The Australian market

For all those who watch the market closely and saw today’s slump snap two days of wild gains on our Aussie stock market, with some bigger stocks reaching a two week high, it is a case of (literally) two steps forward, one step back. This comes as Wall Street falls into the heavy realisation that it really doesn’t matter what [US Treasury Secretary Henry] Paulson and the gang do over the coming weeks to avert financial catastrophe — the recession in the US is going to be deep, and there just ain’t no getting aw ay from it. But just how much that will really hurt us remains to be seen. There’s no doubt our market has been just as battered as the US markets in the past 6 or so months — some say unfairly, given that the fundamentals of our banks and financials remans just as strong as they were during the last bull run.We have to be able to convince investors both domestic and foreign that our market is worth investing in, that we’re on the way up, and that a very strong mining industry coupled with sound financial institutions makes a country — and a market — worthy of investing in.As Americans get more and more scared to invest in US equities — as seen by those unprecedented spikes in gold as investors flock to its safe haven — why don’t they consider the Australian market? Just like there were sales people in Australia selling ‘safe’ Lehman Brothers bonds to local councils — how many Australian spruikers are over in the States letting American investors know that Australia, the world’s sandpit, is a pretty good place to park your dough right now?And is it safe enough to be spruiking such things? Those that called the bottom of our market yesterday weren’t shouted down by screaming pessimists — and they weren’t fools either. If the educated guess is that we’re at the bottom — let’s let a few more people know about it, and get some money back in there. Because with a whole layer of sellers wiped out of the market for the next 29 days, surely, the only way is up. By Joanna Townsend,September 23, 2008

Being successful

Rather than focusing on strengths too many people focus on their weaknesses and what they are not good at. They feel unworthy of success as a result of this focus and this inturn limits what they can achieve in their life and work.
Their life forms into a 'holding pattern' which is governed by the confines of their perceptions of unnecessary fears of what people may think about them. by staying in these confines their full potential is never reached.
To some degree, we all have some aspect of this in place in our lives but if we focus on our strengths we can achieve so much in our lives. People who are successful accept or ignore their weaknesses and put their energy and focus on their strengths. They know they are worthy of success and are not disappointed by achieving it. The more you value 'you' the more of everything you will attract.©

'Who's next?' The question as billions lost in market chaos

It is becoming clear that there is more bad news in the Wall Street pipeline despite the US Government's bail-out of giant insurer American International Group.Wall Street was looking grim from the outset overnight but it took a very heavy tumble in the final minutes of trade as the frightening new reality set in that some big dominoes are stacked up, waiting to fall.With three of Wall Street's top five banks gone, the focus is on the remaining two and whether they have come clean with any bad news.So investors have run for the exits.Goldman Sachs and Morgan Stanley fell by record amounts after reporting profits yesterday, the former losing as much as 26 per cent, the latter as much as 44 per cent.If you look at Wall Street itself, around half the gains of the bull market that began in 2002 has been erased.And it is a flight to safety as credit markets freeze up in fear and suspicion.For example, gold - the haven in turbulent times such as war - jumped nearly $US85 overnight. Oil was up $US6.And investors are jumping into the safety of US treasury bills. As a result, yields on three-year notes have fallen to their lowest levels since World War II.Fallout to spreadBut no one should think this is just a problem for the wealthy.The fallout is showing signs of spreading from Wall Street to Main Street, according to financial analyst Jeff Kleintop, speaking on Bloomberg."A lot of what's been going on here has really been a Wall Street problem, but obviously when you start to question the solvency of money markets, that hits the man in the street and so you've started to see some of that, you've started to see money move very much into the safest securities," Mr Kleitop said."The [US Federal Reserve] has been on top of that in recent days but clearly needs to put a lot of money to work very short term in this market to ensure there isn't a seize up among banks as investors really question their money market funds, and where the safest place to put their money is in these turbulent times."For some perspective on the scale of the situation, the ratings agency Standard and Poor's says AIG and a dozen other US companies have collectivity lost the equivalent of Switzerland's stock market value so far this year.Their combined market value tumbled by about $US1 trillion by yesterday, exceeding the $US998 billion value of the Swiss market, which is the tenth biggest in the world.And this is just the beginning of the fallout, with economists saying they've experienced nothing like this.The only comparison is with the Great Depression.US regulators are certain to intervene again to restore calm to protect banks as customers worry about their deposits.

