Finance & Fury Podcast

Welcome to Finance & Fury, the Furious Friday edition. Today’s episode is all about the drive to equality. A recent proposal by the Labour Government is to force equality through gender, and forcing companies to publicly disclose pay gaps between men and women. Reporting differences in pay between genders Personally, I don’t like it as it further drives division between people I think it will actually hurt women more than help them The Proposal Companies with more than 1,000 employees will be forced to publicly disclose how much they pay woman compared to men. Companies that fail to comply will be excluded from competing for government work - this seems like blackmail for compliance! Companies already disclose pay gaps to the Workplace Gender Equality Agency as it is already illegal to discriminate and pay people less based on gender Why is this happening? The Wage Gap currently sits at about 15% or so, but this depends on how you interpret the numbers Stats – What is an average? In 2016 the average

Welcome to Finance and Fury’s ‘Say What Wednesday’. Today’s question is from John. John asks, “What is the relationship (if any) between shares and property in Australia? Should we expect the broader share market to react to falling property prices?” Great question! Correlation - a mutual relationship or connection between two or more things That is, what are the price movements doing in relationship with one another? Does property price rise and fall with shares? Or the other way around? Are they consistently moving in the same direction or in opposite directions? Correlation doesn’t mean causation!!   Just because things are related it doesn’t mean that they are caused by one another, for example Lisa Simpson’s rock that repels tigers.   Correlation between asset classes The correlation between the asset classes and that factors that play into this. Study showed that shifts in stock and property markets can lead to the emergence of an unstable linear relationship between these markets. This supports t

Welcome to Finance & Fury! On today’s episode we take look at the best ways to secure your financial future I’m going to share the rules I follow – And how to not be a victim It isn’t hard – it’s actually really simple… but simple can be boring and repetitive What you can do and how you can implement these things Preface - Don’t be a victim In today’s culture it seems that outrage and victim-hood are held above taking personal responsibility. Most of you won’t be like this as you are obviously doing something to help yourselves through learning - but being the victim seems to be better than succeeding for some people. Outrage at CEO pay, outrage at wage gaps, outrage at anything The solution is always to make “them” less wealthy, not to improve your own position – because that is hard What if the answer was to teach everyone else how to get there? And not through redistribution What if all of this energy was used to improve your own position rather than rage at things you can’t control? When it come

Welcome to Furious Friday! Did you hear?! The property market is going to drop by 45%!! Oh no! Today, we’re looking at a recent 60 Minutes segment ‘Bricks and Slaughter’, which aired on Sunday and sensationalised Australia’s property market.  The segment made several inaccurate statements, including; Our property market has only ever increased (and implied that from here it can only decrease), That we were on a path towards a 45% housing collapse.  Since the episode Several of the experts that appeared on the show have come out and expressed their disappointment and unhappiness as the majority of their comments were either manipulated or never made the final cut. SQM’s Market Analyst Louis Christopher says he was interviewed for over 45 minutes of which approximately one minute was featured in the segment.  Media did their job – which is to sell headlines based on fear! So, where is the property market headed?  Property moves in cycles, and doesn't always go up.  Property prices have gone down in the pas

Today’s Say What Wednesday question is from Paul; “Hey fellas! I think you guys are doing a great a job. Always a fun listen. Question; I was wondering your thoughts on the world of FI (financial independence) which is getting more momentum, to the likes of Mr Money Mustache and other FIRE? Have you taken a similar approach to these people with your own personal finance, having savings rates as high as or higher than 50% of total take home income?” For those who don’t know: Financial Independence Retire Early (FIRE) i.e. Save and invest most of your income now I really like the idea of Financial Independence and employ it myself to avoid the hedonic treadmill creep. I set a base living standard and then invest everything I earn on top of this figure. Whilst I was PAYG a little while ago I was saving between 50-60% of my income and investing it, with a decent chunk being salary sacrificed. I've been in the process of setting up a new business in the past 18 months which put a dint in the ability to save,

Today’s episode of Finance & Fury we’re talking about Artificial Intelligence taking over the ETF and investment market. The discussion was actually started by one of our listeners, Gabriel who recently wrote in, so thanks Gabriel for sending this through.   Introduction; there are a few types of AI ETFs Funds that specifically invest in companies involved in the development of products and services in AI And alternatively, the one that we’ll talk about today: AI is running the ship - funds that use AI methods to select individual investments to buy within the fund   We will talk about: The introduction of AI powered ETFs What this could mean for the market Options on what to do   AI ETF - AIEQ Been around for about almost a year (Oct 2017) Run by IBMs Watson AI - cognitive computing platform capable of answering natural language questions by connecting large amounts of data, both structured (e.g., spreadsheets) and unstructured (e.g., news articles), then, learns from each analysis it conducts to p

