Cheer up!

Switching on the news and browsing the media websites this week is unusually depressing. Without perspective and a wider source of information and analysis, one could be excused for thinking the world is going to hell in a handcart. I’m not going to list the reasons why one might be feeling low, the media do a good enough job of running “if it bleeds, it leads” stories. 

In any case, I’m not convinced it’s true. In fact, I think the reality is almost 180 degrees the other way; there are far more signs things are going well and what we’re being served as news is simply a mixture of confirmation bias and a logical reaction to incentives. A regular browse of the good news stories on Human Progress is a useful counter to the media confirmation bias.

I don’t say this lightly…. I have become convinced, via conversations with friends, family and colleagues that the media business model, what is left of it, has become detrimental to the general mental health of the world.

Technological advances have resulted in a proliferation of volume (24 x 7 updates) and sources (you’re reading a personal blog, but it’s still “a source”) of news. Our old friend, Pareto distribution, drives eyeballs and clicks to those presenting the most compelling new information.

Not much bad stuff happened today” is not a headline we’ll continue to tolerate on consecutive days for very long.  

Let’s lighten the mood a little today then. Because it’s human nature to take pleasure at others’ mild misfortune (after all, that describes the basis for all comedy), today’s blog post is simply a bunch of happy predictions I am prepared to make and the timeframe within which I expect them to occur. 

If you share my optimism and outlook, they might cheer you up immediately. If you don’t, you might experience the even greater pleasure of delayed gratification when the deadline passes and you can return to the comments section and have a chuckle at my expense. 

Either way, I will benefit from a warm feeling of selfless, righteous altruism….

Bill’s Opinion Predictions

Sports

The Bledisloe Cup match this weekend will be won by Australia and, if this prediction transpires, they will go on to draw or win the return match the following weekend and therefore finally win the Bledisloe Cup for the first time in almost a generation. This one is a long shot and is based more on a feeling New Zealand’s team has become fragile and somewhat “woke”.  

The 2019 Rugby World Cup will be won by a northern hemisphere team. My preference would be England but I could probably live with it being Ireland and, after a little introspection and professional counselling, even Wales. The important point is, it’s not going to be New Zealand.

Brexit

Britain will leave the EU on October 31st without a deal. Boris Johnson will be Prime Minister at the time, but will call a General Election in January and will be returned with a clear but not large majority.  

No material changes will occur to the border between Ireland and Northern Ireland.

Britain will not experience significant disruption to trade or travel as a consequence to Brexit. Some luxury or highly-specialised goods or services might have a wobble but will be solved within a few weeks.

EU

As a consequence to the world not ending after Brexit, the EU will double down on their commitment to a European federal una-state, passing laws to ensure a single taxation code, a European military, centralised control of immigration and further adoption of the Euro.

Leo Varadkar will be ousted as Taoiseach by the Dáil before Christmas 2019 as a reward for being played by the EU with regards to Brexit.

USA

The Democrats will nominate Elizabeth Warren as the 2020 presidential candidate. Donald Trump will win a second term with an increased share of both the Electoral College and the popular vote. The presidential debates will comedy gold on a par with the best efforts of Monty Python and Ricky Gervais.

Media

Following the USA elections, there will be some high profile media casualties, with a consolidation or bankruptcy of several high profile brands such as CNN, MSNBC, The Washington Post and the New York Times.

In other countries, such as Canadia and Australia, several mastheads and broadcasters will be further subsidised or even nationalised.

Global Economy

Despite the continuing call for a global stock market crash, higher highs will be reached on the major indices. Gold and silver will see a 20% increase by the end of 2020.

China will “lose” the trade war with the USA. This will be spun as the opposite to save face but the trade indicators will show a material improvement towards the USA.  

Australian Economy

Flat as a pancake over 2019 and 2020 with a slight uptick in unemployment.

House prices in the two main cities will continue a slow atrophy with the occasional dead cat bounce for a month or two which will be lauded as signifying the “new bottom”. At the end of 2020, prices will be lower than today.

 

20 Replies to “Cheer up!”

  1. I love optimism. It makes me laugh. As a bitter cynic I specially like headlines such as “Can Robots Solve the Housing Crisis?” If I answer “No” I am overwhelmingly likely to be proved right. Of course if they ever get around to replacing politicians with robots then there is a fighting chance.

    1. Any headline ending with a question mark is ALWAYS correctly answered with a resounding “No”.

      I saw one today, for example; “Is it time for non-gendered fashion?”. No, not unless men and women stop finding each other visually attractive.

      1. Going back to the Seventies there was a girl at university with an awesome face and figure, but hairy legs and a feminist personality to go with them. Then she wondered aloud why she always wound up with losers like me.

