1 00:00:10,240 --> 00:00:13,320 Speaker 1: Hello, and welcome to the Australians Money Puzzle podcast. I'm 2 00:00:13,400 --> 00:00:16,960 Speaker 1: James Kirby, the Wealth editor at The Australian. Welcome aboard everybody, 3 00:00:17,280 --> 00:00:20,520 Speaker 1: and welcome to the final concluding episode of our summer 4 00:00:20,560 --> 00:00:23,680 Speaker 1: series telling you what to expect in the year ahead. 5 00:00:24,120 --> 00:00:28,840 Speaker 1: You may, I'm sure, ask yourself, why would we ask 6 00:00:29,120 --> 00:00:31,120 Speaker 1: experts what's going to happen in the year ahead when 7 00:00:31,120 --> 00:00:34,599 Speaker 1: we know that so often they get it wrong. But 8 00:00:34,800 --> 00:00:38,919 Speaker 1: the thing is, as an investor, you need to know 9 00:00:39,000 --> 00:00:41,360 Speaker 1: what everyone else is thinking. It's what everyone else is 10 00:00:41,400 --> 00:00:43,920 Speaker 1: thinking is what moves markets, right. It's not what you 11 00:00:44,000 --> 00:00:47,320 Speaker 1: think is going to happen to a certain share price, 12 00:00:47,400 --> 00:00:49,239 Speaker 1: it's what everyone else thinks. So that's why you need 13 00:00:49,280 --> 00:00:52,159 Speaker 1: to know the contentus even if it's wrong, and trust me, 14 00:00:52,200 --> 00:00:56,040 Speaker 1: they're often wrong, but it's a major part of understanding 15 00:00:56,080 --> 00:00:58,080 Speaker 1: the context in which you invest, and you need to 16 00:00:58,120 --> 00:01:00,960 Speaker 1: know basically how to reset in any given years. So 17 00:01:00,960 --> 00:01:03,639 Speaker 1: that's why we had a look at share markets and 18 00:01:03,800 --> 00:01:07,039 Speaker 1: shares and property so far in this series. And I 19 00:01:07,040 --> 00:01:09,640 Speaker 1: hope you enjoyed those shows. I certainly enjoyed them. They 20 00:01:09,680 --> 00:01:11,800 Speaker 1: were really good and we had really good people, I 21 00:01:11,880 --> 00:01:17,720 Speaker 1: must say talking about the share markets, market individual shares. 22 00:01:17,760 --> 00:01:22,319 Speaker 1: On the ASX we had June Bailleu and she of 23 00:01:22,400 --> 00:01:26,440 Speaker 1: the ten group was very good on opportunities and risks, 24 00:01:26,480 --> 00:01:31,600 Speaker 1: perhaps in our own market. Stuart William's covered off on property. 25 00:01:31,720 --> 00:01:33,640 Speaker 1: So you say, well, what's left. Whether we need to 26 00:01:33,680 --> 00:01:36,560 Speaker 1: talk about cash, we need to talk about gold, we 27 00:01:36,600 --> 00:01:39,800 Speaker 1: need to talk about bitcoin, we need to talk about alternatives, 28 00:01:40,360 --> 00:01:42,080 Speaker 1: and I think, more than any thinks, we need to 29 00:01:42,080 --> 00:01:44,360 Speaker 1: put it all together. What have we found out now, 30 00:01:44,440 --> 00:01:47,240 Speaker 1: now now that we starting into the new twenty twenty 31 00:01:47,240 --> 00:01:50,880 Speaker 1: five years, what do we know about the markets, what 32 00:01:50,960 --> 00:01:53,400 Speaker 1: do we know about the consensus outlook? And what should 33 00:01:53,400 --> 00:01:58,480 Speaker 1: investors be expecting. To help me put all that together, 34 00:01:58,560 --> 00:02:01,920 Speaker 1: I've got James Girard of Financial Advisor dot com dot you. 35 00:02:02,000 --> 00:02:05,240 Speaker 2: How are you, James? I'm doing them very well. James, 36 00:02:05,280 --> 00:02:06,040 Speaker 2: thanks for having me on. 37 00:02:07,480 --> 00:02:09,800 Speaker 1: Nice to have you on. And I think this is 38 00:02:09,840 --> 00:02:12,280 Speaker 1: the Tester Show, this is the one that we put 39 00:02:12,280 --> 00:02:14,919 Speaker 1: it all together, because there's quite a lot to put together. 40 00:02:15,800 --> 00:02:19,000 Speaker 1: The early part of the series was recorded just prior 41 00:02:19,040 --> 00:02:22,399 Speaker 1: to Christmas and things were looking a little better then, 42 00:02:22,760 --> 00:02:25,600 Speaker 1: so you'd hear on talking about ASX returns in the 43 00:02:25,880 --> 00:02:29,200 Speaker 1: order of in the teens teen percent at one stage 44 00:02:29,400 --> 00:02:32,520 Speaker 1: for the return for the year now as it finished 45 00:02:32,600 --> 00:02:36,560 Speaker 1: on December thirty one, when we were not working and 46 00:02:36,560 --> 00:02:39,280 Speaker 1: I'm sure you weren't working either, listener. The finally cut, 47 00:02:39,320 --> 00:02:41,360 Speaker 1: if you like, of the AX was we did about 48 00:02:41,360 --> 00:02:44,720 Speaker 1: eleven percent eleven and a half for the year, which 49 00:02:44,800 --> 00:02:46,840 Speaker 1: is good. Okay, the long term average is tenth. That's 50 00:02:46,880 --> 00:02:50,840 Speaker 1: pretty good. Of that, you know, four percent or sober dividends. 51 00:02:50,880 --> 00:02:53,720 Speaker 1: That was our outcome for the ASEX. And on the 52 00:02:53,840 --> 00:02:56,200 Speaker 1: S and P five hundred being the sort of core 53 00:02:56,360 --> 00:02:59,680 Speaker 1: US market, the representative Bellweather market, if you like, for 54 00:02:59,720 --> 00:03:04,480 Speaker 1: the US, they did twenty three percent, which was extremely good, 55 00:03:04,560 --> 00:03:06,800 Speaker 1: and they didn't fall off to the same degree that 56 00:03:06,840 --> 00:03:10,160 Speaker 1: we did, which tells you perhaps once again that the 57 00:03:10,320 --> 00:03:13,960 Speaker 1: US market, whatever is, if things are good, it tends 58 00:03:14,000 --> 00:03:15,880 Speaker 1: to be twice as good as the ASEX. And that 59 00:03:16,720 --> 00:03:21,519 Speaker 1: actually segues into the forecast that was offered by Mark Jokuns. 60 00:03:21,600 --> 00:03:23,960 Speaker 1: He said that US chairs should do twice as well 61 00:03:24,600 --> 00:03:27,560 Speaker 1: in twenty twenty five as ASEX chares, and he meant 62 00:03:27,600 --> 00:03:30,359 Speaker 1: that US chairs could do eight percent and we might 63 00:03:30,400 --> 00:03:33,760 Speaker 1: only do four total return. That is, on both markets. 64 00:03:33,960 --> 00:03:37,480 Speaker 1: It remains to be seen if that's ever going to 65 00:03:37,480 --> 00:03:42,160 Speaker 1: come to pass. But James Girard, I imagine your most 66 00:03:42,160 --> 00:03:45,200 Speaker 1: of the people on your books were pretty happy this year. 67 00:03:46,080 --> 00:03:46,600 Speaker 2: I mean. 68 00:03:48,200 --> 00:03:50,600 Speaker 1: It must be in some ways a relatively easy year. 69 00:03:50,800 --> 00:03:53,720 Speaker 1: There have been a financial advisor to have too many stressed, 70 00:03:53,840 --> 00:03:55,520 Speaker 1: angst ridden codes. 71 00:03:56,960 --> 00:04:00,400 Speaker 3: That's right, Yeah, almost all that's a classes went up. 72 00:04:00,600 --> 00:04:04,400 Speaker 3: Cash rates of high property markets went up in most 73 00:04:04,400 --> 00:04:07,880 Speaker 3: capital cities. Share markets here have been great. International share 74 00:04:07,880 --> 00:04:10,360 Speaker 3: markets on the whole have been great as well. Gold 75 00:04:10,840 --> 00:04:13,720 Speaker 3: went up, Crypto went up if you're into that high 76 00:04:13,800 --> 00:04:16,719 Speaker 3: risk stuff, private equity, so the alternatives. 77 00:04:17,200 --> 00:04:18,440 Speaker 2: Yeah, everything went up. 78 00:04:18,480 --> 00:04:22,400 Speaker 1: Everyone's happy, and everyone thinks that they've got it masters 79 00:04:22,920 --> 00:04:26,400 Speaker 1: they're good investors. I'm a good investor. I bought bitcoin 80 00:04:26,480 --> 00:04:28,120 Speaker 1: and it went up. I must be good. Bit of 81 00:04:28,160 --> 00:04:31,440 Speaker 1: a not a scare, not at all, but a bit 82 00:04:31,480 --> 00:04:34,240 Speaker 1: of a down turn at the end of the year 83 00:04:35,040 --> 00:04:38,920 Speaker 1: calendar year and pretty mixed so far these early weeks 84 00:04:38,920 --> 00:04:45,000 Speaker 1: of January on global markets. As sense perhaps of rates, 85 00:04:45,440 --> 00:04:47,800 Speaker 1: the US records may never come to pass from here 86 00:04:47,880 --> 00:04:50,440 Speaker 1: after the last batch of figures, there's a sense of that. 87 00:04:50,440 --> 00:04:51,599 Speaker 1: Am I over egging that? 88 00:04:52,720 --> 00:04:54,479 Speaker 2: No? I think you correct to there. 