Finance & Fury Podcast

Welcome to Finance and Fury The ASX is sitting around a high mark.  But there is a lot of talk about recessions, analysis talking about share corrections, not a lot of optimism – Has there ever been?   Don’t really see many articles with positive outlook on the economy Important to remember – Don’t trust journalists to make investment calls Bad track record- European debt crisis, Brexit, Trump getting elected, trade wars, actual wars – GFC? Paying attention to the media yields some of the worst investment returns – emotions and fall into crowd Today ep – want to look at share market corrections, what signs are pointing towards, then how to not get stung If you have been listening – eps at the moment might come across as doom and gloom as well Apologise if it comes off that way – only intention is to inform but also provide ways out Not prophesising - Point of those episode is to let you know what can happen – not when or the magnitude Are we going to crash? Might surprise you after what I just sai

Welcome to Finance and Fury, the Furious Friday edition Been talking about monetary system – today dive into Crypto currency Crypto currency – means nothing - has to do with individual coins/tokens/whatever –   Preface – Don’t have as deep an understanding on the overall crypto market as I do on the fiat money system, and especially blockchain   I do know enough about BTC to know one thing – I wouldn’t buy BTC personally – You may love it – good If I get something technical incorrect – let me know – But ill be talking from fundamental POV – helps to explain where I come from –   We all know the story – In 2008 - Bitcoin was proposed by unknown author/s - pseudonym of Satoshi Nakamoto At the heart of blockchain is the distributed ledger. In its simplest terms, a distributed network is a shared database. Rather than one central entity holding the information, it’s spread through a network of millions of sites or nodes. This decentralization offers many benefits over traditional, centralized systems: increase

Welcome to Finance & Fury, the ‘Say What Wednesday’ edition. I recently received a great email from Nick, on a fantastic topic. So, I’ll read most of the email as background to today’s discussion;  “Hey Louis, I’ve recently be thinking about an issue that I think should be at the forefront of people’s minds a lot more than climate change, and that’s waste pollution. The issue of waste pollution in both the ocean and land seems to get a lot less coverage than the issue of climate change, even though the issue has a far greater capability to affect us in a dire manner, as pollution can undeniably kill life. Now, what does this have to do with finance? I recently attended Groove in the Moo, and they had this system where they overcharged all cans by $1, but gave you a $1 cash refund for every can you brought back to the purchasing station. Me and my friend being thrifty got to work and collected over 200 cans that we saw just lying on the floor to make some money over the day. This concept got me thinking t

Hey guys and welcome to Finance and Fury! Today we’re joined again by Jayden to talk about whether property prices will keep declining due to higher mortgage arrears. The RBA’s cookie cutter approach to rates will continue to try and help reduce chances of mortgage default and ease burden on household cashflow. Why is it that an increasing share of housing borrowers are behind in their mortgage repayments? Points to a rising risk to the financial system as housing loans are 40% of banks assets directly This is in addition to trillions sitting in derivative style instruments which use these mortgages as their underlying assets When the property backing the loan exceeds the value of the loan then arrears aren’t a big deal for banks. They take the deed of your home and take back their loan (plus unpaid interest/costs). With falling housing prices however, the potential for banks to experience losses increases. Where are arrears at While it is increasing, the rate of arrears in Australia is still relatively

Welcome to Finance and Fury, the Furious Friday edition! I’ve been thinking a lot about what we are taught in economics, the basic ‘101’. Specifically, if you print a lot of money you get hyper-inflation. There are plenty of stories to back this up Germany Weimar republic, and Venezuela right now – there are plenty of countries with hyperinflation Central banks around the world (and at home) are trying for more inflation, and have increased their money supply over time. But we’re ending up with lowering inflation. This is puzzling on the surface, though it has a pretty simple answer. Inflation and CPI – What we’re told they are - quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over a period of time. Rise in the level of prices – why a $1 today is worth more than $1 in 1 year, let alone 100 years CPI is what is used to measure the basket of goods RBA monetary policy – Try to keep between 2-3% inflation through influence on

