In the current round of Web Seminars we are offering, I highlight four key factors that are a MUST… if you expect to draw any credible conclusions.

1.    Record Population Growth
2.    Investors Have Fled The Market
3.    Home Ownership Unattractive
4.    New Construction Has Stalled Badly

1. RECORD POPULATION GROWTH

Australia is currently experiencing the fastest population growth in 200 years. Our population is predicted to grow by 350,000 this year for the first time in over 200 years. That represents approximately the combined total population of Geelong, Cairns & Bunbury; or the whole of Canberra.

The 1850′s Gold Rush years, Post World War 1 (1919 onwards) and post World War 2 (1946 onwards) saw our 3 previous population explosions. Today we see a similar pattern emerging; i.e. rapid and prolonged growth, too few workers and pro-immigration government policies.

Record population growth means a significantly stronger demand for new housing! Given our record numbers of new migrants will generally rent for a season, demand for rental properties will continue to strengthen.

2. INVESTORS HAVE FLED THE MARKET

Rising interest rates in recent years have squeezed rental yields making property look unaffordable. Add to the mix a booming stock market (averaged over 20% per year between 2004 and 2007) and one can see why property has not been the preferred investment vehicle of recent years.

Since becoming familiar with the term “subprime”, seeing the global credit crisis unfold… and hearing of property values in the US & UK falling by 30 & 40%, many would-be-investors have opted to stay on “strike”. It’s fair to say that since the highs of mid 2004 only the ‘brave’ have continued to invest in property.

Investor demand accounts for about 50% of all new housing starts and about 70% of unit starts. Therefore, that investors have fled the market means significant negative impact on the supply of new housing and increased demand on existing rental accommodation.

3. HOME OWNERSHIP HAS BEEN UNATTRACTIVE

As with investors. the housing affordability barrier, rising interest rates (& general living costs) and of course the US initiated subprime crisis has left many would-be home owners lacking the confidence to purchase.

Scared, priced out of the market, unable to secure funding or unable to service a loan? regardless of the reason why new home ownership has been unattractive; the result has been that many renters in recent years have simply continued to rent. This has placed further pressure on existing rental housing stock

4. NEW CONSTRUCTION HAS STALLED BADLY

Since 2005 the absolute number of completed residential properties has fallen and they are forecast to continue falling in 2009. The US subprime crisis cemented this downward trend in demand for new properties. Add to that, in recent years we have seen the high profile bankruptcy of some large developers along with massive financial pressure on many smaller developers. The cost of finance has skyrocketed for developers… i.e. if they can find a lender who will back them. Understandably, developers are very nervous… many have simply shelved their new projects until such time as they see clear evidence that investors have returned to the market.

Developers going broke, developers shelving projects and/or developers unable to secure funding means new construction has stalled badly and as a result greatly reduced the supply of new property further adding to pressures on existing housing stocks.

DISSECTING THE EVIDENCE

• FACT: We are experiencing the greatest housing shortage in 200 years
• FACT: Because of the new Federal Government’s immigration policy, we are experiencing the strongest population growth in 200 years
• FACT: Since about mid 2004, broadly speaking investors have fled the market
• FACT: Since about mid 2004, broadly speaking home ownership has remained unattractive and renters have continued renting
• FACT: Since about mid 2004 the construction of new dwellings has stalled badly
• FACT: In mid 2004, national rental vacancy levels were about 3.5%. This level is considered a balanced market. Rental vacancy levels have dropped to below 1.5% now and are expected to continue to drop to historical lows of between 0.5% and 1% in 2009. These levels represent a stressed market
• FACT: When the demand for rental housing grows at a faster pace than supply, increased demand can be offset by diminishing vacancy levels
• FACT: When vacancy levels reach just 1% it is said that we have NO VACANCY, as the 1% represents the few days between tenants moving and carpets being cleaned etc… prior to a new tenant moving in
• FACT: Therefore, once vacancy levels fall to 1%… there is no room left to offset increasing demand by diminishing vacancy levels
• FACT: When demand increases and supply decreases and vacancy levels are already stressed; i.e. no vacancy… market forces mean rents have to go up… and significantly where population growth is significant
• FACT: Interest rates are the lowest they have been in years and are expected to reach (near) record lows by mid 2009

Now you have the FACTS, rather than simply “opinions”; may I suggest you draw your own conclusions as to what might happen with Australian property in mid to late 2009?

