In short, NO NO NO!!!! Do not sell your shares not matter what people are saying! Right now is the time to buy more shares as you would be cost averaging the price out and if you are able to put more funds into shares right now then it is an ideal time to do it.
The only time you will realise a loss is on the physcial sale of shares so if you're portfolio has dropped in value it is time to buy up on the quality stocks you hold and lower your cost average price.
In the long term it will be well worth the cash outlay as it will take less time to recoup your (Paper) losses if you lower your entry price.
Remember these key words, buy in gloom and sell in boom!!
Showing posts with label interest rates. Show all posts
Showing posts with label interest rates. Show all posts
Wednesday, October 22, 2008
Tuesday, October 21, 2008
Rudd on Taxing up the Big Wigs
Only a few days ago did Prime Minister Kevin Rudd announce that the government will be reviewing highly paid executives who are earning over 1m per annum. You need to ask the question, what the hell is this actually going to achieve?
Aside from the obvious revenue implications for the government coffers what is this going to do to stave off the recession we are already in?? Absolutely nothing!!
This is a fantastic vote grab for the PM and has touched the hearts of middle and lower class Australians who all suffer from tall poppy syndrome. 'Why the heck should this rich bloke get taxed the same way as others, it's not fair, it's not the Australian way' are the screams heard from the masses!
In essence the PM is saying that theres really no point in aspiring to earn this kind of money because you will be penalised for it anyway. What's the message that's being spruiked here? Should we all just remain in the middle income bracket and be average Jo's just to satisfy the masses and not get hit with a higher tax rate?
Is the PM advocating mediocrity for Australia? I for one do not earn this kind of money but damn it if I'd worked my way through the ranks for years only to penalised for me expertise in a chosen field I'd be rather pissed about it all!
Check out this blog for more info on the PM and the actions of the Australian Government.
Aside from the obvious revenue implications for the government coffers what is this going to do to stave off the recession we are already in?? Absolutely nothing!!
This is a fantastic vote grab for the PM and has touched the hearts of middle and lower class Australians who all suffer from tall poppy syndrome. 'Why the heck should this rich bloke get taxed the same way as others, it's not fair, it's not the Australian way' are the screams heard from the masses!
In essence the PM is saying that theres really no point in aspiring to earn this kind of money because you will be penalised for it anyway. What's the message that's being spruiked here? Should we all just remain in the middle income bracket and be average Jo's just to satisfy the masses and not get hit with a higher tax rate?
Is the PM advocating mediocrity for Australia? I for one do not earn this kind of money but damn it if I'd worked my way through the ranks for years only to penalised for me expertise in a chosen field I'd be rather pissed about it all!
Check out this blog for more info on the PM and the actions of the Australian Government.
Wednesday, October 8, 2008
RBA Drops 100 Basis Pts - Largest in 16 Years -
The time has come for some drastic measures from the RBA. Fortunately the Reserve Bank of Australia has slashed the cash rate by a full 1% (or 100 basis pts) to help stem the tide of the market slow down.
This is some very positive news and in line with this Westpac has announced it will pass on up to 80 basis points to its customers, given this lead from a major bank we should expect to see the other majors follow suit shortly.
The RBA has made a very positive move forward to help kickstart the economy as the inaction of the ruling government has seen prices of fuel, shopping and general living skyrocket as they have been unable to put a cap on inflation through diligent fiscal management.
The decrease in the interest rates has come at the right time for the retail sector as well, especially leading up to Christmas. By the time the decreased rates are passed on and the positive impact is felt by all who have a home loan it will be just about Christmas time.
What this means is that retailers should see some benefit by way of heightened activity as compared to the previous trading quarters which saw sales slump. With more money injected into the retail sector this could also mean the creation or sustaining of more retail sector jobs and this can only be a good thing.
I believe that there is still more fall out yet to come from the US Credit Crisis but in the same breath I also believe that the RBA have responded quickly enough to counteract future effects of the crisis. Hats off to the RBA for making such a big call and dropping the rates a full percentage point for the first time in 16 years, if you're old enough to remember this was during the 'recession we had to have'......