89 00:04:54,680 --> 00:04:56,839 Speaker 3: What we saw in December was that in the US 90 00:04:57,080 --> 00:04:59,840 Speaker 3: the payroll data was really strong. The labor market data 91 00:04:59,880 --> 00:05:02,760 Speaker 3: was really strong as well, and that's meant that share 92 00:05:02,760 --> 00:05:05,279 Speaker 3: markets going, oh okay, well, the Fed Reserve might not 93 00:05:05,320 --> 00:05:07,600 Speaker 3: do all those rate cuts as quick as what we expect, 94 00:05:08,080 --> 00:05:10,680 Speaker 3: and the share markets like those rate cuts to come through. 95 00:05:10,720 --> 00:05:13,200 Speaker 3: So there's been a temperion of that expectation, and so 96 00:05:13,279 --> 00:05:15,760 Speaker 3: share markets are then come back. And also through some 97 00:05:15,839 --> 00:05:20,320 Speaker 3: of Donald Trump's recent comments around Greenland, Canada, Panama, Camanal 98 00:05:20,400 --> 00:05:22,680 Speaker 3: that sort of scared share markets a little bit around 99 00:05:22,920 --> 00:05:27,120 Speaker 3: He's pending inauguration and coming into his presidency and depending 100 00:05:27,120 --> 00:05:28,600 Speaker 3: on when you listen to this podcast in a week 101 00:05:28,680 --> 00:05:31,240 Speaker 3: or so, which will be a testing time for share 102 00:05:31,279 --> 00:05:34,120 Speaker 3: markets because everybody is looking at this as a weight 103 00:05:34,200 --> 00:05:36,320 Speaker 3: and see type moment almost and I don't think I'm 104 00:05:36,320 --> 00:05:39,480 Speaker 3: overplaying this that the fate of almost everybody's pension fund 105 00:05:39,520 --> 00:05:41,360 Speaker 3: depends on this one man and what he does once 106 00:05:41,400 --> 00:05:42,960 Speaker 3: he becomes president in a week's time. 107 00:05:45,240 --> 00:05:54,680 Speaker 1: Oh yeah, hmm, isn't that great? Isn't that wonderful? Depend 108 00:05:54,720 --> 00:05:58,400 Speaker 1: on that Donald Trump's whims. I just I thought, it's 109 00:05:58,400 --> 00:06:00,520 Speaker 1: not that, I it's not that I just agree with you. 110 00:06:00,600 --> 00:06:02,800 Speaker 1: I don't want to agree with you, and so I'm 111 00:06:02,839 --> 00:06:05,680 Speaker 1: not going to. But I know exactly what you're saying. 112 00:06:05,880 --> 00:06:08,200 Speaker 1: There are some very obvious and we need to put 113 00:06:08,200 --> 00:06:10,159 Speaker 1: them on the table. About Trump being elected, a couple 114 00:06:10,200 --> 00:06:12,200 Speaker 1: of things I always say. First of all, you know 115 00:06:12,680 --> 00:06:16,000 Speaker 1: it's in a republican president has been elected pro market, 116 00:06:16,160 --> 00:06:19,120 Speaker 1: pro deregulation president. That's good for markets. That's why we 117 00:06:19,200 --> 00:06:21,599 Speaker 1: had a great final quarter at the end of last year. 118 00:06:22,240 --> 00:06:25,520 Speaker 1: Certain things I think we can safely say. ESG style 119 00:06:25,600 --> 00:06:30,320 Speaker 1: investing is not just it's not just a less fashionable. 120 00:06:30,440 --> 00:06:33,120 Speaker 1: It is in trouble because you have someone who is 121 00:06:33,160 --> 00:06:37,520 Speaker 1: actively anti ESG, and there are anti ESG elements in 122 00:06:37,560 --> 00:06:42,000 Speaker 1: the US state legislators, of course, been environmental, social, and 123 00:06:42,040 --> 00:06:44,720 Speaker 1: governance issues. In other words, that's sort of investing ethical 124 00:06:44,760 --> 00:06:47,600 Speaker 1: investing for want of a better word, as defined. And 125 00:06:47,720 --> 00:06:50,960 Speaker 1: share markets at least is in trouble, and that is 126 00:06:51,200 --> 00:06:56,000 Speaker 1: very obvious now and they are rushing out of their responsibilities. 127 00:06:56,040 --> 00:06:59,000 Speaker 1: In the US, A black rock is turntail on ESG 128 00:06:59,160 --> 00:07:01,640 Speaker 1: having you know, bard us all silly with their ESG 129 00:07:01,720 --> 00:07:05,440 Speaker 1: stuff for years. Facebook obviously been a spectacular example of 130 00:07:05,480 --> 00:07:09,840 Speaker 1: a company that's just like in an extremely unimpressive way 131 00:07:10,160 --> 00:07:15,120 Speaker 1: trying to curry favor with Trump by dropping the mediated 132 00:07:15,440 --> 00:07:18,480 Speaker 1: content that it had promised for so long. You know, 133 00:07:18,640 --> 00:07:21,880 Speaker 1: really bad behavior there. But we're looking at it as investors, 134 00:07:22,200 --> 00:07:27,160 Speaker 1: and the outcome of that is that shares US shares 135 00:07:27,160 --> 00:07:31,000 Speaker 1: particularly have a win behind them, except for ESG shares. 136 00:07:31,560 --> 00:07:33,800 Speaker 1: What about Because we've covered shares, so I want to 137 00:07:33,840 --> 00:07:35,080 Speaker 1: ask you about a couple of other things, and the 138 00:07:35,080 --> 00:07:38,640 Speaker 1: obvious one is gold. James, where do you sit on gold? 139 00:07:38,960 --> 00:07:41,000 Speaker 3: It's interesting, it's gone up quite a lot over the 140 00:07:41,040 --> 00:07:44,920 Speaker 3: past year or so, and looking across the experts, from 141 00:07:44,920 --> 00:07:47,520 Speaker 3: the fund managers to the economists at the banks, the 142 00:07:47,520 --> 00:07:50,280 Speaker 3: consensus there is that we might be up for another 143 00:07:50,400 --> 00:07:53,200 Speaker 3: ten twenty percent increase in the price of gold. The 144 00:07:53,440 --> 00:07:57,400 Speaker 3: gold price has been supported strongly with the what do 145 00:07:57,440 --> 00:07:59,760 Speaker 3: you call them? The treasuries of countries around the world 146 00:08:00,200 --> 00:08:03,120 Speaker 3: up gold, increasing their gold reserves last year, and then 147 00:08:03,160 --> 00:08:05,440 Speaker 3: there's been the other usual cases for gold. There's a 148 00:08:05,440 --> 00:08:07,960 Speaker 3: bit of a safe haven. So we're not sure what's 149 00:08:08,000 --> 00:08:10,760 Speaker 3: going to happen with these geopolitical tensions that are happening 150 00:08:10,760 --> 00:08:13,720 Speaker 3: around the world, and gold's used for injury and that's 151 00:08:13,760 --> 00:08:16,200 Speaker 3: increased in demand as well over the past twelve months. 152 00:08:16,200 --> 00:08:19,680 Speaker 2: So I've just using an anecdote. 153 00:08:19,760 --> 00:08:21,640 Speaker 3: I've got a client who has a self managed super 154 00:08:21,640 --> 00:08:23,680 Speaker 3: fun and going back about five years ago, we bought 155 00:08:23,680 --> 00:08:25,640 Speaker 3: two kilos of gold and at that point in time, 156 00:08:25,680 --> 00:08:28,640 Speaker 3: it was about eighty thousand dollars per kilo of gold. 157 00:08:28,880 --> 00:08:32,600 Speaker 3: And yeah, when we got to early twenty twenty four, 158 00:08:32,640 --> 00:08:35,600 Speaker 3: we decided, okay, let's take some of this goal because 159 00:08:35,920 --> 00:08:38,280 Speaker 3: being in the retirement phase of super we need to 160 00:08:38,320 --> 00:08:40,160 Speaker 3: generate income. And you know, it's great, this goal's going 161 00:08:40,240 --> 00:08:42,280 Speaker 3: up in value, but it's not paying the bills and 162 00:08:42,280 --> 00:08:44,040 Speaker 3: cost of living pressures that are going up. So let's 163 00:08:44,040 --> 00:08:46,000 Speaker 3: sell half of it. So we sold half of it, 164 00:08:46,000 --> 00:08:48,640 Speaker 3: which was great. We deployed it into bond style investments, 165 00:08:48,679 --> 00:08:51,520 Speaker 3: picked up seven eight percent income there, and then the 166 00:08:51,559 --> 00:08:53,240 Speaker 3: other half of the gold has gone up. So now 167 00:08:53,240 --> 00:08:55,800 Speaker 3: we face this second point, which I'm saying this story 168 00:08:55,800 --> 00:08:58,720 Speaker 3: because maybe some investors wire holding gold in similar positions, 169 00:08:58,720 --> 00:09:01,200 Speaker 3: thinking what do I do now my goal. Do I 170 00:09:01,280 --> 00:09:03,520 Speaker 3: continue to hold it hoping that the price goes up, 171 00:09:03,800 --> 00:09:06,320 Speaker 3: or do I sell it? And my suggestion would be 172 00:09:06,360 --> 00:09:09,839 Speaker 3: to start to in a gradual way decreased the exposure. 