[Australia Sucks]

The LNP (The "conservative" party) won the federal election in Australia last night. Investors sigh a breath of deep relief. If the Labour party (communist lefty scum) won the election they were planning massive tax increases for a large number of investors (higher capital gains taxes, scrapping of negative gearing, and scrapping of franking credit refunds). Investors have dodged a massive bullet.

[BigTedSven]

Hi guys,
Just want to drop and let you know about a company I am invested in called Neometals.
Obviously DYOR but these guys have been paying nice dividends for a while now, with the most recent being 4c. Currently trading at 23C with some solid projects on the cards for the future, and plenty of cash on hand compared to the market cap.
Worth a look if you are into gambling.

[BigTedSven]

Typo, most recent dividend was 2C.

[Tail Gunner]

This information was part of a presentation last week at the 2019 Strategic Investment Conference in Dallas, Texas. I am not saying that I agree with the analysis (I do not know enough about the state of Australia's economy), I simply present the information for what it is worth.

Quote:

Let’s start with Grant Williams, seasoned asset manager and author of the highly acclaimed newsletter, Things That Make You Go Hmmm...

Grant delivered one of the most memorable (and hugely entertaining) SIC presentations. In it, he focused on Australia’s developing economic crisis and offered a grim outlook for the next 6–12 months.

What’s going to happen in Australia is likely to mirror the US financial crisis in 2008–09... and those who see it coming will be able to invest accordingly, for outsized gains.

Australia hasn’t seen a recession in 28 years. China’s insatiable demand for both Aussie commodities and real estate has fueled a massive bubble in the housing sector. That bubble is about to pop.

One million households are now under mortgage stress and unable to keep up with their financial commitments. Many mortgages are interest-only, and all are full recourse, meaning the borrower cannot simply give the keys back to the bank and walk away.

Residential mortgages make up 70% of all Australian bank loans. There are relatively few banks in the country, and all are considered too big to fail.

As the government attempts to avoid disaster, Australia’s currency will suffer—which is one way to profit.

I can’t repeat all the data Grant presented, but he has convinced me that Australia is headed for a banking crisis.

If this information is true, it sure sounds quite similar to the prelude to the 2008 U.S. mortgage crisis.

[Bogart]

I wouldn’t be so worried - the US financial crisis was only possible because of the junk bonds and security products that the big banks and institutions were able to create due to the watering down of financial regulstions by lobbyists (the gutted glass stiegele).

Watch the big short etc for an easy to digest version.

We have a much stronger level of financial regulation. The real issue is the economy under the Morrison government isn’t going to receive much stimulus and there won’t be any real significant investment in RandD etc in growth sectors.

Housing prices will be deflated for a few years in syd and melb so getting into property sometime in the next two year is a better play - or looking for stocks that have large realestate portfolios.

For stocks I’d avoid the big banks atm as interest rates will fall. The play for the last few years has been us exposure via int based or diversified stocks or proxy indexes. The dollar is still falsling but my money is on a pivot to the EU as I think brexit won’t be as bad as the FTSE is predicting, and the pound will remain strong.

TLDR don’t worry won’t be that bad, get yourself some British stock.

[Australia Sucks]

Tail Gunner I think at this point in time its absurd to compare Australia to U.S.A. in 2008. Firstly look at default rates on mortgages. They are still extremely low by historical standards.

"Mortgage stress" is not as relevant an indicator as people think it is. Default rates are much more relevant. Australia if you look at how much money Australian mortgage holders have in offset accounts (they are well ahead on interest payments).

Also interest rate cuts are on coming in Australia over the next 12 months. This should provide a floor of support for the housing market.

The elevated number of interest only loans were issued well over 2 years ago. In the past 12 months interest only loans have become far less common (as a % of new mortgages written).

Lending standards are relatively stringent in Australia and have been even more so for over 12 months now. This is not the typical loose bubble style lending you see immediately preceding a crash.