Most liked posts in thread: Australian Fund Manager hands back cash to clients: Looming correction
Minwa, I hardly think small under-performance (less than 1%) over a 6 month period would be the rationale for winding a fund up. Its just noise. Not all of us are focused on 3 or 6 month time-frames. If they under-performed by 15% over a 5 year period that would be a reason.
Australians definitely have the mentality of property will never go down. In wa however recently property has been going sideways / down for the last 2-3 years or so. Yet Sydney still keep going etc etc.
There is always the calamity people who shout year in year out that the next crisis is coming.When and if who knows.. But where is the evidence at the moment?
The question is how long can it keep going. Eventually people will say I can't afford to rent or I can't afford to borrow. Going in the outer suburbs or downsizing no longer works, that is it- I am not paying a higher price anymore. That is when the bubble will burst by itself, if a shock doesn't do it beforehand.
my 2 cents
When this chart starts a journey north the housing Bubble will stop , Obv other factors with the weak AUD enticing foreigners to get in while the getting is good . When/if this chart starts to head north fair chance AUD will do same . Really is not much more complicated than that imo . I think the guy winding up the fund is not that far of the mark tbh . The fact banks are raising rates is a sign imo , sort of doing the RBA's job for them , the first RBA hike is the difficult thing to time .
This curve is pretty dynamic and whips about a lot but in recent history the right side has been higher than the left .
2) Even if rates don't go up or there is no shock, it has to reach a breaking point eventually when people say no I'm not paying that.
In both scenarios it looks rather bad. Things improve, rates go up loan holders get blown out of the water, that flows through to banks and asx200. Increase in income is not enough to hold of increased loan repayments. Or a shock hits the economy, overall economy gets hit, loan holders get blown out of the water again, similar result.
or the economy could just grow really slowly and rates could stay low for a while, property could go sideways for a while with incomes and equities. No crisis no shock, effective stagnation a slow let down.
A new paradigm,change to the rule of thumb assumption that property and stock go up forever and double every 10 years...
my 2 cents
Someone else pointed out that Phillip Parker's previous fund Parker Asset management closed under poor performance as well.
Time will tell but you wont get a property crash and rate hikes at the same time. Can't happen.
This was discussed in another thread on here recently RBA is recently trying to distance itself from property prices (it's the governments problem)
Curve has flattened in recent weeks if anything and outside of an inflation spike (no idea where that comes from? AUD at 30c maybe?) I just can't see rate hikes anytime soon.