173 00:09:09,880 --> 00:09:12,160 Speaker 3: So every time it goes up another five or ten percent, 174 00:09:12,480 --> 00:09:14,480 Speaker 3: sell a little bit of it if you can, so 175 00:09:14,640 --> 00:09:15,800 Speaker 3: that you're averaging it. 176 00:09:15,880 --> 00:09:16,520 Speaker 2: You sell price. 177 00:09:16,600 --> 00:09:19,000 Speaker 3: Because nobody has at crystal Ball, no one can tell 178 00:09:19,000 --> 00:09:20,560 Speaker 3: when that the peak of the gold price will be. 179 00:09:21,200 --> 00:09:23,800 Speaker 1: This person did they hold the gold? They had the 180 00:09:23,800 --> 00:09:25,160 Speaker 1: gold and bullion, you see they did. 181 00:09:25,240 --> 00:09:28,920 Speaker 3: Yeah, we bought physical gold, one kilo blocks, and we 182 00:09:29,400 --> 00:09:31,959 Speaker 3: took out a bank safety deposit box. And it's really 183 00:09:32,000 --> 00:09:34,000 Speaker 3: hard to find a safety deposit box. We had to 184 00:09:34,040 --> 00:09:37,760 Speaker 3: walk around to several branches of major banks to try 185 00:09:37,760 --> 00:09:39,600 Speaker 3: and find one, and some of them said, look, we 186 00:09:39,600 --> 00:09:40,920 Speaker 3: can put your name down, but there's going to be 187 00:09:41,040 --> 00:09:42,600 Speaker 3: a five to ten year waiting list. 188 00:09:42,640 --> 00:09:44,280 Speaker 2: But luckily we found one. 189 00:09:44,400 --> 00:09:46,520 Speaker 3: I think it was at Westpac from memory, and the 190 00:09:46,559 --> 00:09:49,480 Speaker 3: client left these two kilos of gold there. So that's 191 00:09:49,559 --> 00:09:51,920 Speaker 3: another thing to think about practically with gold, is that sure, 192 00:09:51,920 --> 00:09:54,480 Speaker 3: it's great to buy it, and maybe how you buy it. 193 00:09:54,760 --> 00:09:57,080 Speaker 3: Will you buy the physical goal we buy a gold 194 00:09:57,120 --> 00:10:00,240 Speaker 3: etf we buy gold mining companies. But if just go 195 00:10:00,280 --> 00:10:02,480 Speaker 3: for the simple approach of buying some physical gold, you 196 00:10:02,520 --> 00:10:05,000 Speaker 3: also need to think about where you're going to store 197 00:10:05,040 --> 00:10:08,720 Speaker 3: it and whether where you're storing it has insurance attached 198 00:10:08,760 --> 00:10:10,160 Speaker 3: to it, or whether you need to go get your 199 00:10:10,200 --> 00:10:13,320 Speaker 3: separate insurance policy to protect that that gold bar that 200 00:10:13,400 --> 00:10:14,040 Speaker 3: you've just bought. 201 00:10:14,720 --> 00:10:18,640 Speaker 1: What what did this particular person have against ETF? 202 00:10:18,760 --> 00:10:21,679 Speaker 3: So wonder they had an issue with the ETFs, and 203 00:10:21,920 --> 00:10:24,920 Speaker 3: I think it's somewhat misfounded. But they felt that the 204 00:10:24,920 --> 00:10:27,840 Speaker 3: ETF was synthetic and not backed one for one with 205 00:10:27,920 --> 00:10:30,920 Speaker 3: gold reserves, whereas when I read the details of the 206 00:10:30,920 --> 00:10:33,160 Speaker 3: gold ETF, they seem to be backed. So as someone 207 00:10:33,200 --> 00:10:35,880 Speaker 3: buys a goal ETF, the ETF provide will go buy 208 00:10:35,920 --> 00:10:38,400 Speaker 3: some physical gold. But the client just wanted to be 209 00:10:38,679 --> 00:10:41,240 Speaker 3: dead certain that if everything went to crumbs, that they 210 00:10:41,280 --> 00:10:43,240 Speaker 3: have a chunk of gold that can hack a little 211 00:10:43,240 --> 00:10:45,880 Speaker 3: bit of way of to barter to survive, that they'd 212 00:10:45,920 --> 00:10:46,920 Speaker 3: have those gold bars there. 213 00:10:48,880 --> 00:10:52,600 Speaker 1: Sounds like your client probably be most please if they 214 00:10:52,600 --> 00:10:55,120 Speaker 1: had the bullion under the under their pillar. Would they 215 00:10:55,120 --> 00:10:56,719 Speaker 1: have gone beside it? 216 00:10:56,840 --> 00:10:57,679 Speaker 2: Something like that? 217 00:10:57,800 --> 00:11:02,880 Speaker 3: Yeah, gold's a funny has a lure to it. 218 00:11:02,880 --> 00:11:05,000 Speaker 1: It's funny one, isn't it. And I talked to I 219 00:11:05,040 --> 00:11:06,640 Speaker 1: talked to a person who's on the board of a 220 00:11:06,720 --> 00:11:09,760 Speaker 1: family office and the family Office had got into gold 221 00:11:10,040 --> 00:11:13,120 Speaker 1: and they had this exact same conversation and the family 222 00:11:13,120 --> 00:11:17,520 Speaker 1: office were skeptical about this aspect of gold, and the 223 00:11:17,559 --> 00:11:20,280 Speaker 1: conversation went down the same line, At what point if 224 00:11:20,280 --> 00:11:23,839 Speaker 1: you're really worried about things being absolutely dreadful and if 225 00:11:23,840 --> 00:11:27,680 Speaker 1: it's the last resort, then how far do you go? 226 00:11:28,640 --> 00:11:31,400 Speaker 1: How about the vault? Would they get into the vault 227 00:11:31,679 --> 00:11:35,199 Speaker 1: on the day if they need to, etc. You could 228 00:11:35,320 --> 00:11:37,520 Speaker 1: kind of go on forever with that. So that's something 229 00:11:37,559 --> 00:11:40,320 Speaker 1: everybody has to figure out for themselves. But it's pretty interesting, 230 00:11:40,520 --> 00:11:42,960 Speaker 1: and it's also interesting, James, you mentioned that it might 231 00:11:43,000 --> 00:11:45,160 Speaker 1: be time to take profits on gold. That's an interesting 232 00:11:45,200 --> 00:11:49,800 Speaker 1: point of view. I would tend to be fully bullish 233 00:11:49,880 --> 00:11:53,080 Speaker 1: on gold again this year, as I have been last 234 00:11:53,160 --> 00:11:54,360 Speaker 1: year and the year before, and I have it in 235 00:11:54,400 --> 00:11:57,120 Speaker 1: my own SMSF. I have it in the form of vtfs, 236 00:11:57,320 --> 00:12:00,000 Speaker 1: and I see it at a hedge against Trump, basically 237 00:12:00,000 --> 00:12:04,319 Speaker 1: a hedge against Trump's, a hedge against Trump's whims tendency 238 00:12:04,400 --> 00:12:09,760 Speaker 1: towards chaos, and the fact that all elected officials have 239 00:12:09,840 --> 00:12:13,520 Speaker 1: a honeymoon period and then it ends, and the Trump 240 00:12:13,640 --> 00:12:16,920 Speaker 1: honeymoon period when it ends. I think gold could be 241 00:12:16,960 --> 00:12:19,800 Speaker 1: a very useful acid in death context. That's very much 242 00:12:19,840 --> 00:12:22,320 Speaker 1: a personal view. Okay, we'll take a break. We'll be 243 00:12:22,360 --> 00:12:31,440 Speaker 1: back in a moment. Hello, Well, welcome back to The 244 00:12:31,440 --> 00:12:35,320 Speaker 1: Australian's Money Puzzle podcast. I'm James Kirby, Well, the editor 245 00:12:35,360 --> 00:12:38,720 Speaker 1: at The Australian, talking to James Girard. This is the 246 00:12:38,760 --> 00:12:41,679 Speaker 1: final episode of our outlook for the year. So if 247 00:12:41,720 --> 00:12:45,120 Speaker 1: you recall in the first segment I laid out how 248 00:12:45,400 --> 00:12:49,199 Speaker 1: the consensus is for the year ahead, pretty ordinary on 249 00:12:49,240 --> 00:12:54,320 Speaker 1: Australian chairs, pretty good on American chairs, US shares. The 250 00:12:54,480 --> 00:12:58,560 Speaker 1: consensus for property, such an important asset to our listeners, 251 00:12:59,200 --> 00:13:03,240 Speaker 1: is also it's fairly mild, a national average of three percent. 