• With the cost of renting about to soar and the cost of ownership dropping significantly (i.e. rental incomes up and interest charges down), what do you expect the market will do?
• With stock market volatility and uncertainty and interest earned on cash deposited dropping away, what do you expect the market will do?
• With serious increases to the first home owners grant, what do you expect this group to do?
• Given rental properties vacated by first home owners will not produce a glut… because vacancy levels are at an all time low (stressed market) and the population is growing by the size of Canberra each year, what do you think the market will do?

Can I go out on a limb and tell you what I think; I may be wrong, but I don’t think I am?

1. I expect rents to soar in 2009
2. I expect interest rates to continue to drop next month and in 2009
3. I expect confidence to come back to the market, drawing back owners and renters alike
4. Given there is a lag of a few years from when developers decide to build again and new stock being ready to live in… I see no relief for the poor tenant for at least a few years
5. I also believe that the combination of all that I have just outlined will result in the next property price surge

So, in summary…

Those who have been building a property portfolio as their preferred vehicle for funding their retirements (NB: assuming they bought the right residential property in the right areas) are soon going to experience the property investors trifecta:

1. Rising incomes (rents)
2. Falling costs (interest)
3. Increasing equity (values)

I would love to address the subject “We are not the USA” and compare the FACTS relating to how we are different and why what happened there will not happen here; but I will save that for another day.

May I invite you to register your interest for either our next FREE Web Seminar this Wednesday evening… or if you let us know what other time(s) best work for you, we will run them according to demand CLICK HERE.

Happy Investing,

Nick Lockhart
mrd customer care program… because investing is personal

You can register for next Wednesday evening; December 3rd… or nominate a preferred time when you would like us to host one… and if enough people want a lunch time or weekend one e.g. we’ll arrange it!

CLICK HERE TO REGISTER FOR THIS FREE EVENT NOW!

You will learn…

• Four important factors that must be considered if you want to accurately analyse the state of our property market
• Rental market equilibrium; how is it reached and what does it mean
• What are balanced and stressed rental markets and what must follow
• Changing property cycle and fresh wealth creation opportunities
• How the US property market works and why they got themselves into so much trouble
• Why the value of your home will NOT follow that of Europe and the USA
• Plus much more (including answers to YOUR questions, at the end)

Risk is avoided by right knowledge. Don’t assume that you will not learn anything and don’t assume this is a veiled disguise to sell property. mrd is and remains committed to mentoring and providing quality education to those hungry to learn… FREE of charge!

This is an opportunity to INNOCULATE yourself against small mindedness, fear and negativity… or just get a hold of the FACTS so your financial decisions will not be the result of confusing opinions but rather considered reasoning. CONFUSION can produce NO good thing but understanding will empower you to make those decisions that are right for you!

• Register NOW
• Join in our “Virtual Conference Room”
• Gain knowledge
• Dispel confusion
• Eliminate unnecessary risk
• Secure a competitive edge for 2009

The presentation takes about 90 minutes, followed by Q’s & A’s. Hang around and ask a Q or sit back and listen to those asked by other people.

Feedback from our previous 3 Web Seminars: testimonies from attendees

So may I respectfully encourage you to put aside 90 minutes and from the comfort of your own home allow me to take you beyond opinion to economic analysis. I’ll focus on a comprehensive market analysis; from an economics paradigm.

“What In The World Is Going On With Property” Web Seminar

WHERE:
- Online (Broadband connection & Speakers or headphones required)

WHEN:
- Wednesday 3rd December 2008

TIME:
- 6:00pm in WA
- 6:30pm in NT
- 7:00pm in QLD
- 7:30pm in SA
- 8:00pm (NSW, ACT, VIC & TAS)

DURATION:
90 minutes (or less); plus time for questions at the end

PLEASE NOTE:

1. Registrations are essential as we need to send you an invitation link that you click at the allotted time to bring you in on the event
2. In keeping with our policy of keeping education FREE, mrd will be picking up the entire cost of this event; so register now by either phoning or using our secure online link

• Telephone Registration: 0424 144 103
• Register Online – CLICK HERE

CLIENT FEEDBACK FROM EARLIER WEB SEMINARS – Click Here

Thanks, I look forward to “seeing” you there.

Happy Investing,

Nick Lockhart
mrd customer care program… because investing is personal

Those in stage 1 will have talked to Wendy and will be aware that you need to be speaking with your broker/financier to organise your finances now.