Welcome to Finance and Fury, the ‘Say What Wednesday’ edition. Today I’m here with Jayden! Today’s question comes from Gavin, “Is there anything to be considered when looking at refinancing mortgages with smaller lenders that run their business online like reducehomeloans.com.au with rates of 3.19%, versus the larger lenders?” Great Question!   Types of Lenders   Large lenders – ‘Big 4’ banks; ANZ, Commonwealth Bank, NAB, and Westpac Small lenders – almost any financial institution other than the Big 4 banks Credit unions, building societies Non-bank lenders – what most online lenders fall under   What are non-bank mortgage lenders? A non-bank mortgage lender is a financial institution that offers home loans but is not a bank   Is a mortgage with a small lender better due to being cheaper? It can be, depending on what you’re looking for in a home loan. As with anything else, smaller lenders have their pros (possibly lower interest rates, possibly better customer service, etc.) and their cons (possibly f

Welcome to Finance and Fury. Today’s we’ll be talking about what assets will survive a financial correction. The assets that that people still have confidence in. Confidence is key! In any asset, confidence is what is required.     Why is confidence important? If a lack of confidence/panic is what causes prices on assets to drop heavily then the solution is in assets that, while their prices may be impacted (short term volatility) they will not go to zero.   Human behaviours/emotions pay a significant role Bubbles (and FOMO) – you see the price going up, you jump in because you fear missing out. This can create overpricing. Works in both directions – Crash – when people fear a share crash, they sell their shares in a panic, and the crowd follows dropping the price quickly The fundamentals/intrinsic values of things don’t matter in a financial collapse. People aren’t looking at Fair Value when all they can focus on is 40% losses – they only see the losses Subjective values – do people value it regardless of i

Hi everyone and welcome to Finance and Fury! Today we’re going to look at our current monetary system; what is considered money, and also the future of our monetary system. Today’s episode will be a fairly quick episode, and will be an introduction to a series of Furious Friday episodes that we’ll be doing over the coming weeks. Our current monetary system is actually debt-based fiat currency. This means that every dollar that you have is a debt obligation by a central bank to eventually repay. This is pretty important to look at, because unfortunately this won’t last forever. It’s only been around for 40 years, and we can already see the signs of this system struggling to keep up with the never-ending ability to create ‘money’ out of thin air.   Money is created with 1s and 0s – for every $1 there is a debt obligation to the central bank to repay this. Every dollar that you have is backed by some form of debt, whether it be debt created from a commercial bank (fractal banking reserve) or when it is issued an

Hi Guys and welcome to Finance and Fury’s ‘Say What Wednesday’ Episode. Today we’re joined again by Nick. Our question today comes from Justin who asks, “Our building company recently went through issues with its cashflow, so as directors we halved our wages to help…I was wondering if you could talk about the importance of, and the correct way to complete a cash flow forecast. Up until recently we had never completed a budget or cashflow forecast yet we have a turnover of 5 million. Yet, it was the lack of cash flow forecast that nearly brought us down.” Good question! Today’s episode we’ll run through; What are cashflow forecasts The different ways of achieving these How to plan to build your cashflow Major issues you may run in to Business cashflow As a business owner the company revenues are yours after all costs are paid for Costs of business - What is typically the biggest expense for a business? What is the average profit margin? How does it differ between types of companies? Profits - Used to p

Hi everyone and welcome to Finance and Fury. If you missed last Monday’s episode on bank bail in laws, you might want to go back and catch up as this week’s episode follows on from that one. Today we’ll look at what to avoid holding as investment in the future, based around the updates to these laws. Knowing what investments can be taken by banks in the next financial collapse, to allow them to bail themselves out is a great place to start, as these are going to be pretty risky going forward. According to an IMF paper titled “From Bail-out to Bail-in: Mandatory Debt Restructuring of Systemic Financial Institutions”: Bail ins - a statutory power of a resolution to restructure the liabilities of a distressed financial institution by writing down its unsecured debt and/or converting it to equity The language is a bit obscure, but here are some points to note: What was formerly called a “bankruptcy” is now a “resolution proceeding.” Bank’s insolvency is “resolved” by turning its liabilities into capital. Insolv

