Lessons of 2015

Posted by Daniel Joseph

What a year it’s been! Here’s just some of what I learned and had affirmed in 2015:

Live above the chaos

Focus more on what you can control (be it personal or professional) and less on the chaotic external noise that you can’t. Property investing is a long term strategy to wealth creation, and through the years you’ll encounter a number of things that may lead you to question your investment decisions. Just think about how the world has changed over the past two decades: recessions, wars, mining slowdowns, political coups d’Ã©tat, nuclear deals and the collapse of some of the largest financial institutions in the world. A century’s worth of chaos, packed into two decades. So how do you live above the chaos? Get educated, have courage and invest with the support of Blue Wealth.

The bubble that never bursts

There’s no greater myth of property economics than that which persists around the bursting housing bubble. The talk has changed little in the past few decades, despite an increasingly large mountain of evidence to the contrary. Here are the facts: Australian property, with the exception of resource dominated towns, has never experienced price movement that you’d liken to a bursting bubble. Still, nearly three quarters of Australians think that we’re in a housing bubble. If you’re one of them, this message is for you: the largest reduction in prices for our capital city property markets over the last couple of decades has been 5 per cent (that’s based on an index that combines prices in all our capitals).

Trust the media as much as you’d trust your accountant conducting brain surgery

Let’s not be slaves to sentiment shifts and media hype and instead be guided by research and education. Here are just a couple of quotes that highlight the need for scepticism when it comes to the information propagated by the media:

‘I’ve always said I see a 40 per cent fall (in property values) over the next ten to fifteen years, I’d say that over the next five years we’ll certainly see something in the order of a 20 per cent fall.’ – Professor Steve Keen, June 2011

‘My feeling is that we’re in for a lengthy period, ten years or so, where house prices will effectively be range bound within perhaps a five to ten per cent range.’ – AMP Capital Investors Economist Shane Oliver, June 2011

Actuality: Between June 2011 and September 2015, the value of property in our capital cities increased by 30 per cent!

Perceptions inhibit rational action

More often than not, Australian investors don’t use the property cycle to their advantage; instead, they invest in high demand markets, opting to be one of the many sheep instead of the shepherd. Why? It takes more courage and foresight to be a shepherd (early adopter, for all you marketing types) than it does to be a sheep (the laggard of the group). Having a one dimensional view of property investment bound by perceived geographical constraints can set you back years in your portfolio building journey. Blue Wealth’s mission is to provide you with the education and knowledge so that you have the courage to be a shepherd in a market dominated by sheep.

I’ll leave you with one of my favourite quotes by renowned polymath Benjamin Franklin: ‘An investment in knowledge pays the best interest’. Let 2016 be the year you seek professional support, get educated and take action. From the team at Blue Wealth we wish you all a Merry Christmas and a happy New Year and sincerely hope that you can manage to live without a blog post for the next few weeks.

Posted by Daniel Joseph, on 22nd Dec 2015