Glencorp Property Management are very efficient when it comes to finding a tenant for your property and will begin the process as soon as the certificate of occupation has been issued.  This will be issued before the certificate of completion and will allow the property manager to begin advertising and set a date for the lease to begin.

We recently finished an updated Area Research Report on the Cairns region with the latest information on its industries, infrastructure, development and property market.  Click here if you would like to take a look at this.

Again, keep in touch with your property strategist and/or Wendy as you move towards settlement and don’t hesitate to call if you have any queries or concerns.

Stage 1

Building 25

• Internal cleaning in progress
• Carpet install in progress

Building 24

• Internal painting complete

Building 23

• Plasterer complete
• Painters to start internal gloss work on Friday 14/11/2008

Stage 2

Building 22

• Internal painting ready to start
• Granite bench tops on site

Building 21

• Building ready for defecting by supervisor
• Plumbing, electrical and air conditioning fit offs complete

Building 20

• Plumbing & electrical fit off 80% complete

Building 19

• Building ready for defecting by supervisor
• Plumbing, electrical & airconditioning fit offs complete

Building 18

• Carpentry second fix (skirting, doors, door frames) 50%
• Ceiling fan and air condition head unit install complete

Building 17

• Kitchen install complete
• Main floor tiles laid
• Waterproofing complete in wet areas and ready for tiles

Building 16

• Ground & first floor ready for painter to start
• Second floor kitchens installed

Stage 3

Building 15

• First floor block work complete
• Scaffold raised and ready to start second floor formwork

Building 14

• First floor block work 80% complete

Building 13

• Second floor suspended slab reinforcement in progress
• Second floor suspended slab pour booked for Monday 17/11/08

Stage 4

Building 12

• Ground & first floor ready for painter to start

Building 11

• Internal plasterboard wall linings 85%

Building 10

• Internal plasterboard wall linings 40%

Building 9

• Fire check ceilings to top floor completed

Building 8

• Roof tiling 85%
• Ground floor internal wall frames completed

Building 7

• Ground & first floor internal wall framing completed

Building 6

• External textured render 70%
• Ground & first floor internal wall framing completed

Building 5

• Ground floor slab formwork complete
• Slab pour booked for Wednesday 19/11/08

Building 4

• Ground pad completed

Estimated completion –

Stage One – 30/11/2008
Stage Two – Jan/Feb 2009

That means that aside from those 20 who missed out last time, we can accommodate another 30 people; actually 27 now as 3 of those spots have already been taken up.

At The Conclusion Of This Event You Will Understand

• The current state of the Australian property market
• Which way property rents & values are likely to head, when… and why?
• What impact the current economic global slowdown will have on the value of your home and your investments

Nothing good is produced by confusion! So when it comes to you successfully navigating your way forward; in these more turbulent times… DON’T BE CONFUSED; it is a sure recipe for disaster!!!

So if:

• The constant negativity in the media has left you unsettled… even a little; or
• You question where things are at… and what the future may look like; or
• You have been told that Australian property values could fall by up to 40%; then…

It’s time for your inoculation!

My goal for this event is simple:

“DISPEL CONFUSION“

Gaining well researched and sound KNOWLEDGE will position your to make the very best financial decisions in 2009 and beyond. So may I respectfully suggest you place a PRIORITY on participating in this event at this time?

Put aside 90 minutes and, from the comfort of your own home, allow me to move beyond opinion to economic analysis. I want to focus specifically on an analyse of market rents and market values… from an economics paradigm.

MY PROMISE is simple. This “value add” evening will not resemble what I am seeing a bit of lately… desperate real estate agents “pushing their thing”, any way they can. That’s simply not in the DNA of mrd!

BE WARNED:

• There are a lot of “mixed messages” and numerous opinions being bandied right now
• Without sound research and clear understanding this will produce confusion
• Where confusion reigns nothing good is produced
• RIGHT NOW people are making financial decisions, from a position of confusion
• Mistakes are being made every daily

By participating in this FREE event, you will discover that I agree with some of the claims being made by various economists and analysts (some claims line up with warnings that mrd has been sounding for years). You will also learn that I strongly refute other claims being made by some… and I will show you exactly why.

I am not suggesting that you suffer through 90 minutes listening of my subjective (biased) opinions. NO! I will objectively unravel economic reality and look at the ACTUAL current state of our property market. Then, based on solid research and indisputable economic laws… suggest the most likely outcomes for property values and rentals moving forward.

