Blog Marco

Think about it. The world has an underlying population trend. Nearly every developed country in the world had a boom in births after WWII - i.e. the Baby boomers. That group of people are now aging and are now starting to retire from full-time work. If you are are trading shares, or are an investor, this fact would have already crossed your mind. Think about this: if you have more kids, the taxes that you would pay would be less since the public tax bill would be spread out. And that's what many developed countries are planning to do: to increase their population by both artificial and natural means. They are boosting their populations artificially through immigration - mostly from third world or industrial countries. They are also encouraging their residents to increase the population naturally by having more kids through tax benefits.

Sydney house prices are falling. In the weekend, a house in St Clair, in Sydney's western suburbs, sold for only $260,000 last weekend. The price was 42 percent cheaper than the last sale in the same area in 2003. It was a mortgagee sale - the owners were forced to sell as they could not meet the interest payments on their $405,000 loan.

In addition to rising interest rates, petrol prices seem to be a compounding factor that is driving down Sydney house prices. Looks like a fair number of people are going to be looking at negative equity for quite some time...

Isn't it ironic that a successful Internet company - Wotif.com gets assigned the stock code WTF? WTF is a common internet acronym for "What The Fuck?" Wikipedia can help you out if you don't know WTF means. But why did Wotif.com get assigned this stock code in the first place? That's because the most logical stock code WOT is already taken by the Westpac Office Trust. Anyway, I'm not discounting WOTIF's success as they listed last Friday and closed their first day of trading at a 66% premium.

Read more at My Share Trading.

"So what has been in the news lately? Well recently I've posted up a direct suggestion about two weeks ago when petrol prices were at $1.10 that prices will go back up to $1.30. And it did. You didn't need to interpret that at all. Ok, think bigger picture. We had a news piece about Warren Buffet placing a strategy bet that the markets will not fall anytime soon.
another piece about the fear of fund managers about the economy overheating. We had an IMF warning as well as an RBA warning about economies overheating. And another article about consumers taking out more loans... collectively what does that tell you? One person - dubbed the worlds greatest investor sells insurance - a financial instrument that acts like a put option reckons the markets aren't going to fall.

If you are a foreign exchange trader or a traveller, this is of importance to you.

The Australian dollar could fall as low as US72c before the end of the year, extending the 13-month lows hit earlier this week.

On Monday night it touched a low of US72.64c, a level the Aussie Dollar has not visited since October 2004, and a narrowing interest rate differential continues to undermine the currency.

The reason for this is that the interest rate differential - the difference between local Aussie interest rates and those interest rates in the US - had narrowed over the last year.

Australia's interest rate advantage now stands at 1.5 percentage points, with local rates at 5.50 per cent and US rates at 4 per cent.

The interest rate differential between Australia and the US is leading to a lower yield for investors, making the local dollar less attractive.

Economists do not believe the Reserve Bank will move on interest rates until well into the new year, while the US Federal Reserve is expected to raise rates again next month.

Westpac chief currency strategist Robert Rennie said the Australian dollar's outlook was as simple as "yield, yield and yield".

"Yields are rising in the US and the US dollar is becoming more attractive, meanwhile the data in Australia has been disappointing, like the employment numbers last week," he said. "The [local] market does not feel that the RBA will put anything into action until some point next year, if at all.

Qantas is one of the world's most anti-competitive airlines and its customers are paying higher prices as a result, rival Emirates said today.

The Sunday program on Channel 9 interviewed John Symond of "Aussie Home Loans". His message: get out... get out of the real estate market NOW.

John Symond predicts that given the current trend, he expects a further fall in property prices on the eastern seaboard on top the ten per cent correction in Sydney — the biggest market — since the height of the boom.

"Anyone who thinks this softening of the real estate market is about to turn around quickly is in for a shock because this gradual decline, I believe, will go on for several years." Mr Symond urges those with investment properties especially to bail out as soon as they can: "I would be putting it on the market because I reckon the price you are going to get today will be higher than what it will be tomorrow."

With some $20 billion funneled to homebuyers and mum and dad investors, Aussie Home Loans is the biggest non-bank lender to middle Australia. His comments will cause a stir because at the same time he urges investors to sell, he says ordinary Australians should refrain from buying in the current market: "The only time I would buy is if I am an owner-occupier and need somewhere to live. For anything else, I would wait because I believe prices will continue to come off."

Mr Symond says the prospect of interest rate rises next year are "deeply worrying", particularly for first home buyers. Commenting on the prediction by property forecaster BIS Shrapnel of a one percent rise in the variable rate by the end of next year, the Aussie Home Loans chief said: "People would hurt and we would start to see defaults. The segment most at risk are first home buyers because if they bought at the top of the market, they would today have negative equity."

He warns that thousands of properties could suddenly flood the market as borrowers default on their loans or cut their losses and run: " I think we will see more and more forced sales and that's why I'm saying to people there's no rush, we are going to have a wider selection of properties to choose from at probably a lower price."

-- And for young people like me and first home buyers - this is something to watch out for!

Symond's comments have stunned the real estate industry. "John is highly influential and from the consumer's point of view, he is very credible," said top Sydney agent John McGrath of McGrath Partners. "What he's said will definitely have an impact on the market." Louis Christopher of Australian Property Monitors commended Mr Symond for speaking out: "Obviously a comment like that wouldn't help his own business so he is calling it as he really sees it and all credence to him because not many people do that."

Mr Christopher said while he thought Aussie John's predictions were "a little bearish", he agreed there may be tens of thousands of Australians who bought during the boom who now owe the banks more than their properties are worth. APM provides the Reserve Bank with housing data to help it decide changes in interest rates. "Even a quarter percent rise would mean that Sydney's down-turn would continue," Mr Christopher said. "But if the predictions of a one percent rise turn out to be correct, we would be looking at a further 13 to 18 percent decline in the Sydney housing market."

The Reserve Bank of Australiadecided again this week to keep interest rates on hold but has repeatedly warned that it will use them to curb inflation. In the September quarter, inflation reached three per cent — the top of the Bank's so-called Comfort Zone. Most experts predict higher interest rates in 2006 as inflation builds because of hikes in wages and fuel prices.

Picked up this article from somewhere... A little bit on the business side of things but the author did have a few interesting points: "Such temperatures are believed by many to be the result of global warming. Global warming is believed by many to be caused by greenhouse gases. The main source of greenhouse gases is the burning of fossil fuels. If it weren’t for the tragedy, the irony would be palpable."