252 00:13:03,320 --> 00:13:05,600 Speaker 1: That could move either way if you think about it. 253 00:13:05,640 --> 00:13:08,280 Speaker 1: This year the national average that is twenty twenty four 254 00:13:08,280 --> 00:13:12,160 Speaker 1: of the national average was four point nine. Which they're 255 00:13:12,160 --> 00:13:15,040 Speaker 1: all key figures, James, But they're modest enough, really, aren't they. 256 00:13:15,080 --> 00:13:18,280 Speaker 1: For property, it's certainly a period of it's a pretty 257 00:13:18,280 --> 00:13:21,920 Speaker 1: mixed out look on every level, not just regionally but 258 00:13:22,080 --> 00:13:25,880 Speaker 1: generally for property. What are you saying to people on 259 00:13:25,920 --> 00:13:29,760 Speaker 1: their property holdings? What's your sort of default position at 260 00:13:29,760 --> 00:13:30,400 Speaker 1: the moment on that? 261 00:13:30,600 --> 00:13:33,000 Speaker 3: So when we're talking about property, we were either talking 262 00:13:33,000 --> 00:13:36,079 Speaker 3: about rates or physical property. And I was really interested 263 00:13:36,120 --> 00:13:38,960 Speaker 3: to listen to Stuart Wims, and I'd encourage everyone if 264 00:13:38,960 --> 00:13:41,600 Speaker 3: they haven't listened to that podcast on the Money Puzzle, 265 00:13:41,640 --> 00:13:44,080 Speaker 3: to listen to that because really insightful. He's an expert 266 00:13:44,080 --> 00:13:47,360 Speaker 3: on property markets, and he spoke about sentiment and market 267 00:13:47,400 --> 00:13:51,559 Speaker 3: cycles and why Perf went up and Melbourne went down. 268 00:13:51,640 --> 00:13:54,400 Speaker 3: But broadly, what I'm saying to clients is that I 269 00:13:54,440 --> 00:13:57,640 Speaker 3: feel that what I'm seeing is my clients, particularly the 270 00:13:57,720 --> 00:14:00,760 Speaker 3: ones in Sydney and Melbourne, with these one million two 271 00:14:00,760 --> 00:14:05,440 Speaker 3: million dollar mortgages, they're starting to struggle. They're eating up 272 00:14:05,480 --> 00:14:08,480 Speaker 3: into their officed accounts, their savings because a fair chunk 273 00:14:08,480 --> 00:14:11,199 Speaker 3: of these people have gone from two percent interest rates 274 00:14:11,240 --> 00:14:13,959 Speaker 3: to six to six and a half percent interest rates, 275 00:14:14,000 --> 00:14:16,560 Speaker 3: and that's stopping them from upgrading their home, from in 276 00:14:16,600 --> 00:14:19,520 Speaker 3: buying investment properties. And so I just feel that we 277 00:14:19,600 --> 00:14:23,080 Speaker 3: just once these rate cuts happened from the Reserve Bank, 278 00:14:23,160 --> 00:14:26,720 Speaker 3: it will be this confidence boost because property markets run 279 00:14:26,880 --> 00:14:29,840 Speaker 3: on sentiment, Mum and Dad sentiment in terms of buying 280 00:14:29,840 --> 00:14:32,160 Speaker 3: and selling, and I think that once we just get 281 00:14:32,160 --> 00:14:35,480 Speaker 3: that first twenty five basis points rate cut that the 282 00:14:35,760 --> 00:14:38,160 Speaker 3: floodgates will open and the property markets will will go 283 00:14:38,240 --> 00:14:40,480 Speaker 3: back up. And I was really interested to hear she 284 00:14:40,520 --> 00:14:43,360 Speaker 3: will talk about Melbourne in particular and all these property 285 00:14:43,400 --> 00:14:46,160 Speaker 3: taxes and the tough time you guys have had over 286 00:14:46,160 --> 00:14:48,440 Speaker 3: the past five to ten years with your market compared 287 00:14:48,440 --> 00:14:53,400 Speaker 3: to Sydney ten property taxes, two new ones. Yeah, yeah, 288 00:14:53,440 --> 00:14:55,680 Speaker 3: I hope you had lots of facilities and resources and 289 00:14:55,880 --> 00:14:58,240 Speaker 3: things afforded for all these taxes that you've been slugged with. 290 00:14:59,120 --> 00:15:02,880 Speaker 1: Oh, yes, of course, each one of them was so beneficient. Yes, 291 00:15:02,920 --> 00:15:05,440 Speaker 1: I know. It's it's a really is an issue. You've 292 00:15:05,480 --> 00:15:08,720 Speaker 1: got the prices falling and you've got the taxes rising. 293 00:15:08,720 --> 00:15:11,480 Speaker 1: It's as simple as that. And you had three percent 294 00:15:11,520 --> 00:15:13,600 Speaker 1: de client in the City of Melbourne last year, a 295 00:15:13,680 --> 00:15:15,920 Speaker 1: forecast de client of up to five percent this year, 296 00:15:16,680 --> 00:15:22,200 Speaker 1: and the property taxes are mounting. So there is indisputable evidence. Actually, 297 00:15:22,560 --> 00:15:25,840 Speaker 1: Ria the Proper Track Group have provided evidence to me 298 00:15:26,000 --> 00:15:28,800 Speaker 1: which I wrote about, that investors have been moving out 299 00:15:28,800 --> 00:15:31,960 Speaker 1: of the state on the basis of those taxes, and 300 00:15:32,720 --> 00:15:35,120 Speaker 1: very simply on the average year, on the average city 301 00:15:35,240 --> 00:15:39,119 Speaker 1: or state in Australia, something like six percent of investors 302 00:15:39,160 --> 00:15:42,160 Speaker 1: sell and in Melbourne it's running at nine percent, so 303 00:15:42,640 --> 00:15:45,680 Speaker 1: basically a third higher than you would expect it to be. 304 00:15:46,520 --> 00:15:49,840 Speaker 1: So I thought between the line Stewart was saying that 305 00:15:49,880 --> 00:15:52,480 Speaker 1: looking at the national market, he thought Melbourne, you know, 306 00:15:52,600 --> 00:15:56,560 Speaker 1: had potential course as if you believe in cycles, but 307 00:15:56,720 --> 00:16:01,120 Speaker 1: she does, then Melbourne. Is you your dollar invested in 308 00:16:01,160 --> 00:16:03,920 Speaker 1: a metament might be better awarded than anywhere else, just 309 00:16:04,000 --> 00:16:05,400 Speaker 1: now and properly, what do you think of that? 310 00:16:05,720 --> 00:16:08,960 Speaker 3: Yeah, it makes sense when you look at the value 311 00:16:09,400 --> 00:16:12,360 Speaker 3: they're in the Melbourne market relative to its closest competitor, 312 00:16:12,400 --> 00:16:15,680 Speaker 3: which is a Sydney market, it makes sense to be 313 00:16:15,760 --> 00:16:19,360 Speaker 3: looking to to buy in Melbourne. I guess I look 314 00:16:19,360 --> 00:16:21,800 Speaker 3: more across the country and one thing I noticed that 315 00:16:21,840 --> 00:16:24,600 Speaker 3: people like to buy in their backyard. People feel more 316 00:16:24,640 --> 00:16:27,920 Speaker 3: comfortable buying in their own local town that they live. 317 00:16:28,040 --> 00:16:29,280 Speaker 2: It's just inherent of us. 318 00:16:29,280 --> 00:16:32,520 Speaker 3: We like comfort, we know what we like, we have 319 00:16:32,600 --> 00:16:37,240 Speaker 3: experience of Yeah, that's right, So people will always continue 320 00:16:37,280 --> 00:16:40,000 Speaker 3: to do that, whether it's an upcycle, down cycle, good time, 321 00:16:40,080 --> 00:16:42,280 Speaker 3: bad time with properties. But if I look more broadly 322 00:16:42,320 --> 00:16:45,280 Speaker 3: around the country, my personal opinion is that it's a 323 00:16:45,280 --> 00:16:47,600 Speaker 3: pretty hard time to buy investment property at the moment 324 00:16:47,640 --> 00:16:51,160 Speaker 3: because we've had Perth go up a lot and although 325 00:16:51,240 --> 00:16:54,000 Speaker 3: professionals like Stuart believe it will keep going up, my 326 00:16:54,040 --> 00:16:56,040 Speaker 3: opinion is that we're not getting on the ground floor. 327 00:16:56,280 --> 00:16:58,560 Speaker 3: We've already had a lot of growth in Perth. Some 328 00:16:58,600 --> 00:17:00,480 Speaker 3: properties have gone up fifty percent, some have gone up 329 00:17:00,480 --> 00:17:03,400 Speaker 3: one hundred percent over the past five years. So you know, 330 00:17:03,560 --> 00:17:05,960 Speaker 3: the question is how much more growth will there be 331 00:17:05,960 --> 00:17:09,359 Speaker 3: before the market peaks? And Adelaide's a similar thing. Although 332 00:17:09,400 --> 00:17:11,720 Speaker 3: it may continue to grow, we're not on the ground floor. 