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Hmmmm....as I suspected. Wages are increasing faster than cpi.....which to my mind confirms what BS cpi methodology is. Isn't it just dandy to see public servants value their man hours greater than the private sector, that they draw a wage from. It seems the govt's view on economic stimulus is...

So they're going to raise the minimum wage greater than cpi or gdp how many years in a row? And people on the minimum wage effect house price growth how? :) The more I hear out of Rudd's mouth, the more I see annual rent increases being capped.....now that'd be a black swan........but...

Fortunately HE, I'd had a few sav blancs when I read your post so it made sense. :) I agree with your insight that you are more likely familiar with wage rises in a specific sector, unrepresentative of the services sector that comprises 65-70% of gdp. You have prompted an interesting...

Truong, back of the envelope calcs have their blind spots. Every IP has in costs. 1% hold costs are very optimistic. after tax -CF increases equity in the deal. Doubling every 12 years is 6%pa growth....for 20 years!!! Maybe achievable, maybe not. There's heaps of regions that are still...

Keep this chart in mind when contemplating the future Wylie, especially the Household savings ratio. I think a good case can be made to use HSR as a proxy for unused household debt serviceability. Note it has been declining since the 70s. There's not a lot of room for household debt to expand...

I'll side with you on this one Wylie. 7.2% cg sustained over 10 years is strong growth, especially when the RBA try to contain cpi to 2-4%.....of course, the double every 10 years thing doesn't consider that. Interest costs do not compound, capital gain does....as do rent and holding...

nah you've got it backwards James. You should be offering to buy houses at today's market value, especially in regional towns, no matter their rental yield.....cos you're 110% sure values will steadily move up.

Talking gross BV. Many up market areas where investors chase short-medium term growth don't do much better than 3% gross. This strategy imho, won't be as rewarding for some time.

I agree totally IV. Our shifting of most goods manufacturing to SE Asia has held Australian CPI down artificially. This is the ABS overview. Results won't be out until dec 2010. I don't know which spin they'll put on it. Govt likes to underpredict cpi to suppress wage inflation. But asset price...

There's not much discussion at this level on SS DB. I appreciate your input. Several years ago, there was some good analysis being done. Guys would disagree about some point, then go away and come back with a xls model showing timing was superior to b&h, or some such thing. Timing consisted of...

Hey, wish I was sitting in an office paid for by someone else, on their time, doing this. :)

BV, the point I am making is that whether IP beats cash, is dependent on the relationship between interest rate, starting yield, and escalation rate of growth and yield. If you buy a property where initial yield, and escalation of growth and yield are 3%, and rates average 3% above rent, it...

My interest in inflation and investment performance is leading me down another path for the time being. What I believe is official inflation rate seriously underestimates inflation, hence why the ABS is looking at a major review of it and the RBA are looking at asset price inflation in addition...

Bill, According to ABS cpi index series640101, the 20 years 1971-1990 averaged a cpi of 10.42%pa 1991-2010 has 2.43%. And my comments re inflation refer to ABS cpi. Considering the RBA targets a lower rate of inflation, what's the probability we get double digit cpi reported anytime...

I appreciate you spent the time analysing the formula. But please appreciate its intended use. The formula was part of an ongoing discussion between Ausprop, Hi Equity, and myself regarding the importance of inflation to leveraged investment performance. We had been discussing things ignoring...

Well, the theory in its entirety is, get all of your capital back with the >cpi return. :)

And they'll be buying more bonds shortly methinks.... An urgent 'sell' warning Richard Russell, author of the famous Dow Theory Letters, is “insisting, demanding, begging” his subscribers to “get out of stocks”. In his latest letter, published last night, he says the stockmarket has lost...

Here's one formula to calculate net gain anytime in the future, ignoring tax. Here's a challenge: Try and improve performance by increasing inflation rate. =Vo*((Yo*(1-(1+rentgrowth)^per)/(1-(1+rentgrowth))) -Ho*(1-(1+cpi)^per)/(1-(1+cpi)) -incost -avrate*per +(1+cg)^per -1) Vo =...

I will gladly take the other side of a trade by anyone who uses leverage without mitigating downside risk. Hedge funds can only dream of evermore such clients.

Hey if you believe there's no advantage in timing the market, there's heaps of -CF sub cpi growth property out there right now. Go knock yourself out dollar cost averaging into it and shares.