Hello all,
My name is Glen and I have had a distinction and gained some clarity that harmony is the foundation of building wealth. It is not just what you do but when you do it.
I dug up an old diagram of an economic clock and re read the meaning http://www.paritech.com.au/paritech-site/education/beginners/strategies/clock.asp
I am really wanting to somehow create a live (updated monthly/quarterly) Economic Clock however really do not have any idea of how to go about it.
What I know I need is:
Real median house prices
business indexes? which ones?
Higher Auction clearing rates
Inflation
Share prices (SPI or All ords?)
Interest rates
Commodity prices
Overseas reserves
Unemployment
Cost of building products for the median home
Rent pricesOk, I don’t really want any of that stuff, all I want is an economic clock on someones website that is updated reasonably regularly so I can know where I am in the cycle.
If I cant get that however, I will have to build my own in which case I would like to know the what/where/how/why of each of the indicators mentioned above.
I know it may be a big ask but please let someone have some words of wisdom and hopefully a path of least resistance!?
May everyone find their truth and then find the strength to live it.
Glen,
I have been putting some thought into the economic clock myself for my own investing.
I feel that we are at about 6-7 O’Clock mark at the moment. I doubt we will see falling interest rates as they are still near an all time low but I do expect to see further strengthening in the stockmarket.
I think the real estate slump is close to bottoming but we may some period of stagnation before it takes off again. We need to have a stock market boom first. So I think that when I hear all my friends talking about the share market being the place to invest it will signal the end of the share boom and time to be positioning myself in real estate again.
In actual fact as it is not a simple matter to pick up the phone and buy property I need to start somewhat earlier. During the share boom I imagine when people are moving money from property into the stockmarket.
This being an area of interest – I would love to hear others thoughts.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
“We need to have a stock market boom first.”
wow I thought we had already experienced the biggest boom ever and the party was already over. People I know with large portfolios are either getting out or about to get out. I certainly have no interest in buying shares after the huge gains already experienced. Take a basic example of BHP… when I bought them a few months back they were about $13. they have double since then and you have to wonder what would happen if any of the good news that has been priced in should falter.
http://www.megapropertygroup.comINVESTMENT SALES * RENTAL SOLUTIONS * STRATA MANAGEMENT
AUSPROP I know that the Australian market has reached record highs recently but are you suggesting that a new high is the end of the boom? You think we are looking at the end of the rally? Why is that?
I am yet to see the media attention on the sharemarket that we saw in the last booms. I also don’t feel that the average person is into the shares yet. Usually they all climb aboard towards the end.
Where do you think we are on the clock and why?
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
In my opinion there are always buy opportunities in the sharemarket, you just have to buy on value in sectors that are about to ‘take off’… [blink] Now where have I heard that before?
GDR +4.88%
OSH +1.66%
ROC +4.99%Oh, and that’s just today’s gains…
Maybe I’m just a lucky stock-picker?F.[cowboy2]
Hmm, that sounded a bit smug, and did not add much to the thread, so I’ll try again.
I think the classic economic clock is broken. (In answer to Simon’s question on another topic, yes I actually do think ‘it’s different this time’. Different in terms of mechanism, but not the result.) The clock stopped when the long-held relationship between interest rates and inflation was severed (see RBA Governor Ian McFarlane’s speech from last night: Here)
Why did the world’s central banks push short-term interest rates to their lowest level for a century, and why has this apparently easy monetary policy not led to an appreciable pick-up in inflation?This will become most apparent when, at some point in the future, the Central Banks will discover that this severed relationship cuts both ways, and the old way of controlling inflation – hiking rates – is ineffective, in fact it will only aggravate the problem.*
So I don’t think the interest rate part of the clock holds great relevance at this point, but there is some merit to the rest of it – when you increase the money supply, it will drive up nominal asset values, and this will not happen in a coordinated manner. Rather, the money will flow from one asset to the next, causing a series of booms. The herd effect.Cheers, F.[cowboy2]
*Happy to explain my theory on this. Just ask (might be good for a laugh)…
Oh, and one more thing – I’m expecting a fairly major share pull-back in late Oct-Nov. I’d put a dollar on the XAO below 4200… This is not based on anything more than a gut feeling and a bit of very primitive chart-work, but it worked for the correction in Apr/May (though admittedly I didn’t realised we’d passed the bottom until the first week of June).
