What next ?

[trendsta]

Starting a new thread to discuss and share ideas about "what next" in terms of economy investments.

Its apparent now that globally economies are recovering, and australia in particular is doing well (along with various emerging countries). So the question becomes appopriate "what next"?

 

[sanjayag]

next is next IP

Whatever is the economic conditions, I'll try to save money and purchase my next IP. When you have a goal of 5+ years investment......these "next" don't matter much (IMHO).

 

[devo76]

Starting a new thread to discuss and share ideas about "what next" in terms of economy investments.

Its apparent now that globally economies are recovering, and australia in particular is doing well (along with various emerging countries). So the question becomes appopriate "what next"?

I understand what you are saying but unfortunately for me nothing stands out as yet. Its true money can be made in any environment. As im sure many have positioned themselves to make a fortune out of the GFC. Whats next i dont know. Im sure some smart cookies out there have seen forming markets and they are positioning themselves to profit. So i guess people can be placed into two groups. The ones that identify profit areas and act on them. And then there are the others that will read about them and jump on part way through betting on the tyrend continuing. Im the later at this stage im afraid. Well maybe not with property buy and hold methods anyway.

 

[BayView]

Im sure some smart cookies out there have seen forming markets and they are positioning themselves to profit. So i guess people can be placed into two groups. The ones that identify profit areas and act on them.

The smart cookies are the ones who actually.....take action.

I know lots of people who have talked about investing in property...none of them have acted yet.

I did.

Call it blind faith, reckless, stupid, dangerous.

I call it: thinking of making an investment, doing some research and gaining a bit of knowledge and then doing it. And then doing it again when you can.

Really hard.

 

[13910]

The smart cookies are the ones who actually.....take action.

I can't tell you how much I would have made if I invested heavily in the two stocks I wanted to in January. Actually, I can. Down to the cent.

Unfortunately, had just bought my first place and didn't have a cent to my name. Not complaining, as it's made me money too, but can't help but ponder the what if.

Cheers
Greg

 

[steveadl]

I can't tell you how much I would have made if I invested heavily in the two stocks I wanted to in January. Actually, I can. Down to the cent.

I do this all the time as well, but am really trying to force myself to stop. It can be destructive and a real negative influence on your thinking if your constantly focusing on the opportunities that were missed, or what could have been if you did this instead of that at the time. I tend to do this with both equities and properties. I've even noticed my parents doing this a lot lately which is perhaps where I was influenced with this thinking - but I'm determined not to let it continue my whole life.

Focus on the positives of the actions you did take, and the best way of moving forward for you now.

(this post is as much for me as it is for you Greg )

 

[joanmc]

steve and greg : instead of calculating how much you didn't make look at the reasons you chose not to make that investment that would be more helpful

on topic: I think any recovery will be bumpy but the potential to make money will always be there. We have done extemely well in the last 10 months but I think it will all slow down a bit now and the biggest opportunities have already been missed by most.

We have just settled yesterday on a new property and are looking for another to buy in January but that will then be it for us property-wise for a while......unless something good comes up(never say never)

 

[chilliaa]

steve and greg : instead of calculating how much you didn't make look at the reasons you chose not to make that investment that would be more helpful

on topic: I think any recovery will be bumpy but the potential to make money will always be there. We have done extemely well in the last 10 months but I think it will all slow down a bit now and the biggest opportunities have already been missed by most.

My thoughts exactly, i am now moving into partial asset disposal and debt reduction mode.
I started 2007 with no debt, i now have $2.5 million debt, although the whole portfolio of shares and properties is cash flow positive i dont feel comfortable holding so much debt. Debt is great as a wealth creation vehicle, but it also inhibits the ability to be nimble.

 

[our obsession]

....building my brains out (next few years) on land that I got for good value in regional vic..just keep working on accumulating more assets, as fast as we build, they fill up with tenants, no need for me to overthink anything.

Our other IP's keep going up steadily in value, rents are going up...I never thought wealth creation would be so simple.

 

[MichaelW]

...tendering my Mona Vale build. Took a while to get here, but there you go. Should start building it Jan 2010 or thereabouts if all goes to plan. Once its done and tennanted I'll look to start buying some IPs in Brisbane. I like the area I'm living in now so will look around here for my first one. Bardon / Paddington / Milton... Might even try and get a good site and do a small development. I like that sort of thing.

