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Share the Wealth

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21.01.2022 As the panic has well and truly set in, we need to ask ourselves ‘where to from here?’. For those who know me, I have always said that the next crisis is almost always the reason for the next crisis. From 2008, Governments around the world introduces stimulus measures never before seen in history. Central banks lowered interest rates to near zero percent, and we doubled down in debt. This crisis is now in government, central banks, in lieu with the media. ... Australia has been lowering rates into this mess for the past 2 years, and now we are facing a recession like never seen before and the cash rate is 0.25%. In 2007, we started from 7.25%. So we have a central bank with no ammunition, and a government not able to govern. The repercussion is simple, absolute carnage in our domestic currency. The AUD currently sits at USD0.57.... we are set to go lower as the world is now totally dependant on the flow of US dollars. As for debt markets, who would lend our government money? The answer is no one. As no one would want to lend their cash at 0.25% return, knowing they are going to be repaid in cheaper dollars tomorrow. The thing that people need to understand is that money has to hold its value, and cheap rates will not stimulate this time around. People will pay 15% interest if they believed they could double their money in a years’ time. But people will not borrow at 1% if they didn’t think they could make 1%. There are so many issues to address, and I won’t touch on the virus because it has become uncool to not jump on the fear bandwagon. But ask yourself this... will the government cut its expenses/employees like every other industry in Australia? Probably not. Or do they continue to use taxpayer dollars, repaid by future generations that will never be paid off, to fund themselves. The answer is yes, more than likely. It is private industry that creates the job, this isn’t chicken and egg, the job is introduced before the tax is taken. So for those in government work, the job security is envious, but there is a price to pay for when the government can only pay in weaker dollars moving forward, the only other alternative is they default. I’m sure we know which path current politicians will take....

20.01.2022 After receiving a fair few phone calls lately, I’ve been asked about what is happening and what’s going to happen from here. One interesting observation to make is that many people are now keen to get into stocks. What I can say, without giving advice, is that not to panic. The numbers should be enough to calm everyone about the risks of contracting the virus. To put it in perspective, the common flu claims between 12k-60k lives every year. I’m not an expert on the flu or the... Coronavirus, but they are the facts. As for markets, the panic which has been driven by mainstream media will most defiantly cause a recession across the globe. In regards to your stock portfolio, I won’t say whether to buy or sell, but to stay calm. Money/capital will shift to safety and it is why you are seeing markets up and down quite frequently because it is confused. As we head into the warmer months in the northern hemisphere we should see the panic subside, but what this virus has exposed is how fragile we are as a society, and how fragile credit markets are in the world. As we become more reliant on government for assistance it will come at a huge price to your domestic currency and the ability of the government to borrow money in the near future. Without going into a huge amount of detail, the crisis now is in government, as I say to most people the solution to the previous crisis is almost always the cause of the next one. The actions of governments of 2008-2010 is coming back to haunt us as the Coronavirus was just the straw that broke the back of a market that was very much overdue for a correction anyways. Stocks always have a place in anyone’s portfolio but just be careful about buying into hygiene or vaccine related companies, this is hot money and hot money always leaves once the party is over. ie, Bitcoin. You are a small fish in this pond and by the time the news gets to you, the big guys have already left that market. So, just relax. The Coronavirus will subside, then it will be a focus on dealing with the recession numbers ahead. My opinion; stimulus is on its way, central banks are not done cutting rates, currency flows to increase into the US, and markets will rise across most sectors because of all of the wrong reasons.... See more

09.01.2022 As the panic has well and truly set in, we need to ask ourselves ‘where to from here?’. For those who know me, I have always said that the next crisis is almost always the reason for the next crisis. From 2008, Governments around the world introduces stimulus measures never before seen in history. Central banks lowered interest rates to near zero percent, and we doubled down in debt. This crisis is now in government, central banks, in lieu with the media. ... Australia has been lowering rates into this mess for the past 2 years, and now we are facing a recession like never seen before and the cash rate is 0.25%. In 2007, we started from 7.25%. So we have a central bank with no ammunition, and a government not able to govern. The repercussion is simple, absolute carnage in our domestic currency. The AUD currently sits at USD0.57.... we are set to go lower as the world is now totally dependant on the flow of US dollars. As for debt markets, who would lend our government money? The answer is no one. As no one would want to lend their cash at 0.25% return, knowing they are going to be repaid in cheaper dollars tomorrow. The thing that people need to understand is that money has to hold its value, and cheap rates will not stimulate this time around. People will pay 15% interest if they believed they could double their money in a years’ time. But people will not borrow at 1% if they didn’t think they could make 1%. There are so many issues to address, and I won’t touch on the virus because it has become uncool to not jump on the fear bandwagon. But ask yourself this... will the government cut its expenses/employees like every other industry in Australia? Probably not. Or do they continue to use taxpayer dollars, repaid by future generations that will never be paid off, to fund themselves. The answer is yes, more than likely. It is private industry that creates the job, this isn’t chicken and egg, the job is introduced before the tax is taken. So for those in government work, the job security is envious, but there is a price to pay for when the government can only pay in weaker dollars moving forward, the only other alternative is they default. I’m sure we know which path current politicians will take....

07.01.2022 Hi everyone. Another down day on the ASX. One thing a lot of people have been calling about is in regards to their superannuation fund. All I will say is that you should maintain composure in times of stress. It’s easy to jump on the bandwagon, but perspective is always good. Here is the Dow from the past 6 months vs Dow overall. If you are worried, don’t be. Have faith in humanity, and the ability to bounce back. To the retirees, you need those stocks to serve you for many years to come. So don’t disappoint your future self by selling at the wrong time....