"Crash? What Crash?" ---Where To Invest When Shares Go South & Property Stalls

Looking at the investment landscape in recent years we have seen homes shoot up dramatically for about four or five years in a row. We have seen companies such as Woodside Petroleum and BHP double the value in just one or two years. The Australian share market has double digits for a few years is experienced, the Aussie dollar is strong, interest rates are still OK and life is good ...
Share markets rise in America and Japan, countries that were previously in negative territory stock. Even boring old bond yields have recently picked up. How long will the good news last? How long will it take until the next big stock market crash? What can we do to prevent the disaster Will there be a disaster at all, or the prospects are good and always sunny?
Remember that you first heard the warnings here.
I'm not one of those people who come along after the event and say "I told you so". Although it would take me to say a great deal of satisfaction in 2008: "I told you to invest in XYZ in 2006," it will probably make you want to hit me ... Please just remember that you heard it here first, so I do not need to remind you in two years ...
Let's take a look at some of the previous Boom & Bust Cycles to see how they compare.
Market ------ Period ------ Gain --- Duration ---- Market Crash
American NASDAQ - 1994-2000 year ----- 7 ----- 701% -------- YES
Japanese --- 1982-1989 ----- 7 year ----- 569% -------- YES
Australian -1982-1987 ----- 5 years ----- 521% -------- YES
Resources - 2002-2006 ----- 4 years ----- 289% -------- Not yet
Source: IRESS Challenger &
As you can see, previous "bull run" lasted from five to seven years and had revenues of 500% to 700% of the crashes. The Australian Resource Boom is not running for so long (yet) and the returns are not as high (yet) been. This seems to indicate that the Australian Resource Boom still will not crash (yet).
There are people who say "the crash will never come" and there are many who say "what goes up must come down". The arguments will not be refunded after the dust clears. On CNN in 2000, when the U.S. "tech stocks" were falls from dizzying heights down swinging, analysts were saying "they could bounce back" They have not yet.
There are people who are out buying houses now, thinking that will double in the next few years as in the last few years. The housing again If you think you can double after you just doubled your money, your money go to a casino, suspend disbelief and become an analyst ...
Become a "realist agent"
Ok, no one ever said that I am a broker. I've only ever owned a few slices of the ground, a few houses and fantastic real estate deals that I missed in countable if they are unforgettable. Ask me about the time I almost made 400% in two years. Yes, it was more than once. Made almost 400%, but not quite ...
Realistically, homes can not double in the next two years. There are restrictions on fair value, interest, redemption versus renting and affordability.
Realistically, the price of steel not double in the next two years. Neither can be copper, coal, oil, wheat, gas or any of the other products that us Aussies love so much, and the Chinese are so eager.
When rubber was scarce and expensive during the Second World War, the Australian Army replaced the rubber straps with brass springs. Brass is now more expensive than rubber and you can not imagine tying your hair or your socks with brass springs, but during the war, that's what they did. When building materials were short and wood was at a premium in the 1950s, our bevel board houses was fibro houses. Necessity is the mother of improvisation ...
If things are too expensive, we find a way around it. Be a realist. As our resources become too expensive for the Chinese, be sure that they will find another way. Ride Australia on the Chinese raw material consumption can not continue forever.
Where to invest when ownership is slow and shares may crash
Be alert and not alarmed. I'm not predicting that prices of coal, steel, oil and other exports will collapse. I'm not stating that BHP shares will drop like a rock. I'm just suggesting that prices simply can not continue to climb as sharp as they already have.
We can find that commodities simply plateau, and lead to a plateuing in share prices, as well as by some of the homes are now flattening. Like Mrs Bucket's Mercedes, the shares may not "crash" as such, they can just "not to go". (Does anyone else watch "Keeping Up Appearances"?)
Looking at the economic clock, one will see that when shares are flattening after their peak, the next thing to invest in a) shares, b) raw or c) property. (If you've never seen the Economic clock rather do a net search or call me! This 200-year-old instrument is as vital to investors as a compass to sailors.)
The "Classless" Asset
There is another area where you can invest. This investment is not in the regular four "asset classes" of shares, property, bonds and cash.
The investment is outside these traditional boundaries and outside the scope of the economic clock. Unlike property, stocks and bonds, it does not move in predictable and down cycles. There is neither a "perfect time" to buy nor a perfect time to sell. In fact, since 1960, this investment has outperformed the S & P500 without correlated volatility. That means more than 40 years, this investment better returns than the stock market has done and has not had the ups and downs of stocks.
In years when the stock market was massively negative, this investment made positive returns. During wars and recessions it was also positive. During ownership breakdowns and wild inflation made it also sharply with very little risk. You know what it is?
It is not gold bars: this investment brings an income. It is not time deposits: this investment capital. It's not gambling, cheat, steal or anything illegal, immoral or bad luck, touch wood. What if I told you that this investment is endorsed by a number of major banks, has full approval of the government and also contains excellent tax benefits for Australian investors? Are you ready to call me? Be a realist means. Invest safely. See you at the other side of the crash.
Jeremy Britton DipFA SA (Fin) Disclaimer The information in this document is of a general nature only, does not take into account your specific objectives, financial situation or needs. Accordingly, the information may not be used, relied on or treated as a substitute for specific financial advice. Whilst every care has been taken in preparing this material, no warranty regarding the information provided and accordingly neither Professional Investment Services nor its employees or agents therefore be put on any ground in relation to the acts and liable actions as a result of your actions on such information. Jeremy Britton is an Authorised Representative (# 298825) of Professional Investment Services, ABN 11,074,608,558,

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