The credit rating blog is still on the cards and will be out shortly, I thought this was more important at this stage to highlight to the readers of this blog.
This is some very positive news and in line with this Westpac has announced it will pass on up to 80 basis points to its customers, given this lead from a major bank we should expect to see the other majors follow suit shortly.
The RBA has made a very positive move forward to help kickstart the economy as the inaction of the ruling government has seen prices of fuel, shopping and general living skyrocket as they have been unable to put a cap on inflation through diligent fiscal management.
The decrease in the interest rates has come at the right time for the retail sector as well, especially leading up to Christmas. By the time the decreased rates are passed on and the positive impact is felt by all who have a home loan it will be just about Christmas time.
What this means is that retailers should see some benefit by way of heightened activity as compared to the previous trading quarters which saw sales slump. With more money injected into the retail sector this could also mean the creation or sustaining of more retail sector jobs and this can only be a good thing.
I believe that there is still more fall out yet to come from the US Credit Crisis but in the same breath I also believe that the RBA have responded quickly enough to counteract future effects of the crisis. Hats off to the RBA for making such a big call and dropping the rates a full percentage point for the first time in 16 years, if you're old enough to remember this was during the 'recession we had to have'......
The credit rating blog is still on the cards and will be out shortly, I thought this was more important at this stage to highlight to the readers of this blog.
Monday, October 6, 2008
RBA To Drop Rates - What are the Banks Doing?
The RBA is set to drop rates yet again but before you breathe a sigh of relief the major banks have already stated that they would not pass this onto the consumer. In my view this is an absolute joke and simply a profit grab from the banking institutions.
Think back a month ago when the RBA dropped its rates and the banks followed suit, this time the banks will not drop their rates so in effect what the banks are doing is regaining any lost profit margin they gave away last month! Welcome to shareholder return at the cost of the community!
What makes matters worse is that the Australian government in all their wisdom have seen fit to not enforce the lowering of rates to the consumer. In essence the Australian Government has become a toothless tiger, since when does the corporate sector not have to follow the guidelines set out by a government and how come the average person has to bear the brunt of profiteering.
We are up in arms about fuel prices and consumer watchdogs are all over oil companies like a rash but the banks seem to dictate their own terms regardless of whats good for the Australian economy.
If the government of today were to really make an impact then they should enforce through legislation that the banks do pass on the decrease to consumers so that the flow on effect will be that little light of hope for all who have a home loan.
To find out more please contact me via e-mail or go to my website which is www.aussiewisefg.com.au and you can touch base with me through there.
Think back a month ago when the RBA dropped its rates and the banks followed suit, this time the banks will not drop their rates so in effect what the banks are doing is regaining any lost profit margin they gave away last month! Welcome to shareholder return at the cost of the community!
What makes matters worse is that the Australian government in all their wisdom have seen fit to not enforce the lowering of rates to the consumer. In essence the Australian Government has become a toothless tiger, since when does the corporate sector not have to follow the guidelines set out by a government and how come the average person has to bear the brunt of profiteering.
We are up in arms about fuel prices and consumer watchdogs are all over oil companies like a rash but the banks seem to dictate their own terms regardless of whats good for the Australian economy.
If the government of today were to really make an impact then they should enforce through legislation that the banks do pass on the decrease to consumers so that the flow on effect will be that little light of hope for all who have a home loan.
To find out more please contact me via e-mail or go to my website which is www.aussiewisefg.com.au and you can touch base with me through there.
Thursday, September 25, 2008
RBA Drops Rates - What does that mean for my Home Loan?
The RBA recently dropped its cash rate by a quarter percent and although this is a positive move forward it does little for someone with a home loan when on average the savings equate to around $40 per month.
The RBA have touted that they will be decreasing interest rates again a further 3 or 4 times across the coming 12 months, then and only then will the home loan market be able to breathe a sigh of relief. When the average person all of a sudden has a further $200 to $300 per month will the market start to grow again, these savings will help compensate for the higher cost of fuel and in turn day to day living.
