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.
Imagine bringing in a billion per minute. This is exactly what Masayoshi Son did in a 45 minute meeting. Now armed to the teeth with cash, Son is busy finding places to put it to work. Yet strangely, he’s made an unorthodox investment that’s left analysts scratching their heads.
Amongst all the panic and hand-wringing over what the volatility of the past week means, we haven’t heard much about China. Which is kind of crucial, especially for Australia. Put simply (and accurately) if China holds up, Australia will be fine. So, is China holding up?
Something is risky if there’s a high probability to lose money, right? Investors are told investing in an index or ETF is far safer than the alternative, holding picked stocks. So not only can you make amazing returns, you can also take on far less risk. Dreams do come true... but try telling that to anyone who bought an ETF tracking volatility.
From a purely technical (charting) perspective, US stocks are due for a bounce. Like the price of bitcoin early last week, the S&P500 is now ‘oversold’. The important thing to watch here is how far the bounce takes stocks. If, for example, you see the market rally back to around 2,700 points and then run out of steam, I think you’ll see stocks subsequently fall to new lows.