To apply a stock trading principle; never buy stock that is falling in price. Wait for the bottom, wait for the confirmation that the price is rising, that is the trigger to get back in.

However, if your strategy is long term then buy anytime so long as the deal is right and you factor in an interest rate 1-2% higher than the current rate.

Prediction: The RBA will NOT increase rates on Wednesday. Exports are struggling and higher rates will drive up the dollar thus making exports worse. There are signs that the property market is weakening, particularly in the middle of prime trading season. This is what the RBA wants. Election is coming up so political pressure against rate rise will be immense. The only stumbling block is discretionary consumer debt, it’s bad and getting worse. Christmas won’t help. The RBA will tighten in January.

On margin calls on property. I believe that it can happen, but it is probably the last thing the banks want to do! Not worth the expense or publicity unless the risk is substantial (BTW: I don’t work for a bank). So long as you keep up your payments, don’t make yourself a pain to them, all should be well…unless there is a major property crash!! Part of this is, of course, is to not let the bank know what the current value of your property is!! Refinancing/reorganising your loan may do this though.

Finally, Peter J Daniels sounds pretty wise.. the question is “How do you know if it is the wrong thing?” []

Stephen Back
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