  2. Reminds me of that Bruce Springsteen song 57 Channels and Nothin On.

    Coincidentally I have gone all Zen these days and having just read Psycho Cybernetics again, I am well and truly developing the happiness habit like a man with no arms on a hands free phone.

    On your predictions fair play to you.

    I was going to challenge Michael Vaughan when he recently went against your prediction that England would win the Ashes, but I let it go this time.

    On Brexit, if “they” permit the UK to leave it will only be because of some bigger advantage to the collectivists, maybe perfidious Albion and the Anglo US alliance somehow out states the Euro-state, either way they win.

    On US politics, never mind the campaign trail what about recent antics. Who is copying Ronald Regan from back in the eighties?

    ‘When governments permit counterfeiting or copying of American products, it is stealing our future, and it is no longer free trade.’

    “Back in the 1980s, Japan was portrayed as America’s greatest economic threat-not only because of allegations of intellectual property theft, but also because of concerns about currency manipulation, state-sponsored industrial policy, a hollowing out of US manufacturing, and an outsize bilateral trade deficit.”

    He also cut taxes, then what happened.

    Land prices went up.

    Twas ever thus.

    I could get into the Thatcherite copy cat stuff as well, of talking tough on immigration and appealing to the majority and attracting the more radical NF vote, but not doing anything about immigration. Howard did it here with his “stop the boats” scooping all the One Nation votes. May and BoJo do it, its the same old tricks, different puppets.

    This US Sino war thing is heating up, and Xi has gone all De Niro like “I’m gonna tell you something. Somebody messes with me, I’m gonna mess with with him. Understand?” And yes just like Japan before, the yanks may win, but just like before the only winners are the 1%’ers not any of us.

    And during his recent Asian Bread and Circuses tour “Trump used the word ‘best’ nine times, the word ‘incredible’ 16 times, the word ‘tremendous’ 28 times and ‘great/greatest’ 50 times” in one news conference. All of this sorcery done at the exact same time that the US Yield Curve inverted. A sign of bad times ahead, maybe even a recession, as every recession in modern times has always followed a US yield curve inversion. US stocks have now been on a seven year bull run, time for a mid cycle slump. No guarantee but a US downturn of some sorts is looming.

    https://www.portphillippublishing.com.au/wp-content/uploads/2019/08/pan_20190805_a.jpg

    For Australia, see what US is doing and add 12-18 months for what we will be doing then, muddling along for now, works for me, as we have never entered a recession without the US doing so first.

    1. Hmm…. the inversion curve statement reminds me of the apocryphal story of the shoeshine boy giving stock tips. Everyone with a newspaper column has been telling us about that looming US recession for a year now.

      To repeat my statement about headlines with a question mark; “Does the inverted yield curve mean a US recession is coming?”.

      Nope.

      1. But I am talking about a mid cycle slump, which happens every time, even if others aren’t. Many have seen this mid-cycle slow down since the top of the last, or the bottom of the last, when they bought land and stocks, not in the tea leafs in the last year and it is unfolding exactly as they predicted. Gantt charted it all out way back when he was alive and is still bang on right up to this day.

        Remember, I said mid-cycle slump, that means a breather for US stocks, US land price increases have already slowed down, I didn’t say Armageddon, then the next phase begins which is the big leg up even bigger than the one we just had, a phase that will go far higher than anything that we have ever seen before, this too is also baked in. That is the top and it will be around 2026 ish, then it drops for four years, then the recover starts.

        Each to their own, for mine, its cycles and trends that works for me. I would bet the house on it.

        1. Remember that when you’re betting on cycles and trends, it’s not economic principles you’re betting on. It’s the vagaries of politicians willingly assisted by the central bank. Selling out at the top, or when you think you’ve made enough profit (nobody ever does), is seldom a good idea. You pay capital gains tax on the profit and then you have to time it right to get back in the market. As Warren Buffett’s famous bet proved, passive investing wins every time.

          Re predictions, the only sporting one I’d care to make is that Lewis Hamilton will smash Michael Schumacher’s record. Whether or not Donald wins in 2020 depends on what the economy looks like at the time. China will go into recession for reasons entirely unconnected with the trade war. In the best British tradition, BoJo will muddle through.

          1. @MvR

            Property

            My houses and my land are all well bought now and were all bought pre-GFC, portfolio now has a decent wedge of equity and holding costs are approaching neutral but still a few years to go before they wash their own face. I have done a major renovation on my own home which is CGT free and has massive equity.

