澳洲Australia property New threats, same result, some opinion on

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Hi All

I thought I would try to start a threat collecting "expert" opinionon the year ahead so see where we should all be puttin our piggy banks.

Regards, Peter 147

New threats, same result
December 19, 2004
The Sun-Herald

The global economy won't be quite as good and there'll be plenty of colour and movement to excite the markets

The way the economy is going, this will be a great Christmas. So will next year's.

It's just a pity about the bits in between.

Even the Government has admitted things are slowing down and we'll hear the new forecasts for 2005 this week.

John Howard warned the other day that the big threats are drought, rising oil prices and a rising dollar. Er, where has he been? They were this year's big threats and have already happened. Apart from the drought, they seem to be going in the other direction.

No, next year's threats are different. They're the US, Chinese and Japanese economies in that order. So for us it's quite likely that this time next year will be pretty much as it is now.

For a start, like this year, interest rate speculation will be contradictory. That's because the disastrous balance of payments demands a rate rise, but the knife-edged state of household debt, and the impact it would have on home prices, argues against it.

Also the dollar will be all over the place as the markets buck the trend by sending the US dollar up again as the US economy strengthens, due in no small part to its big fall this year.

As with interest rates here, there are two strong forces pulling in opposite directions. Pushing the US dollar up will be rises in US rates, a booming Wall Street and good growth. The US in 2005 is set to be the best show in town.

Pushing the US dollar down will be talk of a crisis every time the ever-worsening balance of payments comes out.

But the Chinese are widely expected to appreciate the yuan in 2005 which will keep their economy under control and boost the US. Japan seems to be stagnating again.

So you can probably see the picture. The global economy won't be quite as good as this year, and there'll be plenty of colour and movement to excite the markets.

This is all very well, but at this time of year there's one crucial question: should you be in shares, property, or neither?

Based on these economic trends, my guess is yes, no and no.

Certainly you'd be better off right now in an average share rather than an average property.

It's also likely the sharemarket will ride the coat-tails of Wall Street which is only just now coming out of its extended rest and recuperation from the tech wreck.

Incidentally, a pick up on Wall Street would spill over to the Nasdaq exchange of high tech stocks, prompting Phillip Shamieh of the tip sheet Investment Wise to suggest: "This may be a major catalyst for a re-weighting on tech stocks around the world."

In any case, there's also enough domestic spending momentum to keep profits bubbling along for at least six months.

Property, on the other hand, is likely to fall victim to the periodic bouts of interest rate speculation.

Speaking of which, forget a drop in rates. That will only happen if the economy is in deep trouble, in which case it would be too early to buy property because prices would fall, or too late to sell.

By the way, if you compare values then the sharemarket, based on the price earnings ratio, is at its average of the past 10 years, say brokers Patersons.

The equivalent ratio for property is so bad nobody even bothers to mention it. Comparing the yield on dividends and capital city rents, property is almost twice as expensive
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Hi Peter

Anyway to enlarge that font a little? My wife walked past and thought i was having a bit too much quality time with my monitor. :p

Thanks :D  

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Sultan of Swing said:
Hi Peter

Anyway to enlarge that font a little? My wife walked past and thought i was having a bit too much quality time with my monitor. :p

Thanks :DClick to expand...
Hi SOS,

If your using Internet Explorer just go to....

view
text size
largest

and you should be able to read :)  

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Sultan of Swing said:
Hi Peter

Anyway to enlarge that font a little? My wife walked past and thought i was having a bit too much quality time with my monitor. :p

Thanks :DClick to expand...
Sorry, back up to sixe 2 whgich is STD.

Peter 147  

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Code:
Hi SOS,

If your using Internet Explorer just go to....

view
text size
largest

and you should be able to read 
__________________
Cheers 
Muz
Thanks Muz, works great :D  

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