In today’s Furious Friday episode, we’ll be running through the historical life cycle of fiat currencies. This episode is thanks to John – John wrote in with a few great questions; Is it true that all fiat currencies eventually become worthless? Should we be concerned about printing more and more money - is this something to be concerned about, i.e. the longevity of the AUD?   We will run through: How do fiat currencies fail and what causes it? Is safe-guarding against it something we need to worry about? How would one do this?   History of money Barter economy – was hard for getting values and trading efficiently – hard to travel with a mule to trade their corn Coins – Back by silver or gold Promissory notes – goldsmiths used to house gold for people – those people then give the ownership to others in paper (an “IOU”) – early day banks Skip forward to today – All paper but mostly Fiat or digital currency   Doesn’t have to be fiat to fail – it just has to be controlled by the government A quote from one

Today’s Say What Wednesday question comes from Emma, and relates to saving for a house deposit:  “Hi, thanks so much for the podcasts - I have learnt so much. My question is about saving for a house deposit in Sydney. We have $130,000 saved (which has taken us about five years to save) however we met with a broker and she recommended avoiding LMI by saving up the full 20% of the purchase price plus 4.50% for stamp duty etc. As we have two children we’d like to buy a modest townhouse which are currently valued at around $850,000. Basically, at our current renting while saving rate this would take us five years or so. Do you recommend using ETFs, LICs in this saving circumstance or using the first home super saver scheme or term deposits etc? I’d love to hear any ideas you have to help us save, stay motivated and finally buy something!”   Thanks Emma!  Here’s what we think...   Option 1 – Staying away from risky investments – (5-year period) Given that you want to purchase a place in 5 years, I would probabl

How to not get screwed over in property, the warning signs of scams and how to do your property research Warning signs of scams Off the plan/cold calling companies Buying off-the-plan, or purchasing a property that has yet to be built – The time between the sale and completion and settlement of the dwelling means that "buyers are essentially paying today's prices for a product in tomorrow's market" Makes sense in what looks to be a rising market – most off the plan are oversupplied at the moment though Likely be overpaying Inbuilt commissions of up to $40,000 Sales tactic of reciprocity – “I do something nice for you, so you feel the need to do something nice for me” Can blind to shortfalls in a property Free trips/offers with the property Sales pitches – Tax breaks, gurantees on rent and future growth Government concessions – FHOG Negative gearing/tax breaks being the focus point of the sale If tax is the only gain from the property, then look elsewhere No point paying $12,000 into a property t

Today we’re looking at the market environment for Facebook, Google, Twitter, YouTube etc… their costs are going to far outpace what their revenues will be. Are they on their way up, or on their way down?   EU copyright laws affecting business models Proposal for online forums to be banned The difference between a ‘platform’ and a ‘publisher’ and how the law treats each of those definitions Facebook is down 30% - and have advised that revenues would continue to slow down and its costs rise. Market cap almost half of Australia’s GDP (1.2tr USD) Loss equals the total GDP of Kuwait - some $120.3 billion in 2017 last year Indeed, over the last three months alone insiders - including Zuckerberg - have sold off $3.8 billion worth of stock in the company. Earnings per share (EPS) actually were a little ahead of forecast at $1.74 versus $1.72 that had been projected. And, revenues were only a tad shy at $13.23 billion compared to the $13.36 billion that had been expected.  Trend analysis - middle of a very wide and

Today’s question is from Declan, “What advice would you give your 21-year-old self?” To my 21-year-old self I would have the following advice: Life is a series of challenges, the more you solve the better your life becomes. Always continue learning - I thought after Uni I was done studying, but realised that the more you know the more you can solve. The more you learn the more you earn - By investing time and money to pick up new skills, you become a more valuable member of your company or organisation.  Value my time more - Think of time as a compounding factor, like an investment – The more you can do earlier, the more the effort will compound over time. Plus, opportunity cost now can be represented by putting a dollar value to each hour of your time.   Failure only means there is something else needed - The only shame in failing is if you give up. Failure comes from defectum in Latin, which translated in another way is deficiency. The word failure just means that something else is needing to be done to

Today we’re talking about a news article that came out highlighting that young Australians’ are experiencing either zero, or negative income growth. Stats throughout history How to increase your income - whilst this is a real issue, there are real ways of actually getting around it. The 'Smashed Avo' reference - the idea young people can’t afford to buy a house because they’re living large. The origins of ‘smashed avo’ as a reference to millennial laziness, meanwhile, go back to a column by a middle-aged man named Bernard Salt, who is a partner at one of the big four accounting firms. Living an easy life of brunch, Instagram and maxing out their credit cards. Then they have the audacity to complain about the price of housing!   Let’s look at the stats… Sources: Productivity Commission estimates using Australian Bureau of Statistics (Microdata: Household Expenditure, Income and Housing, 2015-16) and ABS Household Expenditure Survey basic confidentialised unit record files 88-89 through 2009-10.   The gr