Welcome to Finance and Fury, the Furious Friday edition Going to run through the last part of the Lucky country – and that is how we can best turn our luck around Through – innovation, freedom of choice, and ignoring narratives based on assumptions Going to skip through Innovation and freedom of choice –to not repeat the same thing over and over – check out the other eps on this – links on the website – Quick summary of how they fit into todays topic though Growth through Innovation – these two-go hand in hand – Creating new businesses and technologies, products and services which drives innovation – profit incentive – Innovation efficiency is a market force Innovation is a chain – single inventor, drive to improve, idea used to make product, then others improve Without companies we never get tech improvements – Chain between Gov tech and population What accelerates this - Freedom of choice and equality of opportunity – After researching this for years – assume it to be correct – but others have differe

Welcome to Finance and Fury, the Say What Wednesday edition John’s Question: I thought a useful topic could be about pros and cons off starting a business and starting your own business vs buying a franchise system etc. and using a business to achieve financial freedom.  Personally, I have been looking into options to start a business both online and franchises. I have found that starting an online business can have a very low startup and ongoing costs, which is attractive but finding something that can be worthwhile is difficult. So far I have been leaning towards buying a franchise due to the systems already in place and there service or product already being tried and tested. But obviously, this incurs a higher startup cost and ongoing franchise fees etc.  But I am not a skilled tradesman or professional such as a website developer or marketing expert etc.  with a unique selling proposition, so therefore a franchise system is most likely a better option for me to pursue.    Starting an online business or f

Welcome to Finance and Fury Today – Want to start looking at what would likely survive another financial correction or worse, collapse Been thinking a lot recently about the structure of the modern economy – This episode is probably more like a FF ep, but this topic will have a massive impact on each of our lives at some point – where to have your money in preparation for the next crash Heavy topic - so a few things need to be explained before diving into what to look for in what will occur in the next collapse. If you listen regularly, you might have noticed a lot of topics have revolved around monetary policy lately – rate cuts, effects, etc. – Been looking for an answer to what the best investment would be in the event of a financial collapse As the current financial system of uncollateralised debt will be the cause This doesn’t mean that the Next Financial collapse is imminent and that you should rush and sell everything – but it is important to still pay attention to certain signals – Are people buy

Welcome to Finance and Fury, The Furious Friday Edition In this ep, we continue looking at the lucky country look at a downward spiral in growth – low growth traps – and how it is created by what is meant to help growth?   Low growth trap – The big problem comes from just looking at the numbers – and basing policy around models Major part of the modern economy – looking at the numbers – I do it as well Numbers can be inaccurate, or misinterpreted – sometimes the models being used for numbers don’t get the answers that were expected Such as the RBA and rates – lowering them to boost the economy   Nothing new as to why the RBA wants to drop rates – major banks think it will go down to 0.75% - Looking to take action to help stimulate Australian economic growth, employment, wage growth, etc. The question really is if this will work as the equilibrium models suggest – based around neo-Keynesian We should be seeing a pick up in inflation (CPI) rates – which is the trick – focus on a percentage which is ever com

Welcome to FF – SWW- answer questions from each of you – this week from Sebastian   Hey Louis. I've been thinking about the pro's and con's of Managed Funds vs LICs/LITs. It occurs to me that one of the main disadvantages of managed funds is their open-ended nature.   In a crash, A manager of a fund is disadvantaged in this situation because they are having to redeem fund units as panicked investors sell out at a time they should be deploying cash into the market. Closed-ended LICs and LITs don't have this problem.   What do you think about this - and should it impact our choice of investment vehicles? Thanks, loving the podcast as always!   Great question! WARNING: No advice, just providing general examples of when things work, when they don’t – on with it   Few things to clear up – have to run through open/close ended funds, what are MFs/LICs/LITs, the risks/benefits of each and which one experiences the worst outcome in a ‘bank run’ on an investment – people wanting their money back all at once   First – Q