Cheers,
Michael

 

[chilliaa]

I can tell you one trend that i foresee with big ramifications for developed nations.
There has been so much hoohaa about free trade with the benefit of lower prices to the consumer.
The indirect consequence of this is free trade of labour. Advances in technology, and communications is pushing the free trade in labour into skilled sectors as well.

As bluecard stated, there is a high risk of the middle class being eroded.

 

[Tim]

I can tell you one trend that i foresee with big ramifications for developed nations.
There has been so much hoohaa about free trade with the benefit of lower prices to the consumer.
The indirect consequence of this is free trade of labour. Advances in technology, and communications is pushing the free trade in labour into skilled sectors as well.

As bluecard stated, there is a high risk of the middle class being eroded.

Funny you should say that because I have been thinking just that lately - consider Australia's immigration policy and population forecast and the reality is not far away

 

[chilliaa]

Funny you should say that because I have been thinking just that lately - consider Australia's immigration policy and population forecast and the reality is not far away

So the motto of the story: make sure you are the owner of the means of production rather than labour.

 

[Graemsay]

It's already happening.

My line of work is software development, and a lot of work has shifted to India in recent years due to lower salaries. The savings often don't seem to be that large, maybe around 10%, but it's enough to persuade the company accountants.

I'm not too worried for two reasons. The first is that outsourcing doesn't have a great track record, with some of the offshore companies having a bad reputation within the industry. The second is that there seems to be enough work to go around, at least in the good times.

I'd argue that any position that doesn't have a face-to-face aspect is vulnerable, and particularly when it's not a core aspect of the business. I've got no idea how it's all going to play out in the long term.

Chilliaa has got it right, with what sounds very much like a Karl Marx quote.

 

[steveadl]

As bluecard stated, there is a high risk of the middle class being eroded.

I often hear this mentioned. Am I missing something, or is this as a generalisation inevitable? Or perhaps it's govt's job to intervene here and there to keep the social order?

Unless the middle class actively work to improve their means and wealth base - isn't the gap in society going to continue to grow as the wealthy end do continue to increase their asset base? ie. those not actively pursuing wealth (great portion of society) will progressively fall further behind those that do (the rich). So the gap between the poor/middle class and rich will continue to widen each and every year?

Sorry to side track the thread.

 

[Aaron Sice]

I'm not too worried for two reasons. The first is that outsourcing doesn't have a great track record, with some of the offshore companies having a bad reputation within the industry. The second is that there seems to be enough work to go around, at least in the good times.

QANTAS are living proof of this.

impeccable service and flight record when serviced in Australia.

Servicing outsourced offshore to the lowest bidder, suddenly there's planes landing in emergency situations every few weeks.

i have no sympathy for them and refuse to fly what was once the best airline in the world. why pay extra for a QANTAS flight when a Thai Airways plane has equal amount of chance of dropping out of the sky...?

 

[Aaron Sice]

I often hear this mentioned. Am I missing something, or is this as a generalisation inevitable? Or perhaps it's govt's job to intervene here and there to keep the social order?

Unless the middle class actively work to improve their means and wealth base - isn't the gap in society going to continue to grow as the wealthy end do continue to increase their asset base? ie. those not actively pursuing wealth (great portion of society) will progressively fall further behind those that do (the rich). So the gap between the poor/middle class and rich will continue to widen each and every year?

Sorry to side track the thread.

absolutley.

the issue is developed nations' middle class is eroding and developing nations' middle class is emerging.

developed nations are outsourcing labour in a effort to keep labour cost content low. this erodes a middle class from where it was outsourced from and creates a middle class where it is outsourced to.

trouble is, if they'd just turn their heads to the side and notice their ineffective manufacturing techniques, or their lack of volume requiring more markup, or their lack of personal bargaining for raw materials, or their retailer's abhorrent markups then maybe - just maybe - we could keep the jobs here and try something ...*gasp* ... effective!

 

[trendsta]

Cheers for the contributions guys.

From my point of view i'll break in into short (few months) , medium (few months - few years) and long term (>5 years).