333 00:17:11,720 --> 00:17:14,760 Speaker 3: And places like Hobart in Tasmania that had already peaked 334 00:17:14,760 --> 00:17:17,720 Speaker 3: and started to fell. Places in Queensland you go to 335 00:17:17,760 --> 00:17:20,480 Speaker 3: Brisbane and North and South, they've had fifty to seventy 336 00:17:20,480 --> 00:17:23,919 Speaker 3: percent growth over the past three years. Sydney's at record 337 00:17:24,000 --> 00:17:26,160 Speaker 3: highs and so you have to sort of look further 338 00:17:26,280 --> 00:17:28,720 Speaker 3: and broader. Do you go regionally? Do you go to Darwin, 339 00:17:28,880 --> 00:17:31,199 Speaker 3: do you go to you know, I'd hate to say this, 340 00:17:31,280 --> 00:17:33,359 Speaker 3: but Melbourne. Do we buy in Melbourne as well? We 341 00:17:33,400 --> 00:17:34,800 Speaker 3: have to go to places that we wouldn't usually go 342 00:17:34,800 --> 00:17:36,520 Speaker 3: to buy investment property these days. 343 00:17:37,960 --> 00:17:40,919 Speaker 1: Because the numbers are soft enough to suggest that an 344 00:17:41,040 --> 00:17:44,560 Speaker 1: ordinary investment will do pretty ordinary and you have to 345 00:17:44,560 --> 00:17:45,560 Speaker 1: try a little harder. 346 00:17:45,840 --> 00:17:49,960 Speaker 3: That's yeah, absolutely right where your interest rate if you're borrowing, 347 00:17:50,000 --> 00:17:53,720 Speaker 3: most investments will borrow eighty percent have twenty percent deposits. 348 00:17:53,720 --> 00:17:57,200 Speaker 3: Some will do a cashless transaction, so they typical mum 349 00:17:57,240 --> 00:17:59,840 Speaker 3: and dad will have the family house with some equity 350 00:18:00,240 --> 00:18:01,679 Speaker 3: in it, and then they'll go look to buy an 351 00:18:01,720 --> 00:18:04,359 Speaker 3: investment property and the bank will draw a loan against 352 00:18:04,400 --> 00:18:06,399 Speaker 3: their home and then they'll get an eighty percent loan 353 00:18:06,440 --> 00:18:08,520 Speaker 3: against investment property. So they haven't put a dollar in 354 00:18:08,880 --> 00:18:11,159 Speaker 3: of cash. It's all borrowed money. So where you have 355 00:18:11,240 --> 00:18:14,240 Speaker 3: that type of typical situation and you're having to pay 356 00:18:14,280 --> 00:18:17,160 Speaker 3: six and a half percent interest on the mortgage. Average 357 00:18:17,160 --> 00:18:19,560 Speaker 3: rents in capital cities, the rental yields there are like 358 00:18:19,640 --> 00:18:22,240 Speaker 3: three three and a half percent, so already you're a 359 00:18:22,280 --> 00:18:25,000 Speaker 3: good three percent behind. Then you add your outgoings on top, 360 00:18:25,040 --> 00:18:27,880 Speaker 3: which is typically another one percent of the property value. 361 00:18:27,960 --> 00:18:31,840 Speaker 3: So in short, the property's costing people around seven seven 362 00:18:31,880 --> 00:18:33,719 Speaker 3: and a half percent, but they're only getting three three 363 00:18:33,760 --> 00:18:35,520 Speaker 3: and a half percent income. So that difference of that 364 00:18:35,560 --> 00:18:37,960 Speaker 3: circle four percent they need to pay out of their 365 00:18:38,000 --> 00:18:40,439 Speaker 3: own pocket, so it's a good saving grace that we 366 00:18:40,480 --> 00:18:43,280 Speaker 3: have the negative gearing system here in Australia, which has 367 00:18:43,320 --> 00:18:46,240 Speaker 3: been useful in the past three years after the thirteen 368 00:18:46,280 --> 00:18:47,879 Speaker 3: interest rate rises we've had. 369 00:18:48,080 --> 00:18:50,879 Speaker 1: Yeah, yeah, that's true. I mean definitely. One thing I 370 00:18:50,920 --> 00:18:55,040 Speaker 1: would say too, listeners is that many and we have 371 00:18:55,080 --> 00:19:00,800 Speaker 1: many property guests on the show, they are making the 372 00:19:00,880 --> 00:19:04,400 Speaker 1: point that, of course all property is local. Of course 373 00:19:04,400 --> 00:19:07,840 Speaker 1: there's always opportunities. Just at this time as we wait 374 00:19:07,880 --> 00:19:13,119 Speaker 1: for rates to fall. The market is challenging enough in 375 00:19:13,200 --> 00:19:16,320 Speaker 1: that the figures sound good on average, but there is 376 00:19:16,440 --> 00:19:19,800 Speaker 1: soft spots, particularly in the larger cities, particularly in the 377 00:19:19,800 --> 00:19:24,040 Speaker 1: inner city apartment markets and the outer suburban regions of 378 00:19:24,040 --> 00:19:27,320 Speaker 1: those larger cities. So if you are considering this year, 379 00:19:27,359 --> 00:19:32,600 Speaker 1: folks getting into property or extending property that you own, 380 00:19:33,160 --> 00:19:38,600 Speaker 1: the bias towards home standalone houses remains strong and remains 381 00:19:38,680 --> 00:19:41,359 Speaker 1: advisable I think in many ways because I can we 382 00:19:41,359 --> 00:19:44,240 Speaker 1: can see that the property the inner city apartment markets 383 00:19:44,280 --> 00:19:46,600 Speaker 1: particularly are the weakest spot. We'll have a look at 384 00:19:46,640 --> 00:19:49,160 Speaker 1: this in this closing segment. In a couple of moments, 385 00:19:49,160 --> 00:19:52,200 Speaker 1: we'll take a break and we'll talk about opportunities and 386 00:19:52,760 --> 00:20:05,720 Speaker 1: threats for you in the year ahead. Hello, welcome back 387 00:20:05,760 --> 00:20:08,760 Speaker 1: to The Australian's Money Puzzlive podcast. James Kirby here with 388 00:20:08,840 --> 00:20:14,720 Speaker 1: James Girard. So, James Girard, when we look ahead this year, 389 00:20:16,280 --> 00:20:18,840 Speaker 1: it's not easy, but have a goal. Tell our listeners 390 00:20:18,840 --> 00:20:21,639 Speaker 1: what do you think. Let's talk first of all about 391 00:20:21,640 --> 00:20:24,399 Speaker 1: where the danger points are there, but what might be 392 00:20:24,440 --> 00:20:29,040 Speaker 1: the obvious danger points in a divers portfolio that most 393 00:20:29,040 --> 00:20:30,960 Speaker 1: of our listeners have. 394 00:20:31,600 --> 00:20:35,200 Speaker 3: I think there's big danger points are around uncertainty and 395 00:20:35,400 --> 00:20:37,760 Speaker 3: a lot of that is coming out of the US 396 00:20:37,800 --> 00:20:41,840 Speaker 3: with regards to how Donald Trump takes power and will 397 00:20:41,920 --> 00:20:44,280 Speaker 3: his bark be bigger than his buy it when it 398 00:20:44,320 --> 00:20:48,520 Speaker 3: comes to immigration, illegal immigration and tariffs and these type 399 00:20:48,520 --> 00:20:51,520 Speaker 3: of things, because that will definitely affect share markets. And 400 00:20:51,760 --> 00:20:55,080 Speaker 3: also if he has lots of stimulus and adds to 401 00:20:55,119 --> 00:20:57,840 Speaker 3: the economy, that will create more inflation as well, which 402 00:20:57,840 --> 00:21:00,600 Speaker 3: will delay just rate cards and have all these ripple effects. 403 00:21:00,640 --> 00:21:01,320 Speaker 2: So I think. 404 00:21:01,119 --> 00:21:03,760 Speaker 3: Watching what happens in the US is very important as 405 00:21:03,800 --> 00:21:07,000 Speaker 3: well as those geopolitical events, so they're sort of the 406 00:21:07,040 --> 00:21:09,880 Speaker 3: known risks that we have with global markets. And then 407 00:21:09,920 --> 00:21:13,880 Speaker 3: here in Australia, I think it's really crucial around the 408 00:21:13,920 --> 00:21:16,840 Speaker 3: Reserve Bank cutting those interest rates because I feel that 409 00:21:16,880 --> 00:21:19,840 Speaker 3: we're in a lot more danger than what the numbers indicate. 410 00:21:20,000 --> 00:21:22,399 Speaker 3: So the default rates on loans aren't that bad on 411 00:21:22,440 --> 00:21:24,560 Speaker 3: the moment at the moment for home loans and investment loans, 412 00:21:24,600 --> 00:21:26,879 Speaker 3: but that's because people are just hanging on. But another 413 00:21:26,920 --> 00:21:28,600 Speaker 3: couple of months and I think that we could start 414 00:21:28,640 --> 00:21:30,720 Speaker 3: to see things turn bad. So we really need to 415 00:21:30,720 --> 00:21:33,760 Speaker 3: see those rate drops. That's a key thing in Australia, 416 00:21:33,800 --> 00:21:36,600 Speaker 3: and then that will mean that everything will be fine, 417 00:21:36,600 --> 00:21:38,280 Speaker 3: I feel for the Australian economy. 