mrd

Until late last year at mrd we were receiving around 1000 spam messages a day to all of our mail boxes collectively! As you may know, spam can be a huge time waster, deleting every piece of spam that comes into your inbox can be time consuming – and at mrd the previous few years were no exception.

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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.

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Residential Real Estate Prices To Drop By Up To 40%; According To Some!

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.

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A guide to understanding all those confusing investor terms we keep hearing

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As an ‘aggressive’ property investor and someone leading others, I am very mindful of my responsibility to be sober and considered in my views.

Successful people swim against the tide of popular opinion. They carefully consider facts before making decisions of far reaching consequence. As the events in America bring on a feeding frenzy for those with an opinion (and often an agenda); the need for sobriety is needed now more than ever.

My Considered Opinion:

Recent global events in the credit market haven’t altered my long standing confidence in selective residential real estate. I expect my investment strategy will ultimately defy some of the broad-brushed statements being tossed about by a few pessimistic economists; who ironically have had most of the recent television and radio airplay.

Many hours have gone into penning this article… I trust the few minutes it’ll take you to read will deliver real benefit.

Let me start with some background to put into context my thoughts…

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The Gold Coast Bulletin ran an article yesterday (Thursday) saying that one in four baby boomers will have to work into their 70′s because of the “hit” they have taken to their super recently. “Traditional retirement is not an option – they just cannot afford to stop working”.

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For some time now people have been cautious about taking on financial commitments.  The media’s unrelenting broadcast of doom and gloom from America and local interest rates being in the up cycle have made people think twice about what they do with their money.

It is not the lack of money but the fact that money stops moving that causes financial woes.  When people are reluctant to spend, fewer houses are built, there is less demand on goods and services generally resulting in the creation of fewer jobs.  Less jobs means less people able to afford goods and services… and the effect is perpetuated.  The downward spiral, fueled (in part) by negative media, is accelerated by “herd mentality”.

To turn a herd you need to use a momentous event.  In my opinion that momentous event happened today. At its meeting today, the Board of the Reserve Bank decided to lower the cash rate by 100 basis points to 6.0 per cent, effective 8 October 2008.

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Following the huge financial problems rocking the very foundations of the U.S. economy and the run on Northern Rock and Bradford & Bingley in the UK, uncertainty has now hit Japan hard.

In the last 7 days Origami Bank has folded, Sumo Bank has gone belly up and Bonsai Bank announced plans to cut some of its branches.

Yesterday, it was announced that Karaoke Bank is up for sale and will likely go for a song, while today shares in Kamikaze Bank were suspended after they nose-dived.

While Samurai Bank is soldiering on following sharp cutbacks, Ninja Bank is reported to have taken a hit, but they remain in the black.

Furthermore, 500 staff at Karate Bank got the chop and analysts report that there is something fishy going on at Sushi Bank where it is feared that staff may get a raw deal…

RP Data – Rismark Property Value Index Release
Released 01 October 2008

The national end of month property indices report released today by RP Data & Rismark International confirms that the supply and demand imbalance currently being experienced in the Australian property market has placed a floor under housing prices, resulting in minimal value falls.

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The so called economic guru’s are very quick with their opinions and commentary on the state of economic affairs; but remember they are only expressing their opinions. While I don’t profess to offer financial advice, or to have the answers to “life, the universe & everything”, I too have opinions.

In the lead up to the end of the 06/07 tax year, when “the experts” were promoting the virtues of investing into the Howard/Costello “tax effective Superannuation offer”, I didn’t believe them. Today I hear economic guru’s peddling the fear that our property market will follow the US lead and fall by up to 20%. Guess what, I don’t believe them!

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