Thanks for the encouraging feedback from those who participated this week. It seems everybody was pleasantly surprised and found the information more relevant and more beneficial than expected.

“What In The World Is Going On With Property” Web Seminar

WHERE:
- Online (Broadband connection & Speakers or headphones required)

WHEN:
- Wednesday 19th November 2008

TIME:
- 6:00pm in WA
- 7:00pm in Qld
- 7:30pm in SA & NT
- 8:00pm (NSW, ACT, VIC & TA)

DURATION:
90 minutes (or less); plus time for questions at the end

Registrations are essential as we need to send you an invitation link that you click at the allotted time to bring you in on the event.

In keeping with our policy of keeping education FREE, mrd will be picking up the entire cost of this event; so register now by either phoning or using our secure online link.

• Telephone Registration: 0424 144 103
• Register Online – CLICK HERE
• Find Out More About This Event – CLICK HERE

CLIENT FEEDBACK FROM EARLIER WEB SEMINARS:
Click Here

Thanks {SPOUSES_SALUTATION}, I hope to “see” you there.

Kind regards,

Nick Lockhart
mrd; Keeping Education FREE!

Those who participated offered encouraging feedback and commented that they thought the information given had been personally beneficial and insightful.

Tomorrow night (Wednesday 12th) I am hosting the 2nd of these two events… and I invite you to participate. I would love the opportunity to clear the air with regards to:

- The current state of the property market

– Which way property rents & values are likely to head; and when

- How will property be affected by the current economic global slowdown

Have you been ‘freaked out’ or concerned by the negative media coverage of recent weeks? Have you heard it said that Australian property values could fall by 40%? To give you the best chance of making right financial decisions for 2009 and beyond; I encourage you to put the time aside to participate in this event! NB: I will not focus on property investing in any traditional sense; instead I will be looking at rents and values from an economics perspective.

WARNING: There are a lot of “mixed messages” being bandied out there right now and people are making financial decisions based on these messages / opinions. Some claims being made I agree with; some line up with long term warnings I have been sounding for years. Others, I strongly refute. I am not interested in simply offering yet another subjective (biased) opinion. I want to objectively unravel the economic reality surrounding the current state of our property market. Then, based on solid research and indisputable economic laws … suggest the most likely outcome for property values moving forward.

“What In The World Is Going On With Property” Web Seminar

WHERE:

Online (Broadband connection & Speakers or headphones required)

WHEN:

Wednesday 12th November 2008

TIME:

6:00pm in WA

7:00pm in Qld

7:30pm in SA & NT

8:00pm (NSW, ACT, VIC & TA)

DURATION:

About an hour and a bit; plus question & answer time at the end

Registrations are essential as we need to send you an invitation link that you click at the allotted time to bring you in on the event. The response for this week’s web seminar has been very strong and is near capacity. We will either have to upgrade the “virtual meeting room” that we have booked to one that can accommodate more people or look at running a third event for next week… and defer some people from this week event.

In keeping with our policy of (wherever possible) keeping education FREE, mrd will be picking up the entire cost of this event. Register for FREE; either online or by phone.

- Register Online or

- Telephone Registration: 0424 144 103

- Find Out More About This Event

Thanks {SPOUSES_SALUTATION}, I hope to “see” you there.

Kind regards,

Nick Lockhart

Last month there was talk that the RBA would drop official interest rates by 50 basis points or 0.5%. I believed there was justification for them dropping rates by a full 100 basis points; or 1%. I kept my opinion to myself and as history has shown, they did…

The majority of the talk from economists, journalists and commentators is that this afternoon the RBA will reduce rates by another 0.5% (50 basis points). A few economists disagree and say that with inflation still high and the impact of the Australian Government’s stimulus package yet to kick in (in about a month they unleash $10.4b on the economy) there will be no rate cut… or perhaps just 0.25% (25 basis points).

I disagree. Personally I believe there is justification for a rate cut of at least 0.75% and perhaps another full 1%.

Yes we have higher inflation, but the job of the RBA is to keep it between 2% and 3% over the cycle and right now the need to avoid recession is paramount. With the exception of Qld & WA (the resource rich states) the rest of Australia – especially NSW – is doing it very tough. Our biggest threat is that unemployment will rise out of control, further fuelling a drop in both business and consumer confidence; already pushed lower than has been economically justified, by irresponsible negative journalism and those ‘painful pessimists’ being given way too much air play.