418 00:21:39,720 --> 00:21:42,679 Speaker 1: Okay, yes, that's really interesting. And I think that issue 419 00:21:42,720 --> 00:21:45,560 Speaker 1: with the US being so important, of course, that instantive 420 00:21:45,600 --> 00:21:47,919 Speaker 1: becomes that the US markets are so important, and the 421 00:21:48,000 --> 00:21:52,640 Speaker 1: US markets will dictate the tenor of the market this year. 422 00:21:53,480 --> 00:21:56,639 Speaker 1: So folks, as Games were saying, watch the US, don't 423 00:21:56,800 --> 00:22:00,880 Speaker 1: think for one moment that the US share market could 424 00:22:00,920 --> 00:22:03,560 Speaker 1: have a downturn and we would escape it, because we won't. 425 00:22:03,640 --> 00:22:06,199 Speaker 1: In fact, history would suggest we will fall, not just 426 00:22:06,240 --> 00:22:09,000 Speaker 1: in tandem, but we may actually fall further if they 427 00:22:09,040 --> 00:22:12,360 Speaker 1: come off in any way. The other sort of scenario, 428 00:22:12,800 --> 00:22:18,240 Speaker 1: which perhaps is more likely, is Trump being, if nothing else, 429 00:22:18,359 --> 00:22:28,560 Speaker 1: a clearly pro business politician will seek to prolong the power, 430 00:22:28,640 --> 00:22:31,919 Speaker 1: if you like, of US markets and the US exceptionalism, 431 00:22:31,960 --> 00:22:34,919 Speaker 1: as they say. But the manner of doing that, he 432 00:22:35,000 --> 00:22:38,000 Speaker 1: may well stoke inflation way very well. I think it's 433 00:22:38,240 --> 00:22:40,760 Speaker 1: likely he will stoke inflation. I think it's likely that 434 00:22:40,800 --> 00:22:42,600 Speaker 1: they will not be able to cut rates. It was 435 00:22:42,720 --> 00:22:45,840 Speaker 1: a big call anyway that the US could be cutting 436 00:22:45,960 --> 00:22:49,960 Speaker 1: rates while they had a president that was basically lighting 437 00:22:50,000 --> 00:22:54,520 Speaker 1: fires under the engines of US business. And so the 438 00:22:54,680 --> 00:22:58,400 Speaker 1: likely outcome perhaps is that the US market overheats and 439 00:22:58,480 --> 00:23:01,639 Speaker 1: that inflation re peers as a real problem in the US. 440 00:23:01,640 --> 00:23:04,320 Speaker 1: And there's the signals of that already just now these 441 00:23:04,320 --> 00:23:07,400 Speaker 1: weeks on the markets, as we see that these expected 442 00:23:07,520 --> 00:23:10,760 Speaker 1: US fed rates that James mentioned at the start of 443 00:23:10,800 --> 00:23:12,680 Speaker 1: the show, that you know, they were seen us to 444 00:23:12,720 --> 00:23:15,760 Speaker 1: be they were seen us for sure at the end 445 00:23:15,800 --> 00:23:17,760 Speaker 1: of last year, and now they are not for sure 446 00:23:18,000 --> 00:23:20,880 Speaker 1: at all, and they may never come, and that would 447 00:23:20,960 --> 00:23:23,600 Speaker 1: change the whole nature of global markets. So keep that 448 00:23:23,640 --> 00:23:24,000 Speaker 1: in mind. 449 00:23:24,000 --> 00:23:24,800 Speaker 2: That's all about. 450 00:23:24,560 --> 00:23:28,600 Speaker 1: Share markets, I suppose. On the property market, the interest 451 00:23:28,640 --> 00:23:32,120 Speaker 1: rate cut, of course is hoped for. If you're an optimist, 452 00:23:32,160 --> 00:23:34,240 Speaker 1: it's worth knowing that several of the major banks have 453 00:23:34,320 --> 00:23:38,840 Speaker 1: actually peeled back their expectations, brought them back. I should 454 00:23:38,840 --> 00:23:41,400 Speaker 1: say that a rate cut may actually come as soon 455 00:23:41,440 --> 00:23:46,320 Speaker 1: as February. Most people have been talking about May personally, 456 00:23:46,600 --> 00:23:48,280 Speaker 1: who knows. I don't know why. I sure as I 457 00:23:48,320 --> 00:23:50,119 Speaker 1: wouldn't be waiting for a rat cut in February. I 458 00:23:50,119 --> 00:23:52,560 Speaker 1: wouldn't be expecting that, not with what we see in 459 00:23:52,600 --> 00:23:56,520 Speaker 1: the US markets. And all these markets are interlinked. That's 460 00:23:56,520 --> 00:23:58,639 Speaker 1: the thing I think that's so important these days to 461 00:23:58,720 --> 00:24:01,760 Speaker 1: keep in mind, folks. Markets are so interlinked with over 462 00:24:01,840 --> 00:24:05,320 Speaker 1: the LA bushfires on radio this morning, and you know 463 00:24:05,359 --> 00:24:07,720 Speaker 1: there was a time where the l bushfires would have 464 00:24:07,720 --> 00:24:12,760 Speaker 1: been a distant matter. These days, with reinsurance scale and 465 00:24:12,800 --> 00:24:15,719 Speaker 1: scope of the LA bushfires will play straight into the 466 00:24:15,760 --> 00:24:19,120 Speaker 1: Australian market because of the reinsurance costs, because they lay 467 00:24:19,160 --> 00:24:22,000 Speaker 1: their risk off here and we lay our risk off there. 468 00:24:22,240 --> 00:24:25,480 Speaker 1: So everything is interconnected, and the US is this sort 469 00:24:25,480 --> 00:24:28,439 Speaker 1: of locomotive of old market. So that's why James is 470 00:24:28,440 --> 00:24:31,680 Speaker 1: saying to keep an eye on it. Okay, they are 471 00:24:31,720 --> 00:24:34,000 Speaker 1: some of the more obvious threats. Just to drill down 472 00:24:34,000 --> 00:24:36,240 Speaker 1: a little bit deeper on that, James on the local 473 00:24:36,280 --> 00:24:39,720 Speaker 1: shares and as jun Bee Lu made this point more 474 00:24:39,760 --> 00:24:42,760 Speaker 1: than once in her segment on the show, that the 475 00:24:42,800 --> 00:24:47,800 Speaker 1: banks can't possibly do that again. You can't expect Comwell 476 00:24:47,840 --> 00:24:50,520 Speaker 1: Bank to go forty five percent again next year, and 477 00:24:50,560 --> 00:24:53,760 Speaker 1: you can't expect them to carry the whole market. So 478 00:24:53,960 --> 00:24:58,080 Speaker 1: it's pretty obvious then that the financial stocks in our 479 00:24:58,200 --> 00:25:03,320 Speaker 1: market would seem to be not a threat, but you 480 00:25:03,359 --> 00:25:05,639 Speaker 1: couldn't possibly expect them to do as well this twenty 481 00:25:05,640 --> 00:25:07,040 Speaker 1: five as they did in twenty twenty four. 482 00:25:07,080 --> 00:25:07,480 Speaker 2: What do you think? 483 00:25:07,560 --> 00:25:10,159 Speaker 3: I agree with that and was interested to listen to 484 00:25:10,400 --> 00:25:13,960 Speaker 3: June talk about the financial stocks on the AX. So 485 00:25:14,040 --> 00:25:17,919 Speaker 3: I think there's an emerging trade opportunity occurring around a 486 00:25:18,000 --> 00:25:21,639 Speaker 3: rotation out of the banks, or reduction of exposure to banks, 487 00:25:21,640 --> 00:25:25,439 Speaker 3: given how well they've done, and into the underloved sector, 488 00:25:25,480 --> 00:25:27,720 Speaker 3: which is the resource sector. We're seeing most of the 489 00:25:27,880 --> 00:25:30,520 Speaker 3: big resource companies down in share price over the twelve 490 00:25:30,600 --> 00:25:33,679 Speaker 3: months while the banks have been going through the roofs. 491 00:25:33,720 --> 00:25:36,400 Speaker 3: I think that will start to see investors take profits 492 00:25:36,720 --> 00:25:40,120 Speaker 3: from the banks move into the resource sector. But overall, 493 00:25:40,160 --> 00:25:42,520 Speaker 3: I think that the AX will have a pretty stable 494 00:25:42,560 --> 00:25:44,560 Speaker 3: twelve month period, which is in line with what the 495 00:25:44,560 --> 00:25:45,679 Speaker 3: others have been saying, and. 496 00:25:46,040 --> 00:25:49,080 Speaker 1: This rotation is that is basically the institution investors moving 497 00:25:49,080 --> 00:25:51,120 Speaker 1: out of banks and going back into other areas where 498 00:25:51,119 --> 00:25:54,119 Speaker 1: they think there will be some action this year. Resources 499 00:25:54,160 --> 00:25:57,720 Speaker 1: as you see, and also industrials are in industrial shares 500 00:25:58,240 --> 00:26:02,919 Speaker 1: that also have been only ticking along in twenty twenty four. 501 00:26:03,080 --> 00:26:05,919 Speaker 1: Very strange year twenty twenty four on the Australian share market. 