exchange rate risk

i totally agree on your viewpoint Nigel, and personally think Texas is the best market going froward, but there is always more than one way to skin a cat

http://www.bloomberg.com/video/64993640/

slightly off topic,

can you name the LLC anyname? or its it just "your name LLC"

brilliant business those banks are in, borrow at 0.50%, and get 4% back…

this is a pretty big fundamental error of jenman

bump to this thread, id also be interested on everything james asks here…

Aus property market is a tough one, depends on state to state generally..

Darwins going through a bit of a purple patch cos of govt and resources contracts, even was seeing growth during GFC. Sydney despite how expensive property is will still have a certain level of demand, one because council and govt are pretty tight on land release to reduce urban sprawl, plus banks are known to require developers a significant pre-com % before work begins. Qld and WA are having a minor correction due to an oversupply (basically all the developers were seeing record demand and growth in resi and specifically commercial – Perth were lowest vacancy in the WORLD tehn decided to all build not realising theres a time lag between start and finish and the market went from famine to buffet of properties). Melbourne im not too familiar, and im not to aware on Adeliade resi but their commercial should be booming in next few years with a lot of resource/mining companies moving there as mining projects take shape. Adelaide was the second best performing market as a whole during GFC, behind Darwin.

My opinion on Sydney specifically is that we will probably see a lull or chop in capital gains growth across the board for a few years as wages growth should outpace property growth. We need to increase affordability as the ratio of median income: median household is circa 8 or 9 to 1, where as a rule f thumb or sweet spot is approx 3 or 4 to 1, where US is now if im not mistaken.

But Sydney should be on another wave of boom, specifically closer to the city as the 2020 metro plan by state govt for future infrastructure has basically forecasted population growth half of what reality will be, so places closer to the city with stronger infrastructure in place should win out. Over the next 5 years I could see inflation creeping in mainly due to mining/resources, its been listed as a concern in the current RBA meeting minutes. What this means is that IR will be lifted to counteract, however eastern states like NSW and VIC who have no connection with mining will be paying for inflation from resource states through higher IR, could provide a little catalyst for a brief correction, however not major, as our lending practices, land release levels and relatively good monetary policy should avoid a GFC like correction, worst case scenario I would say 20% downside.

Then again forecasting is a mugs game and anything can happen in the future, negative gearing or other tax  changes could provide a significant correction. Thats just my opinion, beauty of which i can change it with any further economic developments, im not married to my current opinion.

to be honest that only looks like a minor correction, looking at current correlations it will still go up as long as people/funds keep having to pump funds in the 'risk on' trade. Due to the expectation of the RMB appreciating in the near to mid term global funds, specifically from the US will look to carry exposure there as they benefit from capital appreciation and exchange rate appreciation. The only problem is it may be trading way above fundamentals (P/E ratios etc) which isnt automatically mean down, just means not a good area to be 'loading up'. You are correct about markets being highly correlated, the automated arbitration and hedging strategies adopted between stock indcies and other investment classes means there is very little difference between ivnesting in the S&P to the Nikkei to the ASX200 as a basket… if you were to overlay the charts of all major world indicies you will see how surprisingly similar they look when looking back to the start of heavy computer automation in markets. Those rules are a pretty good guideline especially number 5 with contrarian indicators. There was a guy (forget his name) that invested basically on the opposite of what financially hit the front page. Ie "Gold set to go to record highs", he would short gold or take an anti gold correlated position. Thats why im also keen to hit the US property market, even though the AUD could very well go higher, its starting to gain traction in the news media.

If anyones interested in good books on investing id recommend Benjamin Graham's – The intelligent Investor (make sure you get the revised edition with a 2003 update)

if you want a great book on speculation/economics/market psychology, I subscribe to George Soros – The Alchemy of Finance

also its important to recognise theirs a major difference between investing and speculation, that being investment indicates you receive an income (dividends) where speculation is where profit is based on simply price gains. As a rule I weight my portfolio
as 60% dividend stocks (investment – where you funnily enough want stocks to get cheaper), 25% speculation and 15% cash (savings account as I cant be arsed buying bonds)… obviously wightings all depends on financial situation and risk tolerance.

Floating the RMB would be the major balancer of the current account deficit problems the west have at the moment… China needs to really be brought into line at G20, likewise the US who are ruining export economies.

Reasons im looking to the US:
– negative sentiment on US is very high both domestically and internationally
– Fed and treasury have drawn a line in the sand and will not let asset prices deflate significantly further. They cant provide all this stimulus, QE etc then if another problem hits say "no stimulus, its bad economic policy"
– hyper inflation is NOT on the table despite how much i disagree with current economic policy
– treasuries are so over bought (no yield) that investors are forced into risk assets such as stocks,commodities and this will eventually be reflected in property which naturally has a time lag.
– doom and gloom/NWO forecasting is the flavour of the month (Glenn Beck, Alex Jones, Harry Dent, Gerald Celente etc) despite how viable it sounds, however markets rarely react in the way the majority perceive it as going
– My mum and dad think investing in the US property market is a bad idea – contrarian indicator
– with investing it is unwise to bet against the US – Warren Buffet

what?… im looking to property atm, im long gold currently from 1070 dollar mark, ive traded professionally for a few years now and imo, gold and silver are not at the right point in their 'cycle' to begin building up a position. Then again gold and silver could go to $10,000 but your still getting a terrible price atm… the only way you could play it is wait for a dip to buy and hold yourself to a price to get out at. Too many perma bulls in 'precious' metals and alot of people storing the physical stuff will be getting burnt I feel.

Too many people with mantras such as "it must go up" with no view of any possible downside. Id love to see the gold and silver market when the Fed star raising rates again. It is generally said anything that doest pay an income (dividend/rent) is speculation as opposed to an investment… plenty of other markets, world regions at the lows of their cycles, imo no need to chase a market well on its way in a self reinforcing reflexive bull run. Theres always new markets, no need to be a sheep.