I can no more pick what the RBA will do than I can a Melbourne Cup winner… but I can offer Nick’s opinion that the announcement of just a 0.5% rate cut this afternoon will only be “tinkering at the edges”. Personally I half expect the Reserve to go further. Regardless, today’s announcement means a happy day for Katrina and me. Who needs to pick a winner on the horses; we are guaranteed a BIG win?

Christmas is just around the corner, presenting the RBA with a natural stimulus OPPORTUNITY before we hit December and many businesses start to wind down. As mentioned the government’s $10.4b stimulus package will kick in in a month and yes that will help. Leaving a rate cut above 0.5% until December (or worse; early 2009) will miss a window of opportunity to give the Australian economy a serious inoculation against very low business and consumer confidence.

I think Melbourne Cup Day 2008 could see a lot of Australian’s and Australian business owners celebrating a great win when the RBA makes it’s announcement this afternoon. If so, don’t be overly surprised. Globally speaking our interest rates are still high and the RBA is mindful of the many businesses contemplating letting staff go prior to Christmas. I believe that some better than expected news is just what is needed.

The government’s stimulus package will go a long way towards getting consumers spending. This will create jobs and lift business profits. My justification for suggesting the RBA could go even further than economists expect is more about confidence and employment than it is about spending, however.

Do you read my articles in our Friday newsletters? I hope you do… in which case you would already know that I have my considered views on many subjects economical. I am not on the RBA board and have no say in what they do to interest rates. So regardless of how far they may move this afternoon, I believe there remains an argument for a cut of at least 0.75%; with more to follow in the months ahead!

CELEBRATE because whether or not you bet on horse races… every mortgage holder will this afternoon celebrate some sort of a financial windfall!

Happy Investing,

Nick Lockhart

PS: Have you been “freaked out” lately thinking house prices in Australia are about to crash by up to 40%? IMPORTANT!!! Before you act on fear, emotion, the counsel from media and/or those pessimists (who are W.R.O.N.G. by the way), why not get the facts? You can register for FREE to participate in one of two web seminars I am hosting – tomorrow evening and next Wednesday evening. I will clearly articulate FACTS and you will go away encouraged!!!

Click here to register for our FREE web seminar now

Have you been “freaked out” lately… thinking house prices in Australia are about to crash by up to 40%?

IMPORTANT!!! Before you act on fear, emotion, the counsel from media and/or those pessimists (who are W.R.O.N.G. by the way), why not get the facts?

Register NOW for FREE to participate in Nick’s 3rd mrd web seminar – next Wednesday evening.

On Wednesday evening just gone, Nick clearly articulated FACTS that assisted those who participated to decipher between subjective emotion and objective facts. The result was everybody went away encouraged!!!

• Are you concerned about the possibility of falling house values?
• Is it too late now to establish a retirement fund?
• Do you feel afraid and pressured to sell?
• Is cashflow a problem right now?
• Do you feel chocked with debt?
• How do you avoid selling… yet still improve your cashflow?
• What are the things that you should be doing right now?
• What are the things that you should NOT be doing right now?

To help you to make better understand where the property market is positioned right now and teach you ways to protect your asset base, I am hosting a couple of web based property market briefings next month.

You are invited to log on & phone in to this event, from the comfort of your own home or office. All you will need is a computer connected to the Internet (broadband connection). We will provide you with a local telephone number and a pin number; so that all you will need to do is call in at the appointed time; at our cost.

NB: Due to the different time zones, these sessions will be held as follows:

2nd “What In The World Is Going On With Property”
FREE Web Seminar; Wednesday 5th November 2008

2nd “What In The World Is Going On With Property”
FREE Web Seminar; Wednesday 12th November 2008

2nd “What In The World Is Going On With Property”
FREE Web Seminar; Wednesday 19th November 2008

Due to the popular demand for this event, we will be repeating it next Wednesday 26th. This event is already filling, register now to avoid disappointment.

4th “What In The World Is Going On With Property”
FREE Web Seminar; Wednesday 26th November 2008

• 6:00 pm in WA
• 6:30 pm in NT
• 7:00 pm in QLD
• 7:30 pm in SA
• 8:00 pm in VIC, NSW & TA

You WILL benefit from participating in this online event! We will address the latest issues and up to date, relevant questions many are asking right now.