There have been rumours that the RBA may decrease interest rates again prior to Christmas, now is this to help people with home loans? I don't believe so, the real reason this move would happen is to inspire some confidence in the general market leading up to the crazy Christmas shoppign season.
You see if people believe that they have more available funds because of home loan repayment savings then human nature dictates that the first thing one does is to go and spend it! This may sound insane but is it a ploy to inject some life into the struggling retail sector, if the RBA does decrease home loan interest rates then the most likely result would be a stronger Christmas trading season for all retailers.
The flow on effect of this is that jobs will remain in place and potentially grow within the sector itself. Mums and Dads will be happy as they are able to buy those items they couldnt afford a few months ago and the average Australian has a smile on their face.
When the general populous is happy then consumer confidence increases and this has an impact across all market spaces.
As far as the home loan market is concerned there is a long way to go before a real positive impact is felt through the RBA's decrease in interest rates, I forecast that this is at least 6-8 months and 4 decreases away.
When it comes to home loan providers and the property market there is still a dim light there although the tough times will remain for another 2 years at least until we see the growth truly come back.
For more information on home loand and other financial products please visit my website which is www.aussiewisefg.com.au and you can contact me there.
The RBA have touted that they will be decreasing interest rates again a further 3 or 4 times across the coming 12 months, then and only then will the home loan market be able to breathe a sigh of relief. When the average person all of a sudden has a further $200 to $300 per month will the market start to grow again, these savings will help compensate for the higher cost of fuel and in turn day to day living.
There have been rumours that the RBA may decrease interest rates again prior to Christmas, now is this to help people with home loans? I don't believe so, the real reason this move would happen is to inspire some confidence in the general market leading up to the crazy Christmas shoppign season.
You see if people believe that they have more available funds because of home loan repayment savings then human nature dictates that the first thing one does is to go and spend it! This may sound insane but is it a ploy to inject some life into the struggling retail sector, if the RBA does decrease home loan interest rates then the most likely result would be a stronger Christmas trading season for all retailers.
The flow on effect of this is that jobs will remain in place and potentially grow within the sector itself. Mums and Dads will be happy as they are able to buy those items they couldnt afford a few months ago and the average Australian has a smile on their face.
When the general populous is happy then consumer confidence increases and this has an impact across all market spaces.
As far as the home loan market is concerned there is a long way to go before a real positive impact is felt through the RBA's decrease in interest rates, I forecast that this is at least 6-8 months and 4 decreases away.
When it comes to home loan providers and the property market there is still a dim light there although the tough times will remain for another 2 years at least until we see the growth truly come back.
For more information on home loand and other financial products please visit my website which is www.aussiewisefg.com.au and you can contact me there.
Monday, September 8, 2008
Global Liquidity Crisis & The Australian Home Loan Impact
Months ago we heard reports from the US about how lenders were impacted greatly due to the high level of defaults and the growing amount of mortgagee auctions. People were losing their home; they were crying out that the bank sold my home from under me. On the other hand the lenders were crying poor too saying they had to sell to recoup losses.
The reality of why this occurred lays equally on both the lenders and the borrowers shoulders, firstly the lenders were providing finance to borrowers on a low doc basis (low documentation) where evidence of income is limited to non existent and also providing in excess of the homes valuation by way of borrowings. For example if a house were worth 300k the lenders would often lender 320k on the property.
This would leave the borrower in a negative equity position along with the banks!
In saying that, some responsibility must be taken on the borrowers behalf as well. Common sense should prevail but rather than do some basic math on what’s owed versus the value of the home, most borrowers would be happy to put themselves in a negative equity position.
Now there are many reasons that lenders did this ranging from keeping up with the Jones’ and having that new SUV or Plasma TV to borrowing good money after bad to continue to make home loan repayments which simply created a vicious cycle of debt on debt.