502 00:26:06,440 --> 00:26:11,320 Speaker 1: Not just that banks carried everything, but banks carried everything 503 00:26:11,480 --> 00:26:14,479 Speaker 1: despite the fact that all institutional investors said that they 504 00:26:14,520 --> 00:26:17,320 Speaker 1: would not do that, and that there was sell notes. 505 00:26:17,359 --> 00:26:18,080 Speaker 2: You know, I remember this. 506 00:26:18,160 --> 00:26:20,680 Speaker 1: I can remember periods of a year or more where 507 00:26:20,720 --> 00:26:22,800 Speaker 1: you would not see a single sell note on an 508 00:26:22,800 --> 00:26:27,240 Speaker 1: Australian bank stock, and all the brokers had sell notes 509 00:26:27,400 --> 00:26:30,600 Speaker 1: all through the year on Australian bank stocks and every 510 00:26:30,640 --> 00:26:34,720 Speaker 1: one of those sell notes was wrong. That's a strange year. 511 00:26:35,320 --> 00:26:37,679 Speaker 1: So there's always something you don't expect. Let's look at 512 00:26:37,720 --> 00:26:40,680 Speaker 1: the other side, then, let's we look at the opportunities. 513 00:26:40,720 --> 00:26:44,560 Speaker 1: So part of that obviously would be non bank blue 514 00:26:44,640 --> 00:26:48,840 Speaker 1: chip shares in Australia being leading resource stocks, perhaps some 515 00:26:48,960 --> 00:26:53,960 Speaker 1: recovery in good industrial shares, even health care shares. There 516 00:26:54,000 --> 00:26:57,440 Speaker 1: is some possibility and that they were off the boy 517 00:26:57,600 --> 00:27:00,760 Speaker 1: last year it stocks of course went very strong along 518 00:27:00,800 --> 00:27:04,160 Speaker 1: with banks. Not as important on a market cap basis, 519 00:27:04,200 --> 00:27:07,280 Speaker 1: but important nonetheless, and so you can't expect them to 520 00:27:07,359 --> 00:27:09,600 Speaker 1: do quite so well next year, you would think history 521 00:27:09,640 --> 00:27:12,959 Speaker 1: would suggest. But in terms of opportunities, you have those industrials, 522 00:27:13,080 --> 00:27:16,879 Speaker 1: you have industrials, you have resource stocks. What about rets 523 00:27:16,920 --> 00:27:19,800 Speaker 1: games you mentioned in passing there in the first part 524 00:27:19,800 --> 00:27:23,120 Speaker 1: of the show you mentioned reats Australian property trusts starting 525 00:27:23,119 --> 00:27:26,240 Speaker 1: to see a few pieces suggesting you know, the worst 526 00:27:26,280 --> 00:27:28,440 Speaker 1: is over for them. Maybe the worst is over for them. 527 00:27:28,480 --> 00:27:30,239 Speaker 2: What do you think? I believe it is. 528 00:27:30,680 --> 00:27:35,040 Speaker 3: Cash rates drop in have several benefits for rates. One 529 00:27:35,040 --> 00:27:37,920 Speaker 3: of them is that rates are a bond proxy that 530 00:27:38,040 --> 00:27:41,560 Speaker 3: both produced income and bonds have had high yields over 531 00:27:41,560 --> 00:27:43,879 Speaker 3: the past couple of years in line with the increases 532 00:27:43,880 --> 00:27:46,720 Speaker 3: in the cash rates both here and around the world. 533 00:27:47,000 --> 00:27:48,720 Speaker 3: But as the cash rates start to come down, the 534 00:27:48,760 --> 00:27:51,919 Speaker 3: bonds look less attractive and people move back towards the 535 00:27:52,000 --> 00:27:54,840 Speaker 3: rates and also the financing of the rates. A lot 536 00:27:54,880 --> 00:27:56,960 Speaker 3: of them have gearing of anywhere from thirty to fifty 537 00:27:57,000 --> 00:28:00,760 Speaker 3: percent in their portfolios to acquire these commercials, properties and 538 00:28:00,840 --> 00:28:03,480 Speaker 3: interest rates are quite high internally in these reats to 539 00:28:03,520 --> 00:28:06,120 Speaker 3: finance their debt, and that will come down which will 540 00:28:06,160 --> 00:28:09,360 Speaker 3: improve their yields as well. There's some tail winds there, 541 00:28:09,359 --> 00:28:11,960 Speaker 3: as I would say for the reads, and so that's 542 00:28:11,960 --> 00:28:15,280 Speaker 3: an area that I'm positive on. And just finishing my 543 00:28:15,320 --> 00:28:18,320 Speaker 3: comments on the resource sector, they're one thing I forgot 544 00:28:18,359 --> 00:28:21,720 Speaker 3: to mention, which is both a risk and an opportunity 545 00:28:21,920 --> 00:28:24,919 Speaker 3: is China and that linkage to our Australian market. So 546 00:28:25,280 --> 00:28:28,760 Speaker 3: there's different interconnecting pieces. You have the US there, what 547 00:28:28,760 --> 00:28:31,080 Speaker 3: are they going to do with tariffs and trade walls 548 00:28:31,080 --> 00:28:33,760 Speaker 3: with China? And then what's the Chinese economy going to 549 00:28:33,800 --> 00:28:36,399 Speaker 3: do with stimulus to sort of get their engine up 550 00:28:36,440 --> 00:28:38,360 Speaker 3: and running again. And then how does that impact the 551 00:28:38,360 --> 00:28:41,760 Speaker 3: Australian market given that iron ore is a big export 552 00:28:41,800 --> 00:28:44,479 Speaker 3: that we center to China, And so if I look 553 00:28:44,520 --> 00:28:47,400 Speaker 3: into that, Crystal Board says that China keeps stimulating their 554 00:28:47,440 --> 00:28:50,000 Speaker 3: economy they get it back underway, which is great for 555 00:28:50,080 --> 00:28:52,360 Speaker 3: the resource prices. And then if I just look at 556 00:28:52,360 --> 00:28:55,000 Speaker 3: a couple of different of the mining companies in Australia, 557 00:28:55,120 --> 00:28:58,040 Speaker 3: so BHP about fifty percent of their profits comes from 558 00:28:58,120 --> 00:29:01,160 Speaker 3: iron ore, forty few metals is really heavy iron about 559 00:29:01,240 --> 00:29:03,160 Speaker 3: ninety percent of their revenue is from iron ore, and 560 00:29:03,160 --> 00:29:05,160 Speaker 3: then Rio Tinto is about the same as HP fifty 561 00:29:05,160 --> 00:29:07,440 Speaker 3: sixty percent of their their profits. So if you wanted 562 00:29:07,480 --> 00:29:10,200 Speaker 3: to go heavy on that China theme resource sector, you 563 00:29:10,320 --> 00:29:12,280 Speaker 3: go forward Skew. But if you want to be more diversified, 564 00:29:12,520 --> 00:29:14,080 Speaker 3: you go for BHP or Rio Tinto. 565 00:29:15,320 --> 00:29:18,240 Speaker 1: Okay, And for what it's worth of folks, the world's 566 00:29:18,280 --> 00:29:24,400 Speaker 1: most famous stockbroker, the vampire squid, Golma Sas, has just 567 00:29:24,680 --> 00:29:31,480 Speaker 1: twenty hours ago put out a pretty interesting report and 568 00:29:31,600 --> 00:29:36,200 Speaker 1: they say that stocks China stocks China stocks being a 569 00:29:36,240 --> 00:29:40,479 Speaker 1: proxy for Australian or or you can, you can use 570 00:29:40,520 --> 00:29:44,000 Speaker 1: it both ways, are expected to rise twenty percent twenty 571 00:29:44,040 --> 00:29:47,200 Speaker 1: percent in the calendar year twenty twenty five. So if 572 00:29:47,200 --> 00:29:50,120 Speaker 1: you want to talk about opportunities, I'm not suggesting you 573 00:29:50,200 --> 00:29:52,800 Speaker 1: do this, but I'm telling you that the most powerful 574 00:29:52,880 --> 00:29:56,160 Speaker 1: stockbroker in the world, investment bank, Gorman Sacks, has come 575 00:29:56,200 --> 00:29:59,520 Speaker 1: out this week with estimation that China stocks will lift 576 00:29:59,520 --> 00:30:03,120 Speaker 1: by twenty t which would suggest that China obviously is 577 00:30:03,120 --> 00:30:05,440 Speaker 1: going to turn this year, which would suggest that the 578 00:30:05,480 --> 00:30:09,760 Speaker 1: idea of resource stocks in the Australian market would be 579 00:30:10,120 --> 00:30:12,680 Speaker 1: a good call. So let's see if that turns out 580 00:30:12,720 --> 00:30:15,720 Speaker 1: to be true. Certainly worth keeping in mind before you go, 581 00:30:15,960 --> 00:30:21,000 Speaker 1: James Bitcoin, you are among our guests on the show. 582 00:30:21,240 --> 00:30:23,959 Speaker 1: You have been someone who's always made sure you're in 583 00:30:24,240 --> 00:30:28,400 Speaker 1: on bitcoin through thick and thin. Where do you stand 584 00:30:28,600 --> 00:30:31,240 Speaker 1: after an extraordinary year? I think it was the single 585 00:30:31,280 --> 00:30:33,560 Speaker 1: most successful acid class, and I think we have to 586 00:30:33,600 --> 00:30:35,560 Speaker 1: call it an acid class these days, whether we like 587 00:30:35,600 --> 00:30:35,959 Speaker 1: it or not. 588 00:30:36,680 --> 00:30:38,680 Speaker 2: Where do you stand now the process? 