Today we’re talking about the markets, how CEOs affect share price and how public perceptions can make or break. We look at Elon Musk. Musk is a business magnate, investor and engineer. He is the founder, CEO, and lead designer of SpaceX; Co-founder, CEO, and product architect of Tesla, Inc.; Co-founder and CEO of Neuralink; and co-founder of PayPal.       In what has been a pressure-filled year for Tesla, the company’s third-quarter performance might be its most important test in 2018 – Musk said it will be great - “most amazing quarter in our history.” But – JRE - Musk was filmed drinking whiskey, briefly smoking marijuana It was the latest in a string of unconventional behaviour and bizarre acts by the billionaire He has a very high IQ – Those people can come across as bizarre to some who don’t have high IQs Even before Musk's surprise August 7 tweet that he had funding "secured" for a go-private deal, Tesla had been under scrutiny from investors, Analysts and short-sellers - it works to hit produ

The political spectrum and where we line up, plus a look at what we know so far of Bill Shorten and Scott Morrison’s policies. Everything is portrayed as a ‘cost’, which is ironic. “Costs” from the Government’s perspective is simply NOT charging you tax. Not taking all income earned is a trillion-dollar cost to them.   Shorten’s Policies Lowering 50% CGT discount to 25% (for assets purchased after 1 July 2017) People will potentially hold onto assets longer because they will be taxed so much if they were to sell. Negative Gearing – Removal of negative gearing (grandfathering existing) (ABS Stats) 21% of households own a second home as an Investment property 35% of dwellings are investment properties (rental properties) Can’t offset more tax than is paid What if property is not rented for a while? People may not buy highly leveraged – high growth properties What if rates go up? A lot of properties in the past were negatively geared Depreciation already gone, property may become less attractive Less ince

In this episode we discuss Cash. We will run through what type of asset it is, how the currency system works, and how it can be manipulated!  We also discuss: The good old days of the Gold Standard What the real uses for cash are What are the uses for cash, and how you can improve your position. Why you can get a 60% interest rate in Argentina, but it may not be worth it! What to do with cash and the potential negatives of doing so! 

Today’s episode is a Market Update and we look at a few of the factors that affect our market. We will discuss why these things matter, and why we are in the state we are in!  In this episode we discuss: Consumer confidence – Look at the savings ratios  Business Confidence – what factors are affecting it and what this means for the economy. Australian Wages and labour - Unemployment and underemployment and how it is correlated with difficulty finding labour Housing Market - House process going through a bit of a down cycle – We run through the Supply to demand ratio – And also look at the homes vs apartment market.  Also, here are the graphs that we discussed:         

Australian motorists are suffering the biggest annual increase in petrol prices in 9.5 years as global factors combine to slug drivers at the bowser.   ACCC - 2017-2018 financial year petrol prices on average rose by 10 percent, resulting in drivers struggling to make ends meet with the price of fuel. Add on people living further and further away – Adds to the weekly budget – making it harder to save! But motorists can manage this cost by using fuel price apps and websites to reward retailers offering the lowest price.   In the episode we cover the following: What is causing the rise: Supply and Demand of course The global oil markets Geopolitical and currency pressures Greedy retail margins How to try and save at the pump

The decline of auction rates and confidence in the market   The number of homes being put up for auction across Australia has plummeted as falling property prices and fewer cashed-up buyers shake the confidence of owners looking for the right time to sell. CoreLogic - properties taken to auction last weekend was 1,909 - down from the previous year - 2,270. The number of homes being taken to market is down on average by 20 percent. Sydney, the preliminary clearance rate was 59.1 percent, indicating a classic "buyer's market". Property values plummeted by 5.6 percent to record over the past 12 months to a median house price of $863,769. Melbourne, the preliminary clearance rate was just 58.6 percent. House values have fallen 1.6 percent over the last 12 months to record a median house price of $709,568   The Analysis Coming down from the top - Last year was at the peak of the market Long term normal averages Why is this happening? Consumer confidence Prices are too high   Property Clock Link: https://www

Last episode we ended with Lenin’s death. The roll out of Communism was well underway and it was time for new leadership. One his last policies before he died in 1924 was the New Economic Policy (NEP) in 1922… A mixed economy put in to place in order to reintroduce a level of private ownership into the economy. Individuals could own small enterprises and some private property. Tax in the form of ‘Quotas’ were introduced with people getting to keep and trade what they produced over and above their quota. Lenin had a stroke not long after this, leaving him partially paralysed. This is when Stalin really stepped up being a regular visitor, and Lenin didn’t like Stalin – or his “Asiatic manner”. Stalin was Georgian and a bit of a racist. Lenin wrote to his sister that Stalin was ‘not intelligent’. Regardless, Stalin had support of a large chunk of the Bolsheviks. So…he was needed.   Joseph Stalin ruled from Lenin’s death in early 1924 to 1953 when he too died. What life was like under Stalin was brutal The

Welcome to Say What Wednesday! This week the question comes from Sean, "You spoke about Education Funds in a recent episode, I’m just wondering if you can explain this further?"  In this episode we discuss What Education Funds are, The pros and cons of using Education Funds When and how to use them