deposits (with higher yields on offer). If it looks too good to be true…

So be careful.

Quick takes

Overblown: Most investors and commentators will congratulate companies for making the tough decisions to lay off staff when necessary (even as they sympathise with those workers). But few ask how those same companies were allowed to become so bloated that they could sack so many without adversely impacting operations. The better company is the one that didn't over-hire in the first place.

Underappreciated: This one is just a reminder. Remember how, maybe 12 or 15 months ago, people were saying rates would never rise again, and could never get to 3% or more? Yep, we know how that ended — so far, at least. Things can move faster and further than you expect, in both directions. The more certain someone is, the more wary we should be.

Fascinating: This isn't new to anyone who looks at news with a critical eye, but I googled 'unemployment news' when the numbers came out this week. From the same set of headlines, our major mastheads and news outlets managed 5 or 6 different takes. None was factually wrong, but each was different. "Jobs lost". "Unemployment steady". "Record low". "Vacant jobs crisis". My advice: Read widely, and critically. Challenge your own preconceptions and biases.

Where I've been looking: As I mentioned, above, the team and I have been spending some time looking deeper into the complex recent retail history to see what we can find. And we've been looking at property managers, too, to see if there's a similar theme. No conclusions, yet, but worth a look.

Quote: "But what are we gonna do for the world today?" – The World Today, by 40-time Golden Guitar winner, Troy Cassar-Daley

Fool on!

Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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