Welcome to FF – RBA cash Rates are lower now – talk about flow on effects Today – Will you get mortgage cuts, how your savings will be affected, effects on the job market and wages.   Mortgage cuts Don’t expect the banks to pass on the Reserve Bank’s rate cuts in full don’t assume your mortgage won’t become more expensive outside any official rate movements. That’s the lesson to be learned from a “fascinating” graph that compares how the big four banks have manipulated variable rates against the official interest rate over the last three years. ANZ and Westpac refused demands from both sides of politics to pass on the full 0.25 per cent cut announced by RBA governor Philip Lowe last week. NAB and Commonwealth Bank customers will get the full reduction in their mortgage interest payments but the comparison shouldn’t expect further savings if another expected cut comes later this year. when the Reserve Bank moves down so do the banks but not always by the full amount – the gap is getting wider each

Welcome to FInance and Fury, the Furious Friday Edition.  Following the series of the Lucky Country – You don’t need to have listened to the last few FF eps for this one – rare event – but will be talking about a few related factors, like GDP growth, Interest Rates, Housing – all in relation to the share market –   Today – episode will be looking at how the share market is related to all of these factors Help focus on how to create a rising share market – as it has become more volatile over time, and growth has slowed   What factors affect the share market? – Millions Due to the nature of a market -built up of millions of people – so millions of factors, between 10s of thousands of companies, between millions of people – why markets are almost impossible to predict day to day -   First – let's start with What is the ASX – Australian Securities Exchange 2,319 listed companies, $2.21trn market cap, the average company is worth $1bn (just shy)   What factors affect the market? Interest rate - What are the

Welcome to Finance and Fury, the Say What Wednesday Edition  This week’s question comes from Adam Hey Louis, learning lots from your podcast its been good value. My question is now the coalition are remaining in power i want to take advantage of the proposed first home deposit scheme. Can you explain more about this and if its good or bad and what to watch out for, and how we can be good candidates. Cheers   Today: Talk about coalition proposals First home deposit scheme How can you use it? What to look out for? What is it? First Home Loan Deposit Scheme The Coalition -FHLD Scheme - support up to 10,000 first home buyer loans each year 5% deposit with a government guarantee for 15% of the loan – not having to pay lenders mortgage insurance as there is 20% of loan guaranteed – your equity and Gov proposal was modelled after a similar scheme in New Zealand called Welcome Home Loan - established in 2003 Eligibility will be available to eligible first home buyers who have been able to save for a deposit o

Welcome to Finance & Fury, today we’re going to be looking at what stops people from investing. The common reasons I see; Fear and misconceptions Not knowing what to invest in Not knowing how to invest Not knowing the benefit Not having enough to invest The last one is a self-determinant from the previous 4 reasons. A form of financial procrastination creeps in; If you fear, don’t know, what, how or why, then you won’t allocate any resources (money) to it If you don’t know what to do, or how to do it, then you aren’t likely to bother If you don’t know the benefit – of realising that at some point – you will need to give up working Or – if you think something is a long time period off, or too large a value, you may procrastinate as well Why invest for retirement in 30 years? What is the point of trying to save a $110k deposit for a home? Most things that become larger (time periods, or their size in monetary terms) also become harder for us to achieve - $110k seems like a lot but $70 per day for 4 ye

  Welcome to Finance and Fury, the Furious Friday edition. Today we have a pretty good episode! (I find this interesting at least, so I hope you do too) – We’re talking about the Australia Property market, specifically the property bubble. How monetary policy has affected house prices over the last decades Most people my age born in the 80s to 90s, even 2000s have only seen property go up This makes it seem like a safe bet – so I want to look at this and the reasons for the meteoric rise, then look deep into whether or not we’re in a bubble. Just quickly before I get started, speaking about property (or lack thereof) I’m participating in the upcoming Vinnies CEO Sleepout to raise funds for the homelessness problem in Australia. If you have been enjoying the content and finding it valuable, I’d really appreciate if you could help me out by giving back. We’re raising funds for rehabilitation and counselling to help homeless people, crisis centres for victims of domestic violence. Go to Finance and Fury and