by Jodie | Dec 6, 2010 | General
Here’s a funny that might just explain a Financial Bailout – in terms any of us can understand!…
It is a slow day in a damp little Irish town. The rain is beating down and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit.
On this particular day a rich German tourist is driving through the town, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night.
The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher. The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer. The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel. The guy at the Farmers’ Co-op takes the €100 note and runs to pay his drinks bill at the pub. The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him “services” on credit. The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note. The hotel proprietor then places the €100 note back on the counter so the rich traveller will not suspect anything.
At that moment the traveller comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves town. No one produced anything. No one earned anything. However, the whole town is now out of debt and looking to the future with a lot more optimism. And that, Ladies and Gentlemen, is how the bailout package works.
by Jodie | Dec 6, 2010 | Business, General, Insurance & Protection
In Australia, almost 3,300 men die of prostate cancer and around 20,000 new cases are diagnosed every year. In fact, each day about 32 men find out that they have prostate cancer and every three hours a man will lose his battle with the disease.
If you or one of your family members was diagnosed with a serious illness such as prostate cancer, wouldn’t you want to have the best insurance cover in place? By taking out crisis cover you can help to ease the financial burden on your family.
If you say to yourself, ‘it will never happen to me’ you might think again after considering some of the alarming statistics in the enclosed flyer.
Adviser Article – PSA Testing in Prostate Cancer
by Jodie | Dec 2, 2010 | General, Investments, Self Managed Superannuation Funds, Superannuation
Gold has been fabulous during 2010 with many clients wondering how they can gain exposure to the commodity – either directly or otherwise.
It’s been time to follow up the Perth Mint to see what they have to offer vs checking out various stocks on the ASX who have direct exposure to Gold and mines. Can Gold make it to $US 1500/oz? It seems many think so, but it may just run out of puff too. So now that it’s had a stellar run… is it time to jump in? or get off??
I recently read of one long-term gold sceptic who, although no richer for watching gold go from $US 1061/oz to over $US 1400/oz in 2010, still sees no reason to change his more pessimistic view on gold as in investment. The ‘Emperor is still naked’ as far as he’s concerned and for the following stated reasons in a recent Eureka Report:
Proponents of an ever-higher gold price are generally believe in some form of future financial catastrophe. The argument being that gold will provide protection against rampant inflation & deflation, sovereign risk and/or the possible degradation of paper currencies. The latter argument has become increasingly popular recently as the Fed supposedly sacrifices the value of the US dollar via a 2nd round of QE – quantitative easing and the viability of the Euro is challenged by the dire position of some of its economies.
As the gold price is highly correlated with the inflation rate, the best argument for gold is that it acts as a hedge for inflation. Technically true! Theoretically, nothing compromises the value of currency more than inflation. The problem investors have is that theory’s not currently panning out. While the USD gold price has tracked US inflation fairly closely in the past, this hasn’t been true more recently. Outside Australia – where currency is appreciating in the face of high inflation – core inflation is struggles to register. Regardless of the amounts of money printed, Mr Hawkins doubts whether this will change materially over the coming years. He states:
- “To be inflationary, low interest rates and/or quantitative easing must have a clean transition through to the real economy. For this to occur, the banking system needs to be healthy and willing to lend and potential borrowers confident. Clearly, we are still a long way from such an environment.
- Despite generally tight commodity markets, excess capacity is still a dominant theme in most global product markets. In combination with China’s ongoing strategy to rip market share out of the rest of the world, there is little to suggest that a cost-push inflation surge is imminent.
- While inflation is barely visible in the developed economies, it is highly visible across the emerging economies and most commodity markets. It may well be the case that the liquidity created by the Federal Reserve is flowing into emerging markets and exchange-traded commodity markets; however, such trends are ultimately self-defeating because rising commodity prices – particularly food and energy – are immediately met by policy tightening.
- Once unemployment rates are trending down and/or the demand for credit is improving, monetary policy in the US, Europe and Japan will tighten.”
He further asserts, that in the absence of a significant pick-up in inflation, there must come a point where the opportunity cost of owning gold prompts the investor to finally liquidate their holding and use proceeds for assets which are now relatively cheaper. Until inflation is prevalent, there are other investments out there worth considering. I’m not convinced that Gold has the long term legs required either, for all the preceding reasons. There’s been plenty of bubbles in the market in the past, and maybe gold will be another in the future – only time will tell. Please let us know if you’d like to explore some alternate options that suit your personal goals and objectives…
by Jodie | Dec 2, 2010 | General, Investments, Self Managed Superannuation Funds, Superannuation
Enhanced returns - up for grabs!
Protection and enhancement of our client’s investment returns is a huge priority for the Advisers at WPP.
We are pleased to have at our disposal a number of products that can fit with your own personal goals and objectives, and into your investment strategy. Whether you’re searching for income or growth of funds; are wary about market conditions and are looking for some capital protection, we likely have something to fit in with your plans to help reach those goals.
Please don’t hesitate to give us a call if you’d like to find out more about what is available – both in and out of the superannuation environment.
