Profiting from Poor Leadership

Publisher’s note: What is Day Zero?

You’ll have to wait until Tuesday to find out!

But it’s a small but subtle shift in the direction of our financial publishing business. And, while that may sound indulgent, it very much involves you.

In fact we’d like to mail you something very special to commemorate this shift…

Our primary goal since 2005 has been to challenge you, make you think, and give you useful ideas that can make you safer, smarter or richer.

Sometimes, to do that effectively, you need to take stock. Reassess your goals. Reinvigorate. That’s kind of what Day Zero is about.

But, as you’ll see on Tuesday, it’s also about coolly assessing what kind of Australia we’re going to be living and investing in between now and 2025.

The events of 2008/09 were a great example of how massive, complex and far-away monetary events can adversely impact Australian investors. Even if, economically, we got off comparatively lightly.

Yet with all the talk of ‘the Australian Economic Miracle avoiding a recession’, it’s easy to forget that Aussie stock investors and retirement savers were hit hard during the Global Financial Crisis.

The ASX still has ground to make up on its October 2007 high. And that was nearly ten years ago. By comparison the US S&P 500 index is up 46%, and the UK’s FTSE 100 is up 6%. Aussie stocks have suffered more than any other major index from the subprime bust. And that’s despite a domestic commodities boom that has raged until recently.

Now imagine what might happen when the exponentially larger global debt bubble bursts. And when there’s no mining boom to shield the economy.

We’ve been imagining. And we’ve come up with a plan. All will be revealed Tuesday…

Regards,

Kris Sayce,
Publisher, Money Weekend

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Regulatory incompetence was a strong theme through many of the Money Morning articles this week. The performances of the political circus are occasionally infuriating and usually boring, but you can’t afford to ignore the effects they can have on your wealth. Often negative, but sometimes positive.

In Money Morning this week, your editors look at Australia’s energy market, interest rates, stocks, housing, and the various dangers and opportunities presented by years of political chaos and failure.

It’s not all bleak news; Greg and Sam have each identified unique opportunities on the Aussie market, created by years of poor public policy beginning to unravel. Read on for all the details…

On Monday Greg explained why you shouldn’t trust government responses to the housing bubble. The recent Victorian government steps to assist first home buyers into the market will do nothing of the sort. It will look like it’s helping. And it will eventually put more money in politicians’ pockets. But it will do nothing to address the problem. In fact, it will make the problem worse. And Victoria’s ‘leaders’ know that. That’s the game of politics.

How can you invest in Australia, knowing there’s such a huge time bomb at the heart of our economy? How much should it affect your plans? For Greg’s answer, you can find Monday’s article here.

Public policy failure, and the malinvestment and danger it causes in markets, were the continued theme on Tuesday. Greg looked at Australia’s energy market, where a decade-long failure of policy has led to supply shortages that could be a serious drag on Australian industry. Not to mention a significant cost for retail consumers. You can read why in Tuesday’s Money Morning, here.

The only upside Greg sees to this supply crunch is the possibility for a small group of investors to benefit. Find out how you could be one of them, here.

With the RBA choosing to keep rates on hold on Tuesday, Wednesday’s Money Morning naturally returned to the housing market. House prices just keep climbing. And with rates on hold alongside a strengthening economy, Greg expects that’s also good news for stocks. For now…

Greg argues that, with growth picking up and Australia’s resources exports improving so far this year, now is the time for the RBA to raise rates. But, like most central banks, the RBA is much quicker to cut rates than raise them. That may leave them with an empty quiver in the event of any crisis in the markets. But danger in the future doesn’t prevent you from making money today. And low rates are certainly providing a tailwind to the stock market. Read the details here.

Sam’s article Thursday also looked at the RBA’s announcement, including the Bank’s expectation for jobs growth. But Sam has some bad news. The RBA’s employment projections may be wildly optimistic. Sam argues that technological changes over the next 5­–10 years could see as many as 40% of Aussie jobs eliminated.

Job losses like that would be a disaster for our economy. Even those who manage to hold onto their job, or already retired, would see massive disruptions as recession hits our economy hard.

But it doesn’t have to be that way. For every job lost to technological advancement, another could be created by it. Or more. But it would take bold moves from industry leaders and government to see that happen. And while there may be hints of that starting elsewhere in the world, the Australian government isn’t showing any signs of seeing this potential disaster coming, or preparing for it. To read how you can be ready for a changing world, you can find Sam’s article here.

Sam rounded out the week with a personal cybersecurity experience, demonstrating the growing dangers online. Every new digital convenience can, potentially, come with new vulnerabilities. Sam argues that, if you aren’t taking steps to protect your money and personal information online, it’s basically the same as leaving your house with the front door wide open. To find out more about guarding yourself online, you can read Friday’s Money Morning here.

And returning to this week’s theme of regulation, leadership and the ripples they cause in markets, have you checked out the latest special report from Sam? As first medical and then recreational marijuana has become legalised in waves across the US, Canada and others, vast fortunes have been made by quick-thinking investors. Now, that wave is finally reaching Australia. That’s good news for many suffering from terrible diseases or conditions who will find new avenues for treatment. And Sam says it could also be good news for you as an investor. This week he released a special new report with two Aussie companies that he believes could grow an incredible pot fortune for you. Click here to read more.

In the podcast this week, Kris and Woody talk about the aftermath of last week’s Snapchat IPO. They touch on the disasters of central banking, and why Australia could use a bit of financial anarchy.

Oh, and before I go, thanks to Greg M for writing in. He suggests that I should add the price of Bitcoin to the numbers at the end of Money Weekend. I add those results there each week to provide a little context for what we’ve written, and in case they may be useful to you. If there’s anything that you’d like to see added feel free to let me know at letter@moneymorning.com.au. If it’s likely to be of interest to your fellow Money Weekend readers, I’ll include it.

Cheers,

Tyler Jefferson,
Editor, Money Weekend

Publisher’s Pick: Crunch Point at Curtis Island’ How a failed $60 billion gamble by Australia’s three biggest energy giants could pay off big for you… [More]

Numbers of Interest, as of Friday

Aussie Dollar to US Dollar: 75.17

Gold: US$1,201.30 (AU$1,598.32) per troy ounce

Silver: US$17.13 (AU$22.79) per troy ounce

Bitcoin: US$1,199.97 (AU$ 1596.55)

West Texas Intermediate Crude Oil: US$49.64 per barrel

ASX 200: 5,775.60


Tyler Jefferson joined Port Phillip Publishing in 2012. With a background in publishing, he started out as part of the team working behind the scenes with your Editors to bring you Money Morning each day.

When he joined, Tyler was Port Phillip Publishing’s 12th employee. Today that number has grown to over 50, as more and more readers turn to Money Morning as their source for independent financial analysis and ideas.

Today as Managing Editor, Tyler still edits the articles you read each day. Along with that, he occasionally contributes to Money Morning with his own irreverent take on the most interesting news and opportunities for you.


Money Morning Australia