A return to the mining boom could put upward pressure on interest rates. And that would threaten housing, especially in the highly leveraged east coast cities. So the success of one of Australia’s key pillars may be a threat to the other.
The boom times are here for everyone it seems…Well, not everyone. The poor old Australian stock market is lagging behind in this period of record highs. In fact, it still needs to rise about 17% to get to the levels of 10 years ago.
The general view has gone from one of another potential interest rate cut, to a question of when the rate rising cycle will start. But the just-completed reporting season didn’t exactly confirm that view. Overall, earnings growth was lacklustre. But that’s what you should expect in a low growth economy.
However, if Neilson’s investments continue to rise, beating the market comfortably, his fund could claw back capital, leading to higher profits and dividends into the future.
Even if you’ve taken your profits out of property and invested them elsewhere, you still can’t afford to ignore this issue. With so many Australians holding mortgages, and the big four banks making up such a large part of our economy, any shock that starts in housing could spread across the entire country.
As a former financial planner, some of the greatest value I could add to my clients’ portfolios was by reducing their tax liabilities. Both current taxes and future ones. But there’s a difference between a good tax strategy, and investing because of a tax benefit.
The Turnbull government yesterday announced a proposal that would see states hand over the identities of all Australian drivers in a bid to strengthen national security laws. It would mean authorities would be able to identify any Australian with a driver’s license in seconds using facial recognition technology.
You can still profit in a market trending sideways. All you have to do is come up with an investment idea, identify growing trends and only invest in what you understand.
From an investment perspective, there are a few ways to play this gas crisis. Australia desperately needs to develop new sources of gas to supply the domestic market. There are a number of small companies developing their reserves now to do this in the years to come.
If this support continues — and the signs are positive — then the Aussie market should indeed move higher in the coming weeks. And you just might see it break through the elusive 6,000 point barrier. If it can do that, it will be a decisive victory for the bulls.