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My home is my castle

Owning your own home brings a feeling of security in these difficult and changing times.
At the end of the day it is the place of rest where you can close the door and lock the world out and enjoy the company of your family and friends.
So no matter how humble or how opulent it is your place to 'get away from it all'

Australia's Federal Treasurer's view

Federal Treasurer Wayne Swan says the Australian economy is strong enough to withstand what he describes as the worst global conditions in 25 years.However, Mr Swan says there is no doubt that the economy is slowing.Speaking ahead of this morning's release of the national account figures for the June quarter, the Treasurer told Lyndal Curtis on ABC Radio's AM program Australia was facing tough global economic circumstances."There's no doubt the economy is slowing and it is slowing on the back of the global credit crunch, it's slowing on the back of the 10 interest rate rises that occurred under the Liberal Party," he said."But the extent of that slowing will only be clear when we see the national accounts today."Mr Swan says Australia cannot escape the effects of the credit crunch but maintains the economy is in a good position."I think it's important to get this into perspective," he said."There is a lot of pessimism around on the back of the global credit crunch and the impact it has had, particularly on global stock markets."But here in Australia we have many advantages over the rest of the world."
Yesterday the Reserve Bank (RBA) cut interest rates by 0.25 per cent to 7 per cent but Mr Swan would not comment on whether there should be another cut in the next few months."What I except responsibility for doing is putting in place a disciplined fiscal policy, an investment for the future that will promote growth in a lower inflationary environment," he said."If we want to get interest rates down over time we've got to get inflation down."

Rules for playing the game

Our property markets are changing and we are moving into a new era, where the rules for property investment are different to what they have been to date.

The way many investors have invested in the past just won't work any more at least for some years to come and perhaps the old way of investing will never return.
The times are changing and we are in a difficult economic climate and may be heading to a much more difficult situation in the coming year. We need to be alert not alarmed.
It's time to educate oneself,take note of lessons learned in the past and adapt them to a new and evolving situation where all the cards have not been played by the major players. It is not a time to react emotionally but to detach, survey what is going on in the economy and form an opinion that can be put into an option for action.

Stay fluid, attentive, market ready, and put together several action plans that can be put into motion when they are necessary.
Keep the assets you have and protect them.

Why interest rates are going down

YOU beauty. Interest rates have been cut and happy days are here again. For good measure, we've even got petrol prices coming down.Sorry, don't be too sure about that. The Reserve Bank has cut its official interest rate only because times are getting tougher. That's the way interest rates work: they go up when times are good and come down when times are bad.
To put it another way, a welter of indicators - for retail sales, the home-building industry, business and consumer confidence, levels of debt owed by households and businesses, and job advertisements - suggest the economy has entered a steep dive. Now the Reserve is cutting interest rates in an attempt to pull it out of its dive. Let's hope it succeeds and we suffer nothing worse than a brief and reasonably painless slowdown.
I have to tell you, however, that its record of success at this point in the business cycle isn't reassuring. Of course, those home buyers confident of holding on to their jobs during what economists euphemistically refer to as a "hard landing" have little to fear. For them the pressure is off.And the likelihood of recession in America, Europe and Japan suggests that weaker demand for oil in the developed world will see petrol prices continuing to fall for some time. interest rate movements are like cockroaches - there's always more than one. It's likely that this cut in the official interest rate will be followed by at least another one, probably as soon as next month. How many we get after that, however, depends on whether the economy continues its rapid slowdown next year.On this the Reserve Bank was at pains to point to the parts of the economy that are still strong: the further leap in the prices we are receiving for our exports of coal and iron ore, and the continued growth in business investment in equipment and construction.Provided the economy is holding up overall, the Reserve will be reluctant to cut rates a lot further. That is because the inflation rate is still well above the desired 2-3 per cent range.But if domestic activity continues its dive, the Reserve will soon stop worrying about inflation, confident that rapidly rising prices and weak demand can't coexist. In this case it will continue cutting interest rates next year, but this would be a sign our luck had finally run out. SMH 2/9/08