To reserve your “virtual” seat simply click here or call 0424-144-103

mrd, Keeping Education FREE

A well know finance industry figure recently launched a series of seminars. After reading the professionally crafted sales email, designed to invoke fear and panic and have me rushing to attend his paid event, I decided to address what appears to be a case of insincere opportunism.

Studying the world of global finance since last year is his authority for making such predictions. He proposed failure within our financial system is so systemic it is irreversible;  concluding our property market would soon crash.

A man (or a woman) with an experience is never at the mercy of a man with an opinion.

I lose respect for those who prey on the unsuspecting; profiting from their fear. My criticism is not isolated to this example; there are numerous other ‘self appointed experts’ seducing the vulnerable. Fear of the possible fallout from the global credit crisis has provided a perfect vehicle for some to sell seminars, newsletter subscriptions and various services… such as finance broking in this instance.

Let me quote a line from the robot on the TV show Lost In Space:

“Warning, Warning; Danger Approaching”

Step 1 of this sales process: You’re at work when an email arrives. Negative from start to finish, it leaves you feeling “sick” with fear and despair. Having watched 60 Minutes last week… and listening to the guy who works next to you, your emotions were already frail. Now confusion reigns, you wonder if your security might collapse about you. “Why not”, you say to yourself; and in a scared moment you whip out your credit card and register for this event. After all, times are tough and you don’t want to live a life of regret.

Step 2 of this sales process: You take your seat after having spoken with no less than 8 other concerned investors. You’re glad you made the effort to attend; those who didn’t must be in denial, you think to yourself. The meeting starts and soon come the charts, the graphs and lots of complicated information. You don’t really understand all this stuff about Australia’s debt to savings level and income and productivity, etc; but the guy speaking seems to know what he’s talking about!

At work the next day you discuss everything best you can with the guy next to you. He’s happy that you are coming round to his way of thinking… after all misery loves company. You believe that you need to have your properties refinanced NOW before their values drop. The guy from the seminar will handle it for you.

Follow The Timeline:

• Fear and uncertainty has prevailed for some weeks now
• You receive an email, written by a paid professional, that left you feeling that you should to attend his paid seminar
• Once there you’re convinced your greatest chance of surviving the impending property crash is to refinance your properties now
• You are given new lines of credit against the increased value of your properties
• You are encouraged to draw down all you can from those new lines of credit and deposit the money safely into an offset account against your loans. Why? To protect you from a so called margin call from your lender; after property values drop. NB: A broker is not paid a commission until a loan is drawn down

When consumer sentiment is low and people are fearful, this will perhaps sound like wise rationale! Caution is recommended, however, whenever someone offers to rewrite existing loans. The benefits to you should always outweigh the costs you will incur.

NB: These seminars are in the future so I may be completely wrong; but if it smells like a duck, waddles like a duck and quacks like a duck… chances are… it’s a duck!

Don’t be unwise when it comes to the buying or selling of assets. Prudently managed, DEBT can be your best friend. Get on the wrong side of it and it’ll whip you.

If I am wrong and just being overly optimistic, why has the Reserve Bank, the Federal Government & the Treasury Department not made a huge “song and dance” and sounded the same warnings as I read in the seminar invitation? Are they avoiding a panic, asleep at the wheel… or is someone being opportunistic right now?

If we had not had a change of government almost 11 months ago you could be forgiven thinking it was in the government’s interest to hide any damage caused by years of financial mismanagement. The political hype over who are the better economic managers and an eternal desire for politicians to score political points puts that theory to rest, however.

If the dire predictions of this individual selling his seminar were accurate:

1. The new Government would be busy warning us of the “problem left to them by the previous government”. There is just 2 years until the next federal election
2. The treasury department would be warning the government. They are employed public servants, they don’t have to face the electorate… but would be blamed if they failed to sound a clear warning and things went really bad
3. The Reserve Bank would say so and adjust monetary policy to prepare the economy. Again, they do not have to face the electorate every 3 years. Putting up interest rates during last year’s federal election is pretty compelling evidence that the decisions they make are outside of politics

I don’t take financial counsel from someone with an opinion. To me these seminars are an opportunistic way of capitalising on genuine concern and fear in the marketplace.

