Latest News from Newealth

18 Apr 2019

Machine Learning: Facial Recognition

The number of things that can go wrong with this technology is mind blowing.

Let’s see if Governments use this technology to incrementally take away all our human rights over the coming decades.

Still the benefits that it will bring are countless.

Watch video.

 

12 Apr 2019

Friday Tidbit

During every Federal Government Election we get asked whether the Liberal National Coalition or Labor has the best policies for managing the Australian economy.

Attached is research which shows that historically both major parties are terrific at running Budget Deficits (spending more money than the tax receipts collected from you and me).

Click for chart.

For this election however, a vote for Labor is a vote to increase tax on the Australian middle class given Labor’s clearly stated policies on negative gearing, capital gains and franking credits.

If you want increased taxation, vote Labor.

 

8 Apr 2019

Australian Residential Property: Balance Sheet Recession

‘History doesn’t repeat itself, but it does rhyme’ is a famous quote by Mark Twain.

Attached is research on what has actually happened in Japan, Spain, United States, United Kingdom and Ireland after the peak in household debt to GDP and the start of the Global Financial Crisis.

Each country cut interest rates and still entered a recession. Interestingly property prices continued to fall even after the end of the recession.

The big problem with balance sheet recession is that consumers stop spending and the focus becomes debt reduction which is bad for economic growth and perpetuates further declines in property prices.

If the history in Japan, Spain, United States, United Kingdom and Ireland repeats in Australia then we are in for 6 years of falling house prices which started in 2017.

Remember, when fear and panic take hold during the next financial catastrophe, investors will be presented with the opportunity to buy more quality assets at discounted prices.

Click for charts.

 

5 Apr 2019

Friday Tidbit

This is another excellent piece on Warren Buffett, the 88 year old Oracle of Omaha and his ‘inner scorecard’ principle.

His thinking is profound, enjoy the weekend read.

Click to read.

 

3 Apr 2019

2019 Australian Federal Budget

The Federal Treasurer Josh Frydenberg has handed down his first Budget and some of the key measures include.

  • immediate tax cuts for low to middle income earners by increasing the Low and Middle Income Tax Offset (LMITO)
  • the ability for people aged 65 and 66 to contribute to super without meeting the work test requirements from 1 July 2020
  • significant increases to funding for both health and aged care services

The strategy of again promising tax cuts in the Budget and then delaying implementation to 1 July 2024 (half a decade) is dumb politics in an election year.

It is important to remember that these Budget announcements are still only proposals and still need to be legislated.

Click to read.

 

29 Mar 2019

Interest Rates: Not good news

The normal is for long term interest rates to be higher than short term interest rates.

The concern is when the yield curve becomes inverted (short term interest rate are higher than long term interest rates) because in the past this has marked the beginning of an economic downturn.

Today the US 3 month Treasury Bill Rate is 2.44% and the US 10 year US Treasury Bond Rate is 2.39%.

The yield curve inverted on Friday, 22nd March 2019 and if history repeats, we are now at the start of the next US recession.

Just remember that when fear and panic take hold during the next financial catastrophe, it is then that investors will be presented with the opportunity to buy more quality assets at discounted prices.

Click for Yield Curve Basics.

 

27 Mar 2019

Oil Dependency: Resources

If you are curious about why Russia is deploying military personnel, plans and equipment to Venezuela then this picture says it all.

Click to view.

Venezuela is estimated to have the largest crude oil reserves in the World and even with all that wealth the country is currently in economic ruin.

This could be a strategic land grab for natural resources which has happened many times before throughout Human history.

Remember, Russia has already annexed Crimea which was part of the Ukraine and China has claimed the Spratly Islands in the South China Sea.

Russia and China are also expanding territorial claims in both the Arctic (currently only floating ice) and in the Antarctic.

 

22 Mar 2019

Friday Tidbit: Cool Tech

The future is incredible and exciting.

Check out this footage of having your own autonomous AI drone that can follow you around, create a video package and upload it to social media.

Remarkable.

Watch video.

 

18 Mar 2019

Sydney Children’s Hospitals Foundation: Bear Cottage

Stavros Vasiliou (client since 1997) is setting out on an adventure at the end of this month to raise $15,000 for Bear Cottage, the only children’s hospice in NSW.

His challenge is an epic 4,000km solo cycle from Perth to Sydney over 4 weeks.

We wish him every success and please feel free to support Bear Cottage.

Cycling for a Cause.

 

12 Mar 2019

Market Metrics: S&P 500 Index

Using the total returns data from the S&P Composite Index (from 1872 to 1957) and the S&P 500 Index (from 1957 onwards) it is evident that there is a 31% probably of a negative return in any single year.

That is almost a 1 in 3 chance of loss based on 146 years of data.

Patience however can and does help reduce the probability of a negative return but how many investors are prepared to wait for 20 years.

Click to view.

Investing in growth assets (shares and property) requires expertise (professional management) in addition to patience. If you buy rubbish then no amount of patience will save you from poor or negative returns.

Also buying more quality assets at discounted prices when fear and panic take hold during a financial crash is another key ingredient for investing.

WARNING, past performance is no guarantee of future performance and the above does not constitute Personal Advice.

 

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