The one question many forgot to ask is ‘Can I actually afford this?’ it’s also a question that the lenders should be asking too.
Many months down the track, the ramifications of these poor lending practices are being felt around the globe. In particular the Australian market has suffered a major slow down in the property sector with interest rates increasing and lending policies tightening up dramatically.
This is not such a bad thing although people are asking ‘Why are we suffering because of what the US lenders did?’ This is a fair question to ask too, with the answer not being as clear as one would think.
The reality of why there is a global liquidity crisis is that because if the actions of US lenders and their lending policies the securitised lending market has collapsed. Securitised simply means that an investor has cash funds they are willing to invest which will be secured against property.
The direct impact of the US property and lending crash has seen investors flee the market and the ones who remain have placed strict parameters on whom, where and how much they will lend. From an investors perspective this is a logical way to react and I personally would be doing the same thing.
So how come it has affected Australia’s lending policies and home loan market? Simple, funds which were once available to invest in securitised lending are now all but gone, this has restricted the options available by second tier and non bank lenders. The funds which are available to the market nowadays is coming at a higher cost based on perceived risk which has been driven by the negative US economy and in particular the home loan and property market there too.
My company has seen these changes occur over several months now with many non bank lenders and mortgage originators closing their doors and or merging with other companies to maintain economies of scale.
Unfortunately the home loan market and Australian borrowers are suffering as a result with the impact of higher interest rates and reduced capacity to borrow as a direct result of this. As a flow on the property market has slowed down although we are not seeing the regression we had during the ‘recession we had to have’ in the early 90’s.
There are signs of life again and in the next blog I will be touching on these signs and highlighting areas to look for as an indicator to better times ahead.
For information on home loans and the latest interest rates hop onto my company website which is www.aussiewisefg.com.au and stay tuned to my regular blogs for updates on the financial state of play.
Note – I have added the subscribe option for RSS feeds and I invite you to use this to keep in the loop. I also invite you to send me through your e-mails and feedback.
The reality of why this occurred lays equally on both the lenders and the borrowers shoulders, firstly the lenders were providing finance to borrowers on a low doc basis (low documentation) where evidence of income is limited to non existent and also providing in excess of the homes valuation by way of borrowings. For example if a house were worth 300k the lenders would often lender 320k on the property.
This would leave the borrower in a negative equity position along with the banks!
In saying that, some responsibility must be taken on the borrowers behalf as well. Common sense should prevail but rather than do some basic math on what’s owed versus the value of the home, most borrowers would be happy to put themselves in a negative equity position.
Now there are many reasons that lenders did this ranging from keeping up with the Jones’ and having that new SUV or Plasma TV to borrowing good money after bad to continue to make home loan repayments which simply created a vicious cycle of debt on debt.
The one question many forgot to ask is ‘Can I actually afford this?’ it’s also a question that the lenders should be asking too.
Many months down the track, the ramifications of these poor lending practices are being felt around the globe. In particular the Australian market has suffered a major slow down in the property sector with interest rates increasing and lending policies tightening up dramatically.
This is not such a bad thing although people are asking ‘Why are we suffering because of what the US lenders did?’ This is a fair question to ask too, with the answer not being as clear as one would think.
The reality of why there is a global liquidity crisis is that because if the actions of US lenders and their lending policies the securitised lending market has collapsed. Securitised simply means that an investor has cash funds they are willing to invest which will be secured against property.
The direct impact of the US property and lending crash has seen investors flee the market and the ones who remain have placed strict parameters on whom, where and how much they will lend. From an investors perspective this is a logical way to react and I personally would be doing the same thing.
So how come it has affected Australia’s lending policies and home loan market? Simple, funds which were once available to invest in securitised lending are now all but gone, this has restricted the options available by second tier and non bank lenders. The funds which are available to the market nowadays is coming at a higher cost based on perceived risk which has been driven by the negative US economy and in particular the home loan and property market there too.
My company has seen these changes occur over several months now with many non bank lenders and mortgage originators closing their doors and or merging with other companies to maintain economies of scale.
