It’s been a little while since I’ve had the opportunity to write to you, as so much has been happening. We held our first investment forum for 2017, discussing the great property bubble with some of the best in the business, which was a great success. We had a full house of clients, developers and investors. I’ll be sharing key take outs of the forum in the coming weeks.
Over the past few weeks, a whole bunch of stuff has been happening, so I thought I’d give you a run down of what I’ve been seeing and thinking:
+ Don’t be fooled. Everyone talks about how great the performance of the US stock market has been over the last decade. A closer look will tell you that even the German stock market has performed better than the S&P 500. Don’t believe everything you read in the paper.
Source: Yahoo Finance
+ The US stock market has been falling over the last few days leading up to the healthcare vote in the US. Financial media had been reporting the impact this has had on markets. This is the drop they’re talking about…
Source: Thomson Reuters
I’ve also been reading about what this means, and what impact it will have on financial markets. No one still know’s what caused the Black Monday crash in 1929…88 years on, and we expect people to have the answer to something that hasn’t even happened. Let’s get serious for a second folks. The same doomsayers that were telling us a Trump Presidency would be catastrophic for financial markets continue to publish their pessimism and expect the general public to hang off their every word.
In the end, the bill was shot down and stocks rebounded.
+ This is why you shouldn’t take forecasts seriously, even from Central Banks. Wage data was released last week. I thought it would be amusing to revisit this chart, which shows the RBA’s regular forecast of wages with actual.
The RBA has been forecasting higher wages since 2011. They’ll be right eventually.
+ Prime Mister Turnbull has been considering allowing First Home Buyers (FHB) to access their super to purchase a home. This has to be the height of stupidity. I will not waste your time and expand.
+ Apparently foreigners are “hoovering” up all of our property. No one could really quantify this, until now. We have the data (dun dun duuuuun):
- NSW – 25% of new supply
- VIC – 16% of new supply
So, 1 in every 4 in NSW and 1 in every 6 in VIC. Not very “hoovering” is it?
When we hear the the term “foreigner”, most people think of the Chinese. And rightly so. Here’s how much the Chinese make up of foreign buyers:
It’s quite staggering actually.
Nevertheless, do you ever wonder why this is the case? This is one of many reasons. Although a compelling one, the storage of wealth probably ranks higher than price, certainly from the discussions I’ve had with Chinese investors. Anyway, here’s price and yield from the point of view of our Chinese neighbors.
+ The Melbourne/Sydney apartment property boom/bust theory continues. We’re told construction, prices etc. have all the traits of a bubble not seen anywhere else in the world. If we take a look at other mature apartment markets in the world, such as New York, we’ll quickly learn that this has happened before and has not ended the way the doomsayers claim. Here’s New York apartment prices (per square foot) since 1910. They’ve been climbing since the 1950s.
In the end, no one really knows what the future holds. No one really knows what impact certain events will have on financial markets. Trying to front-run the global markets’ investors is nothing but pure speculation. It’s easy to do it when it’s not your money. Next time someone tells you what they think, or what you should do with your money, ask them what they’re doing with they’re money.