If the merchants of doom we have heard in recent weeks are correct; then I am wrong; but so are:

• Michael Matusik: A long standing, respected, property industry analyst who is selling his reputation and his analysis, not a product or seminar.
• The numerous respected economic forecasters; such as at the ANZ bank. Our banks are sound, secure & profitable at a time when the global industry around them is not.
• Warren Buffett: One of the richest men in the world. He says “Be Fearful When Others Are Greedy  And Greedy When Others Are Fearful”.
• Glenn Stephens: Governor of the Reserve Bank
• Ken Henry: Secretary of the Treasury Department
• Wayne Swan: Treasurer
• Lindsay Tanner: Finance Minister
• Kevin Rudd: Prime Minister
• Malcolm Turnbull: Opposition Leader (and multi millionaire former businessman & merchant banker
• Julie Bishop: Shadow Treasurer
• Etc, etc

There will be many people with many opinions in times of uncertainty. Just remember that not all of them have your best interests at heart; so let the decisions you make be informed and considered.

Happy Investing,

Nick Lockhart

A History Lesson…

The worst excesses I have seen in the residential housing market was the selling of overpriced property through the 1990′s. Many people have heard of Two Tiered Marketing… where interstate and overseas investors paid a different price to what the locals were paying.

This practice came about as a result of greedy developers flooding markets, in particular the Gold Coast with more property than there was demand for. Driven by profit, rather than demand, the result was a massive oversupply of coastal high rises and Surfers Paradise became Renters Paradise. The law of supply and demand ensured that rents fell encouraging many disgruntled vendors to sell.

Property is so forgiving that even those who paid too much when they bought in the 1990′s, were still significantly better off by the early 2000′s.  Let me share with you a real life example of what happened to someone. I’ll call him Ian.

• In 1996 Ian bought a townhouse in Labrador (Gold Coast)
• Ian, who was from Melbourne, paid $140,000… which seemed  great buying as he was told at the time
• Ian soon after discovered that the real market value of his property was closer to $100,000 and that he had paid 40% over the top
• Today, 12 years on, Ian’s property is worth between $360,000 and $380,000
• Ian’s property has been cash flow positive for many, many years and “looks after itself”, financially. In fact it adds to his income
• Based on the more conservative value of his property today (i.e. $360,000, not $380,000); Ian’s capital gain is $220,000 or 157% on top of the 40% inflated price he paid
• Yes, Ian was ripped off because his holding costs (interest on loan) should have been less to begin with (and still less today)
• Yes Ian was ripped off because Ian should have a capital gain of $260,000 or 260%
• Ian had friends warn him against his decision. He bought, they didn’t and they later said “We told you so”!
• Ian would have preferred to deal with a more ethical company than the one he did. Nevertheless, Ian is very grateful that he did something as today his property portfolio extends beyond that one investment. He has surplus rental income and the capital gain and is well on his way towards setting his family up financially!

Remember these…

• The biggest risk you will take is to take no risk at all! Successful people will tell you that they failed forward. Failures in relationships, that we learn from, equip us to do better in the future… and failures in business, that we learn from, equip us to succeed at another.
• Learn from those who have achieved what you hope to achieve.
• Don’t blindly accept opinions; rather be considered and get the facts. It’s only when you are fully informed that you can make fully informed decisions
• Don’t let fear rule (any part of) your life
• Be fearful when others are greedy  and greedy when others are fearful - Warren Buffet

Happy Investing,

Nick Lockhart

Many average people all over Australia would have gone to bed last night gripped with fear. Sections of the media are loving this. Parasite is the best word to describe those who feed off others. This sort of irresponsible journalism (and 60 Minutes are not the only guilty culprits) was akin to the paparazzi attempting to take photos of the misfortunes of a well known figure with complete disregard for the impact their actions may have on “their victims”.

The attitude of “the end justifies the means” does not wash with me… sadly it does in many segments of the media, however.

Here’s what Katrina had to say about what she saw… She’s so fired up I think she’s going to send it in to the 60 Minutes mailbag:

That would have to be the most irresponsible journalism I have ever seen.  Tabloid journalism!  You began with “so what’s behind this crisis”.  Had you actually researched what was behind the crisis and the very fundamental differences between the US and Australia instead of using the worst case scenario victims and the most pessimistic economist to paint a picture for all Australians, people may have the opportunity to “think” for themselves instead of being railroaded with emotion and fear.  Confidence is a critical factor in the economy but you successfully managed to remove any hope of that for the average Australian watching your show.  The government is attempting to bring some confidence back into the market but the media continually undermine that.  The media have a lot to be accountable for in this current economic climate.

Did you read Part 2 of my current DEBT series writings? I called it DON’T PANIC. Click here

Happy investing,

Nick Lockhart