And despite the risk of appearing concieted (or multi-personalities) by replying to my own reply to my original message… Richard Doughty, the great “Mogambo Guru” sums up the way I see the world rather well in his latest commentary albeit from a very US-centric and off-beat perspective:
If you have ever spent any time reading economics history, you will have noticed that 1) you cry a lot in frustration and anger of recurring governmental and central bank stupidity and the misery that comes from acting stupidly, and b) that there is NEVER an entry in the whole corpus of economics literature that reads “The success and healthy growth of the economy was made possible by massive long-term governmental deficit-spending to both a) wage war and b) invigorate domestic consumer demand, a philosophy known as ‘Guns and Butter’. And then the economy sailed smoothly to Utopian bliss, thanks to accelerated consumer spending financed by accumulating massive amounts of debt to new, high, record-setting levels. The economy was again set soaring to fabulous perfection, such that Zeus himself could but stare in wonderment at the glory, as businesses augmented this glorious economic wonder by also assuming massive, record-setting quantities of debt. The icing on the economic cake was when savings dropped to zero, leverage was at its greatest, and the savings, investments and the retirement of every citizen was tied, directly or indirectly, to an over-priced stock market, an over-priced bond market, and an over-priced housing market, with a huge government directly supporting at least a third of the total population, meaning every third man, woman and child in the whole freaking country. Only then, after all these economic pieces were in place, could the economy zoom to Irving Fisher’s ‘permanent plateau of prosperity’ “. And the reason that you will never, ever, read such a journal entry is because it is impossible to have a healthy, growing economy with these massive and massively stupid debt things. Instead, you get ruination and bankruptcy.Oh, but we’re alright here in Australia, we have government budget SURPLUSSES!!!
Just how useful a US$10 billion surplus is when you have a 8 Trillion Dollar tidal wave of US debt approaching (not to mention our very own AU$583.3 billion of personal debt) remains to be seen.Regards, F.[cowboy2]
Yes yes…all very good…but how does the clock and the general pontifications tie back into investors purchasing individual title deeds ?? What’s the direct link – if any ??
From what I’ve seen, properties are valued in one of three methods,
1. Summation method
2. Breakdown of components (Land / depreciated building / lease value)
3. Market capitalisation based on nett rental ratesHow exactly does the clock link with these three.
Speaking of clocks…is there only one “big clock” that accurately caters for everything or are there a myriad of little clocks pertaining to what you are looking at.
I mean, is the Hobart hotel clock the same as the Mandurah canal waterfront clock or the Rockhampton service station clock or the Sydney high rise 2 bed apartment clock.
I’m lost ?? What I do know is that an old Queenslander called Fred Johnson back in the 50’s recognised that this clock watching was waffle and he continued to heavily invest in Ozzie props despite the experts warning against it. He’d made ‘a few bob’ by the 70’s. I shudder to think what the portfolio would be worth now. I think he still ignores the clock.
Cheers,
Darryl Moore
“No point having a cake if you can’t eat it.”
foundation has some interesting points. when you look at the clock it is hard to pinpoint where we would be on it because the world seems to have changed so much. modern civilisation is relatively short and to assume a pattern based on this history could be dangerous anyway IMO.
as for the share market – heck I am no authority. common sense just tells me “what more possible good news could there be?” that would push it higher. I am one to take a profit and with a fully priced market I personally would run before we have any bad news. It wouldnt take much… bird flu or a USD problem or a myriad of other factors that could take the shine off commodities. I recall ABARE have already stated that the shine will come off of commodities prety quickly… not that I am willing it at all. WA is rifing a huge boom of propserity not seen since before I was born! But htere is probably a lot of money to be made if you really know what you are doing or are on the inside (and if you are not on the inside you are on the outside, right?
)
http://www.megapropertygroup.comINVESTMENT SALES * RENTAL SOLUTIONS * STRATA MANAGEMENT
There is just one clock but different areas are at different times. It is obvious that the Perth and Sydney markets are different and I expect there are micro markets as Dazzling described.
I doubt the clock was ever designed to be slavishly applied and noone can argue there is clear relationship between money flowing into Property and into Stockmarket at different times.
How would you use the clock? I guess if you buy and hold then you will make money over time regardless of when you buy.
I am trying to decide whether to buy another IP or buy managed funds for the medium term. I will eventually buy another IP but whether I do so today and hold it in a flat or declining market or whether I wait until there are some signs of a transfer of wealth from the stock market to the property market is my next decision point. I know that my current MF has made 4% in three weeks and has a 5% distribution tomorrow with no entry or exit costs. This is unlikely to be the case in my local property market.
I do appreciate all the differing opinions I am being presented and they certainly have got me thinking.
I think trading the market is quite different to my plan and I agree that there are always opportunities to make money there.
All the best to you all and keep the replies coming,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by glencarlson:Hello all,
My name is Glen and I have had a distinction and gained some clarity that harmony is the foundation of building wealth. It is not just what you do but when you do it.