Unfortunately the home loan market and Australian borrowers are suffering as a result with the impact of higher interest rates and reduced capacity to borrow as a direct result of this. As a flow on the property market has slowed down although we are not seeing the regression we had during the ‘recession we had to have’ in the early 90’s.
There are signs of life again and in the next blog I will be touching on these signs and highlighting areas to look for as an indicator to better times ahead.
For information on home loans and the latest interest rates hop onto my company website which is www.aussiewisefg.com.au and stay tuned to my regular blogs for updates on the financial state of play.
Note – I have added the subscribe option for RSS feeds and I invite you to use this to keep in the loop. I also invite you to send me through your e-mails and feedback.
Saturday, September 6, 2008
State of the Home Loan Market & the Australian Economy
It’s interesting to note that although home loan interest rates have recently been dropped by a quarter percent that the state of the property market is still poor. Why is this? It’s pretty simple really, not only have home loan interest rates increased substantially over the last several years but the cost of fuel and inflationary pressures have had an impact too.
When you combine these factors and the flow on effects of higher fuel prices which trickle down to the food we buy and other goods which require transport to reach the retail sector there is a considerable amount of strain placed on the household income.
What was once ‘disposable’ income has now become essential to simply maintain a reasonable lifestyle and in a lot of cases put food on the table.
So when will this all change? Not for a while yet, although the home loan interest rate has decreased for the first time in several years there is simply not enough income liberated from this to breath life into consumer confidence levels.
The market will bounce back as it always has done although this will take several months to occur, what we will see is the RBA (Reserve Bank of Australia www.rba.gov.au) cutting interest rates in the new calendar year two to three times. Once this happens there will be enough income liberated for people to start feeling confident in opening their wallets and spending again.
The flow on effect will be felt in the retail sector and in the property market, jobs will be created and money will start to flow within the economy again.
What this means for the home loan market is an increase in overall enquiries and home loan settlements. Time and time again I have seen this occur in the industry and with every downturn there is an eventual upturn, it is a matter of when not if and it all comes down to time and timing of economic factors which all have an impact.
Aussie Wise Finance Group has been through the ups and downs of fluctuating economies and will again be there when the market moves into positive territory. To find out about me and my organisation simply follow this link to www.aussiewisefg.com.au or you can give me a call to have a chat.
Bookmark this blog as I will be regularly updating it with market goings on and will run a special in a few weeks on the sub prime crash or as is known in the industry the current ‘liquidity crisis’…. More on that soon….
When you combine these factors and the flow on effects of higher fuel prices which trickle down to the food we buy and other goods which require transport to reach the retail sector there is a considerable amount of strain placed on the household income.
What was once ‘disposable’ income has now become essential to simply maintain a reasonable lifestyle and in a lot of cases put food on the table.
So when will this all change? Not for a while yet, although the home loan interest rate has decreased for the first time in several years there is simply not enough income liberated from this to breath life into consumer confidence levels.
The market will bounce back as it always has done although this will take several months to occur, what we will see is the RBA (Reserve Bank of Australia www.rba.gov.au) cutting interest rates in the new calendar year two to three times. Once this happens there will be enough income liberated for people to start feeling confident in opening their wallets and spending again.
The flow on effect will be felt in the retail sector and in the property market, jobs will be created and money will start to flow within the economy again.
What this means for the home loan market is an increase in overall enquiries and home loan settlements. Time and time again I have seen this occur in the industry and with every downturn there is an eventual upturn, it is a matter of when not if and it all comes down to time and timing of economic factors which all have an impact.
Aussie Wise Finance Group has been through the ups and downs of fluctuating economies and will again be there when the market moves into positive territory. To find out about me and my organisation simply follow this link to www.aussiewisefg.com.au or you can give me a call to have a chat.
Bookmark this blog as I will be regularly updating it with market goings on and will run a special in a few weeks on the sub prime crash or as is known in the industry the current ‘liquidity crisis’…. More on that soon….
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