            Investment houses and land no plan to sell, will consider selling from 2024 onward, maybe one a year for CGT purposes if I do, I don’t expect to be working then so will not have the double problem of high income putting up my CGT rates. I also have a capital loss sitting on my books that I can offset when I sell or on shares see below.

            One of my properties is a development opportunity, its a fairly large block in the middle of a regional city with some potential. I have a busted asbestos house on it now that a local guy has been renting for years, I don’t put up the rent and he keeps it patched up. I am thinking about a 15 unit single person dwellings, single story with some elderly/handicap features, big demand now and a lot more coming for that type of product there and plenty of government grants. It would be massively cash flow positive if I did go that way with it. Not in a rush with that one, I would finance that with increased equity growth out of the other investment properties. Could even do an owner builder course and get a site hut, live out there, pay myself a salary out of the construction loan and project manage the build when it comes time to develop it.

            Business Ownership

            My big shareholdings and wealth are in the firm that I used to work for, they are still private so my shareholdings are fairly illiquid at the moment. They will be subject to CGT as I got them for nothing the full value but with a 50% discount for holding more than a year, but I wont sell them all down at once, they are held in a discretionary trust which means that I can distribute profits to a very wide group minimizing tax liability and can spread it over financial years depending. I think they will either list or sell next year (liquidity event) that when I will work out how much to sell and distributions etc.

            Superannuation (pension)

            I have that in a fairly tax effective and flexible package called Hub 24 where I can play around with it and invest in a range of products, plus it’s not classed as a SMSF with all the bullshit that comes along with that. It’s a fairly large amount as I have been contributing for a very long time, being 55 I could start pulling cash out of it now but have no plans to do so, will just continue to grow it in the low tax vehicle that it is in. Plus I can get my risk taking behaviour off my chest trading shares, without putting the lot on black.

            Just checked the ROI for the last rolling 12 months investment performance now, here is the break up and actual performance including dividends. Normally I wouldn’t have that much cash in it, but since retiring and holidaying I have been a bit slack and haven’t been selling down my dogs as quickly as I ought to, see worst performing shares below and tomorrows purchases, which will reduce cash holdings.

            Overall Super Position

            • Australian Listed Securities 33%
            • Managed Funds 47.8%
            • Cash 19.3%

            Composition

            • Financials 24.2%
            • Materials 24.1%
            • Real Estate 7%
            • Communication Services 4%
            • Industrials 7.5%
            • Health Care 23%
            • Consumer Staples 3.6%
            • Information Technology 6.6%

            Managed Funds

            • Aberdeen Standard Emerging Opportunities Fund 10.31%
            • Morningstar Balanced Real Return Fund 3.28%
            • Vanguard Conservative Index Fund 7.90%

            Top three share performers currently held:

            1. PNV POLYNOVO LIMITED ORDINARY 340.97%
            2. SLR SILVER LAKE RESOURCE ORDINARY 253.94%
            3. SO4 SALT LAKE POTASH LTD ORDINARY 59.18%

            Worst three share performers currently held:

            1. CPV CLEARVUE TECHNOLOGIE ORDINARY (67.76%)
            2. RWC RELIANCE WORLDWIDE ORDINARY (44.43%)
            3. CIM CIMIC GROUP LTD ORDINARY (36.45%)

            There is a buy order going in tomorrow morning for these shares:

            • Zip Co Ltd [ASX:Z1P]
            • Vmoto Ltd [ASX:VMT]
            • BCI Minerals Ltd [ASX:BCI]
            • Qube Holdings Ltd [ASX:QUB] L
            • ERM Power Ltd [ASX:EPW] L
            • Grange Resources Ltd’s [ASX:GRR]
            • OZ Minerals Ltd [ASX:OZL]
            • Base Resources Ltd [ASX:BSE]

          2. You were busy while I was sleeping. Erm…

            That’s quite a lot of detail to post. Let me know via the feedback form if you would like me to delete it this morning.

          3. Wow that’s a healthy portfolio. My modest investments are in an index fund. For fun I used to play penny stocks and made good returns, but the God of Havoc and General Cussedness turns your luck around as soon as serious money is involved, so I never tried that. Owner-building is fun but you don’t always save money because all subbies are crooks and chronic liars.

            Here in South Africa we’ve taken the decisive step to Venezuala-ism but I can’t leave because I’m hostage to my kids, grandkids and great-grandkids and I can barely to afford to pay my way into a stable country, never mind sponsor anyone else.

          4. @MvR

            I think I have mentioned to you before that I have spent a lot of time in SA, and that I really like the place and it is an outright tragedy what it has become. I know what is going on there and before I left my firm I made the call to stop tendering works in SA, Africa is okay but SA is a no no.