I dug up an old diagram of an economic clock and re read the meaning http://www.paritech.com.au/paritech-site/education/beginners/strategies/clock.asp
THIS IS FREAKY…[blush2]
The words sounded so familiar then I looked back and I wrote a book published by Paritech in 1988 “The Investors Guide to the Australian Share Market” under the name Bryce Harrison (using my 2 sons names) and this is a direct quote from it.
So what do I have to contribute to the discussion as the original author.
The Economic Clock was first published over 150 years ago and while it is not good for picking timing of the cycle, it is still relevant today.
I have traded and invested through 4 cycles and every cycle people say “this time it is different – the cycle does not apply anymore because…..”
And every time their arguments seem to make sense.
Until you look back ten years later and everything falls into place and another cycle has taken place.
Yes this time is different, every time is different, but it is also the same
.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auSo where do you think we are at on the East coast today Michael?
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
on tonights news is “how you can benefit from the stock market boom… how long will it last and what stocks do the experts tip”!! makes a change from which suburb will boom next anyway.
milk goes up 8% on Monday. it is quite clear to me that we are experiencing cost push/demand pull inflation and there is only one way to go with that.
these little signals are telling me that the minute hand is about to click around another notch. property untrendy (on average nationally anyway), shares trendy, interest rates pointing up – hmmmm
http://www.megapropertygroup.comINVESTMENT SALES * RENTAL SOLUTIONS * STRATA MANAGEMENT
Based on that you might suggest property will be less attractive to the masses and hence time for the professionals to move back in before the next strong market growth period?
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
possibly… the decline could still be going on for a while tho, then the bottom, then the gradual turn around.
the reality is the professionals will make money whether the market is going up, down or sideways. you just need to adopt the right stratagey and select the right market at the time.
http://www.megapropertygroup.comINVESTMENT SALES * RENTAL SOLUTIONS * STRATA MANAGEMENT
From a purely contrarian perspective – possibly, but it may be better to wait until a price floor is well established and or the fundamentals (ie rent, wages) are in place to support the next boom.
on tonights news is “how you can benefit from the stock market boom… how long will it last and what stocks do the experts tip”!! makes a change from which suburb will boom next anyway.So now the “dumb money” starts to flow into shares… hmmm. Stop-losses in place? Check! Head in the sand? Check! Alright Maverick, press that red button labelled “BOOM” and we’ll see what happens.
milk goes up 8% on Monday. it is quite clear to me that we are experiencing cost push/demand pull inflation and there is only one way to go with that.And there’s not a gorram thing the RBA can do to fix it.
Bugger. Where’d I leave that hoe?
F.[cowboy2]
Originally posted by foundation:
And there’s not a gorram thing the RBA can do to fix it.F.[cowboy2]
Are you a Joss Whedon fan by any chance?
More stuff on the voigtstr at http://users.bigpond.net.au/voigtstr
Thank you all for your responses!
I guess however I am no closer to actually discovering the best sources to find the data to actually create a clock.
I agree we are at around 7 on the clock however I want to be able to actually chard a range of different indicators. I have been told Brisbane trails Sydney / Melbourne by 1.5 years but want the data to check it out.
If anyone knows a good source of the info, please help!!
Cheers,
May everyone find their truth and then find the strength to live it.
Originally posted by foundation:In my opinion there are always buy opportunities in the sharemarket, you just have to buy on value in sectors that are about to ‘take off’… [blink] Now where have I heard that before?
GDR +4.88%
OSH +1.66%
ROC +4.99%Oh, and that’s just today’s gains…
Maybe I’m just a lucky stock-picker?F.[cowboy2]
***DELETED***
Seems the aurhor is not sure of Foundation’s abilities and has asked for proof whereby Foundation predicts tomorrows gains. I am sure we would all enjoy that test however I don’t expect anyone to perform under those conditions!
Please post in a more considerate manner in future.
Kindest regards,
Simon
Originally posted by voigtstr:Are you a Joss Whedon fan by any chance?[offtopic][biggrin]
Buffy etc tired me after a time, but Firefly is probably the closest thing to a perfect tv series for my tastes I’ve ever seen. Have you seen Serenity yet? Who knows when it’ll arrive in my 2 horse town…Seems the aurhor is not sure of Foundation’s abilities and has asked for proof whereby Foundation predicts tomorrows gains. I am sure we would all enjoy that test however I don’t expect anyone to perform under those conditions!Dang! Seems I missed a dirty post! For what it’s worth Blogs, those 3 companies are all I’m holding directly ATM. Up again Friday, then again today. I’m still holding. I have stops in place under the oils, but I’m happy for gold to stay volitile. I’m in it for the long term…
Hey Glen, I hope you’ll share your clock with us when you’re done. Or write a book.
Cheers, F.[cowboy2]
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