Short term: i think Q4 US GDP and various other countries GDPs may be stellar. Mainly because they are reported as gdp growth from corresponding year qtr. Q4 08 was about -6% for US and Q1 09 was also about -6.. its very likely with rising consumer confidence, stimulus effects, and xmas high spirits we see a perfect postive storm and the growth Q4 09 compared to Q408 comes at over +4% ! We may base and have samll correction but i think there is a decent run in the stockmarket (maybe spike to 5100-200ish?).

Medium term: Not very confident. Once US forms this new higher base , it will be very hard to go up from there. Same goes for Europe, Japan etc. Its a long and tough road with high unemployment there is a lot of "slack" (unused capacity) in the economy. I think energy / commodities will trend higher at a faster rate than global GDP due to supply destruction, increased demand in east offsetting some of the lower demand in west etc. Likely stocks in general range trade for a while, or make slow recovery up.

Long term: trend is set. China, emerging countries, and affiliated assets. Energy is also bright spot, mainly because this financial crisis and massive govt debt / bailouts have assurred that there wont be much govt funding left to new alt techonology etc. Without govt support is ethanol industry sustainable competing against 70 USD oil.. i think not.. same for solar, wind etc. Without govt subsidies/support for alt sources , conventional sources will have to reach a point where economically alt sources are justified, and thats way higher than current prices. Even with a massive once in multi-generation crash global oil demand only slumped by about 5% (if that, i'll try find the 07-08 figures). Now even if we have 0-slow recovery in west, and a decent recovery in east, plus oil depletion rates continue, a future high price of oil is assurred.

 

[chilliaa]

From my point of view i'll break in into short (few months) , medium (few months - few years) and long term (>5 years).

Very intelligent way of looking at the investment horizon. It focuses the mind on both short term and long term opportunities.

Short term: i think Q4 US GDP and various other countries GDPs may be stellar. Mainly because they are reported as gdp growth from corresponding year qtr. Q4 08 was about -6% for US and Q1 09 was also about -6.. its very likely with rising consumer confidence, stimulus effects, and xmas high spirits we see a perfect postive storm and the growth Q4 09 compared to Q408 comes at over +4% ! We may base and have samll correction but i think there is a decent run in the stockmarket (maybe spike to 5100-200ish?).

Totally agree. However i dont like to forecast the stockmarket in the short term, there are too many variables. For many individual stocks though i agree with your sentiment, especially when the market will compare period on period results.

Medium term: Not very confident. Once US forms this new higher base , it will be very hard to go up from there. Same goes for Europe, Japan etc. Its a long and tough road with high unemployment there is a lot of "slack" (unused capacity) in the economy. I think energy / commodities will trend higher at a faster rate than global GDP due to supply destruction, increased demand in east offsetting some of the lower demand in west etc. Likely stocks in general range trade for a while, or make slow recovery up.

I honestly dont know. The only 'market' that i have confidence in is the Nasdaq going higher long term, technology 'comes' from the US. If the US$ continues to depreciate i think this market has the ability to continue to climb.

For other markets, i think its very stock specific. Whether these stocks as a basket will move the indexes higher i dont know.

Long term: trend is set. China, emerging countries, and affiliated assets. Energy is also bright spot, mainly because this financial crisis and massive govt debt / bailouts have assurred that there wont be much govt funding left to new alt techonology etc. Without govt support is ethanol industry sustainable competing against 70 USD oil.. i think not.. same for solar, wind etc. Without govt subsidies/support for alt sources , conventional sources will have to reach a point where economically alt sources are justified, and thats way higher than current prices. Even with a massive once in multi-generation crash global oil demand only slumped by about 5% (if that, i'll try find the 07-08 figures). Now even if we have 0-slow recovery in west, and a decent recovery in east, plus oil depletion rates continue, a future high price of oil is assurred.

I sought of agree. A big concern for me is the influence of hedge funds. Their directional plays have a significant influence on the underlying asset and their money is hot. So what proportion of the asset is based on fundamentals and what proportion is being supported/lifted by hot money.

 

[Ausprop]

the RBA is getting it's knickers in a knot over the potential for housing to bubble... shouldn't they be concerned about the equities bubble that is already well formed?