            My wife and I plan to visit Cape Town for our 30th anniversary next year, she was born there and I have actually never been there myself.
            .

          5. “Let me know via the feedback form if you would like me to delete it this morning.”

            No but just be careful, the bears are our of hibernation at the moment, plus its reporting season. Be cautious but dont get too hung up on the daily charts, which is the reason why I have just decided to hang on to CIMIC a little longer, otherwise I would be selling the low on the news.

            https://www.asx.com.au/asxpdf/20190717/pdf/446pdtjw74ssjm.pdf

          6. Bravo to you for doubling down. Let me know if you later feel uncomfortable with that detail remaining up.

            I don’t listen to many voices in the financial press; their awful track record is all I need to judge.

            I outsource my financial advice to a professional and listen but tend not to disagree. 99% of my assets are not in the Australian jurisdiction for several reasons, not least of which it is ridiculously hard to be exposed to a wide range of financial instruments.

            Until you try to buy with your Superannuation, say, a Uranium ETF in a country that digs the stuff up, do you realise how poorly-served Australian investors are.

          7. I have made good trades in uranium and lithium in Australian small caps in the past.

            Spoke to broker then, he called to ask if I was sure about today’s big buying instructions, bearing in mind what happened this week, I told him that is exactly why I am getting in.

            On CIMIC (the old Leighton Group), they are famous for trading far higher than previous lows, I am holding only, not chucking more in though.

            So okay I will bear my sole further here on my other two dogs that I am currently holding as well. Can someone please confirm my bias or otherwise?

            CPV CLEARVUE TECHNOLOGIE ORDINARY (67.76%)

            ClearVue Technologies (ASX: CPV) has unveiled plans to roll-out its ground-breaking photovoltaic innovations across the Middle East and establish what it has called “feet on the ground” in one of the world’s largest markets. The smart building-material company has signed a memorandum of understanding (MoU) with Grafsol General Trading for exclusive distribution rights in the United Arab Emirates (UAE), Kuwait, Bahrain and Qatar.

            Pus this.

            Overall, ClearVue Technologies insiders were net buyers last year. Their average price was about AU$0.20. We don’t deny that it is nice to see insiders buying stock in the company.

            Gut feel.

            Hold for now, management are steady, revisit when I have invested all my cash reserves which will be down to 10% after this mornings relatively big buys.

            RWC RELIANCE WORLDWIDE ORDINARY (44.43%)

            Why the Reliance Worldwide share price crashed 26% lower today What happened?

            Whilst the company’s Americas business continues to achieve good underlying growth, two issues have restrained net sales in the second half of FY 2019. One is the lack of a modest freeze event in the region. A modest freeze event is considered to be the average level occurrence of winter storms over a sustained period across the USA, causing cracked or broken pipes. Management believes this is a timing issue due to these inventory strategies rather than a fundamental demand issue.

            Gut feel.

            I dont believe in AGW, hold for now and review when I have no more cash reserves, make the call to dump then and reinvest whats left in new opportunity.

        2. Go on with you, with your predictions 6 years out.

          Put some numbers and dates on these guaranteed events. Dow Jones this time next year or two years from now. Median house prices in a city of your choosing a year from now. An ounce of gold in US dollars in a year.

          Go on, something specific rather than vague noodling about cycles.

          1. Last top was 2008, bottom was 2012, we have been in recovery since. Its an eighteen year cycle comprising of a four year slump, seven year recovery, mid cycle slump, seven year mega boom up the top, rinse and repeat. Gets you to 2026, this is US dates, Oz lags the US.

            That has always been my investment outlook, still is, bookmark this post and watch it unfold for yourself.

            My house buying now if for sons and nephews.

            I already told you what my prediction was for Oz house prices on your last Oz house price post, its still the same.

            I just told you that I thought that US stocks were looking a bit toppy.

            And I just told MvR what Australian stocks I am buying tomorrow.

            I dont know what will happen tomorrow but I do believe that “history doesn’t repeat itself but it often rhymes”.

  3. The good news today was that Cricket Australia announced that transgendered folks could now play in the Australian women’s team. I am not sure if this was good for the multiple media outlets that ran it, or for the those second tier male cricketers who now have new hope for representing Australia. Possibly both?

    Presumably Australia will retain those Ashes for some time, or until Ben Stokes has a mood change and the rules change in England. If they haven’t already. Or Phil Tuffnell comes back and tears it up for the English women’s team. I’d pay to see that – not a lot, but something.

    1. I read this comment over a cup of coffee this morning and assumed you were making a joke and I’d sleepily missed the punchline.

      …..and then I Googled it.

      Groan. Oh well, I suppose that’s tomorrow’s blog post written already then.

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