//July

Our Forecasting Record

OUR FORECASTING RECORD Before we start the dictionary defines a forecast as:- Verb: forecast; predict or estimate (a future event or trend). Noun: forecast; a calculation or estimate of future events based on past events, especially coming weather or a financial trend. It’s easy to make a forecast. “I reckon my footy team the crows will play in the Grand Final this year!” Every day people from all walks of life make all sorts of predictions. “It’s going to rain today.” “Trump will never build that wall.” And “of course the Property Market is going to Crash….” But it’s actually very difficult to make a Non-Emotional Scientifically Based Prediction. It’s even harder to get it right! However, every year that’s exactly what we do. Do we always get it right? Unfortunately, No. But the statistical probability of getting it correct as often as we […] 150

Rise of the Nano House

RISE OF THE NANO HOUSE Moore’s Law states that computer processor speeds will double every two years, in a similar way Ricardo’s Law (of Rent) explains the continually diminishing size of Hong Kong apartments! The relentless technological advancements that are driving the rise of Nano Computers are also having the same effect on apartment sizes in Hong Kong. You see at $25,000 per m2 Hong Kong apartment space is not small change. It’s no wonder developers are doing their best to extract the maximum profit from their sites by shrinking apartment sizes and building sky high – the Cantillon Effect explains this. (To read about the Cantillon Effect click here). These Micro Flats or as I like to call them, Nano-Apartments, are typically as small as 20m2 and cost $500,000! They can be as small as 11m2 in size, but rent for A$660 per month on less than […] 150

“It’s Only a Few Grains of Rice….”

“IT’S ONLY A FEW GRAINS OF RICE…” Have you ever heard the story about the invention of the game of chess? Well the story goes something like this….. Once upon a time there was a very clever Indian mathematician who invented a board game that he called ‘Chess’. He took the game and showed it to the Emperor of India. The Emperor was so impressed with the game that he said to the inventor to name his price. The mathematician replied that all he wanted was a single grain of rice for the first square, two grains for the next square, four for the next, and eight for the next and so on for all sixty four squares on the board. The emperor chuckled to himself and immediately agreed; amazed that such a clever man would ask for so little. […] 150
By | 2018-09-21T13:22:22+00:00 July 14th, 2017|Education, Wealth|0 Comments

End of Year Tax Threats and Scams

END OF YEAR TAX THREATS AND SCAMS Please be advised that phone call scams are very common at tax time. If anyone calls you talking about rebates you are entitled to – they are scamming to get your bank details. If anyone calls making threats about ATO investigations claiming to be from the ATO legal department – its an extortion scam and they will try to tough talk you into making a payment to get a non existent tax case against you dropped. Its important to remember the ATO will never call demanding payments. They send out letters informing you of audits if applicable and if there was a mystery rebate you are entitled to your accountant should tell you about it. Never give bank details over the phone or your TFN. In both cases its nonsense, so if in doubt call […] 150
By | 2018-09-21T13:26:07+00:00 July 5th, 2017|Wealth|0 Comments

The Cantillon Effect

THE CANTILLON EFFECT In the early 1890’s Australia’s population was approximately 4 million, not bad for a country that still existed as separate states and yet according to many, Australia lay claim to an even more extraordinary fact. Melbourne housed the world’s 3rd tallest building – that’s right! Completed in 1889, the APA Australian Building was a full 12 stories or a massive 53m tall. Now to put that into context, a small colony in the Empire had the pizzazz to build the world’s 3rd tallest building? Amazing I’d say! However what followed is not dissimilar to the events of the GFC, with Australia in the early 1890’s suffering horrendous falls in both the share and property markets and the onset of a 1930’s styled depression. An enormous contraction in credit occurred with many banks either failing or having their assets frozen until they were recapitalised. But this brings about 150

There is NO housing Bubble (YET!)

THERE IS NO HOUSING BUBBLE (YET!) S&P Dow Jones Indices today released the latest results for the S&P CoreLogic Case-Shiller Indices and the news is ALL good! Prices are up! (a 5.5% gain) The default rate on mortgages are still low with household debt at manageable levels. The demand for housing continues to exceed supply and the banks are happily extending more and more credit. We are told that the demand for housing is currently outstripping supply and inventory levels are very low.   But reading the analysis, reproduced below, has me scratching my head. NO mention of the drivers? No mention of technological advancements, the improvements in profitability, the continual enhancement of infrastructure, population growth and changing household demographics. The only mention of credit is the throw-away comment that “financing is available”….. Please understand the “The Effortless Advantage” as defined by classical economist David Ricardo. It explains how our 150