589 00:30:38,720 --> 00:30:41,520 Speaker 3: Bit Coin's gone up about five hundred percent since the 590 00:30:41,560 --> 00:30:44,520 Speaker 3: start of this cycle, and last cycle went up from 591 00:30:44,560 --> 00:30:49,040 Speaker 3: memory around six hundred percent. So similar to some capital 592 00:30:49,080 --> 00:30:51,760 Speaker 3: city property markets in Australia, you look at where are 593 00:30:51,800 --> 00:30:55,200 Speaker 3: we in the cycle, and on one hand, with cryptocurrency, 594 00:30:55,200 --> 00:30:57,480 Speaker 3: a lot of people are thinking, geez, it's in the news, 595 00:30:57,720 --> 00:30:59,280 Speaker 3: it's going up. I don't want to miss out. But 596 00:30:59,320 --> 00:31:01,560 Speaker 3: then you have to think, well, the people that bought 597 00:31:01,960 --> 00:31:04,000 Speaker 3: when it was much cheaper than what it is today, 598 00:31:04,040 --> 00:31:06,680 Speaker 3: they're probably going to start selling out and taking their profits, 599 00:31:06,760 --> 00:31:09,560 Speaker 3: and you're coming in to buy to sort of cash 600 00:31:09,600 --> 00:31:11,920 Speaker 3: them out and let them have that five six hundred 601 00:31:11,920 --> 00:31:16,400 Speaker 3: percent gain. So I would say it's a high risk, 602 00:31:16,880 --> 00:31:21,160 Speaker 3: high lost, high potential gain type investment, and it's probably 603 00:31:21,160 --> 00:31:23,560 Speaker 3: where a small dabble in there. The way that you 604 00:31:23,600 --> 00:31:25,080 Speaker 3: can do it is you can either just set up 605 00:31:25,080 --> 00:31:27,840 Speaker 3: an exchange account with one of the exchanges. You just 606 00:31:27,840 --> 00:31:30,360 Speaker 3: need to be careful because they're not really regulated. Regulation 607 00:31:30,520 --> 00:31:34,120 Speaker 3: is coming in from the Australian government on this on exchanges, 608 00:31:34,520 --> 00:31:35,720 Speaker 3: sort of like with the places where you go to 609 00:31:35,720 --> 00:31:38,840 Speaker 3: buy cryptocurrency, but still emerging, so be careful who you 610 00:31:38,920 --> 00:31:41,240 Speaker 3: use to set up with. And then you can buy 611 00:31:41,320 --> 00:31:43,640 Speaker 3: a bit of bitcoin, which is the big staple, and 612 00:31:43,680 --> 00:31:45,840 Speaker 3: then you can spread money. And one thing which I 613 00:31:45,920 --> 00:31:48,920 Speaker 3: suggested recently in the Australian last weekend in the Wealth 614 00:31:48,920 --> 00:31:52,640 Speaker 3: section was that you can look at this averaging situation 615 00:31:52,680 --> 00:31:54,360 Speaker 3: where you go, all right, what are the biggest twenty 616 00:31:54,400 --> 00:31:58,560 Speaker 3: cryptocurrency coins. I don't really know the difference between Stellar 617 00:31:58,760 --> 00:32:01,040 Speaker 3: versus ripple and what they do, why they go up 618 00:32:01,080 --> 00:32:02,640 Speaker 3: and while they go down, but I want a piece 619 00:32:02,640 --> 00:32:04,920 Speaker 3: of the action. So it might be to spread five 620 00:32:05,040 --> 00:32:07,600 Speaker 3: or ten thousand dollars and put five hundred dollars in 621 00:32:08,040 --> 00:32:11,440 Speaker 3: ten or one thousand dollars in twenty or something like that, 622 00:32:11,560 --> 00:32:13,200 Speaker 3: just to get a bit of a spread exposure because 623 00:32:13,200 --> 00:32:14,960 Speaker 3: it's just so hard to figure out why they go 624 00:32:15,040 --> 00:32:16,760 Speaker 3: up and down, even though I follow them quite closely. 625 00:32:17,360 --> 00:32:21,520 Speaker 3: You need to really understand a lot of technical stuff, 626 00:32:21,560 --> 00:32:23,920 Speaker 3: which I don't do, and I don't think most people 627 00:32:23,920 --> 00:32:26,840 Speaker 3: do either. I think they're really just following crowds and forums. 628 00:32:26,880 --> 00:32:28,560 Speaker 1: Okay, so it gives you a chance to buy a 629 00:32:28,560 --> 00:32:31,640 Speaker 1: diverse of id spread off crypto coins. Correct, Yeah, yeah, 630 00:32:31,760 --> 00:32:34,040 Speaker 1: in a single in a basket of them. I kind 631 00:32:34,040 --> 00:32:37,120 Speaker 1: of ANYTF like approaches where you buy everything and help 632 00:32:37,160 --> 00:32:40,640 Speaker 1: for the best. Yeah, Well, buying everything and help for 633 00:32:40,640 --> 00:32:42,800 Speaker 1: the best, hopefully for the best is probably a very good, 634 00:32:42,960 --> 00:32:45,880 Speaker 1: probably a very good disposition to have an investing It's 635 00:32:45,880 --> 00:32:50,000 Speaker 1: one thing A very clever person who I worked with 636 00:32:50,160 --> 00:32:55,200 Speaker 1: one time and who had a PhD in the treatment 637 00:32:55,400 --> 00:33:01,960 Speaker 1: of time in Shakespeare please, was also stockbroker at one stage, 638 00:33:02,520 --> 00:33:07,160 Speaker 1: very very Eridivepresson said to me one time, and I've 639 00:33:07,200 --> 00:33:09,400 Speaker 1: never forgotten it, and it's probably a good thing for 640 00:33:09,520 --> 00:33:12,680 Speaker 1: looking ahead for the year. About being an investor, he said, 641 00:33:12,720 --> 00:33:15,200 Speaker 1: the main thing is to be the same. If you're 642 00:33:15,240 --> 00:33:17,760 Speaker 1: going to be bullish, always be bullish. If you're going 643 00:33:17,800 --> 00:33:20,480 Speaker 1: to be bearish, always be verish, just don't. 644 00:33:20,320 --> 00:33:22,440 Speaker 2: Chop and change. 645 00:33:22,680 --> 00:33:24,560 Speaker 1: I really like that. I think there's an awful lot 646 00:33:24,560 --> 00:33:26,920 Speaker 1: to it. Maybe somebody would like to write in and 647 00:33:26,920 --> 00:33:29,480 Speaker 1: tell us what they think of that approach and what 648 00:33:29,600 --> 00:33:32,640 Speaker 1: they think of the series which we've put together for 649 00:33:32,680 --> 00:33:35,960 Speaker 1: you for the year ahead. I hope it was useful 650 00:33:36,000 --> 00:33:37,720 Speaker 1: to you. Thank you very much James for coming on 651 00:33:37,720 --> 00:33:38,320 Speaker 1: the show today. 652 00:33:38,600 --> 00:33:40,360 Speaker 2: My pleasure is always thanks for having me on. 653 00:33:41,160 --> 00:33:45,000 Speaker 1: And folks, next week we really zoom normal transmission okay 654 00:33:45,040 --> 00:33:50,040 Speaker 1: with two shows a week Tuesdays and Thursday, starting next Tuesday, 655 00:33:50,160 --> 00:33:54,520 Speaker 1: January twenty one. The letter box is only half full. 656 00:33:54,640 --> 00:34:01,360 Speaker 1: We can take some suggestions, questions, comments, lovely to have 657 00:34:01,480 --> 00:34:04,480 Speaker 1: them rolling in again. The email is the money Puzzle 658 00:34:04,520 --> 00:34:08,160 Speaker 1: at the Australian dot com dot Au. Today's show was 659 00:34:08,200 --> 00:34:10,600 Speaker 1: produced by Leah Summerglue. Thank you very much, Lee, and 660 00:34:10,680 --> 00:34:11,760 Speaker 1: thank you everyone for listening. 661 00:34:11,840 --> 00:34:12,479 Speaker 2: Talk you soon.