Is Aussie property really in a price bubble? Well, yes and no. I say yes and no because property has some unique characteristics that make it hard to compare to stock or cryptocurrency bubbles. Let’s have a look at a few of them now.
They’re calling it the One Belt One Road Initiative. It will cover 65 countries, touching more than 4.4 billion people. This project is a massive opportunity for Aussie businesses. And that means it could also be a massive opportunity for you, the Aussie investor.
I’m talking about politics. Specifically, the potential for the Trump administration to start a trade war with China. Before we get into that though, let’s have a look in our own backyard. This latest ‘no sex with staffers rule’, to pretty much stop ministers from being immoral jerks, is the Nanny State’s crowning glory. It says something about the quality of individuals we have vying to run the country that it has come to this.
It’s still not clear if China will start selling US bonds. In fact, it could be that China can’t help but buy more US bonds. As an exporting nation China earns hundreds of billions in foreign currency, particularly US dollars. Over time, they’ve piled up trillions in USD. What can they do with all these dollars?
This week saw the launch of the Royal Commission into the banking industry. Anything that affects the banks is likely to affect the entire Australian share market. The Commonwealth Bank is Australia’s largest company by market capitalisation. Combined, the banks make up a third of our share market. A loss of confidence could be catastrophic.
In 2017 the ability to raise money through an ICO was incredible. You could easily pull in tens of millions worth of fiat money and crypto contributions in a matter of minutes. Inevitably, this left a whole heap of new crypto projects with huge wads of cash. But there was one huge problem.
You’ve probably read all about Chinese tourists fuelling Australia’s tourism boom. But did you know, as more come to enjoy their Aussie holiday, Chinese tourists will change the way you buy everything? While we in the West love our credit cards, Chinese seems to have skipped them altogether.
This is the pathway to mainstream crypto adoption. Making crypto easy, accessible, fun and educating people about it is no easy task. We think that soon you’ll start to see physical locations — shop fronts — open up to give the main street people an ‘on ramp’ to crypto.
As US bond prices collapsed, so too did bond prices in most developed countries. The rise in yields not only devastated bond portfolios, it encouraged thousands of investors to jump out of stock and into high yielding bonds. It caused the All Ordinaries (the 500 largest Aussie stocks) to fall more than 22% from its high in 1994. Question is, could we see a similar situation play out in 2018?
Australia, as an investment destination, suffers from an increase in risk perceptions. Foreign capital is less willing to invest here, or buy debt issued by the banks to fund the mortgages of Aussie battlers. As a result, the Aussie dollar falls. However, the ‘magic’ of a falling dollar is that it increases the purchasing power of foreign currency.