I certainly am.

Reading all the headlines, you’d think we’re on the cusp of a property crash and diving into another global crisis via a double-dip recession. Run for the hills!!

Add an election to the mix and you’ve got a recipe for massive procrastination.

So what can we make of it all?

Let’s see if I can help…

I think the Reserve Bank of Australia went way over the top with its interest rate hikes. We went from a 3% cash rate to 4.5% in just 6 months.

This was a massive 50% increase and the most aggressive in the western world.

So why did Glen go so hard?

He had eyes only for the property market and the only way he could stop it was by using interest rates as his evil weapon against his perceived property boom.

He’s thinking was… Slow down the property boom and we’ve got a chance at improving the housing affordability of everyday Australians.

Since his crusade 6 months ago, he succeeded in putting a pause on property prices, but only after 6 months of solid real estate gains in most markets.

…and this week, we receive evidence that is he has also killed affordability with the following headline, “New Home-Starts Fall a Further 5.2% in June”

Some uneducated investors see those type of headlines and think we’ve got a serious problem.

Here’s what I think…

The down-turn in new home sales is by and large the product of the end of the government stimulus for first home buyers and the increase of interest rates, which has led to the following problems…

The lack of available land… Chronic lack of development finance leading to a lack of development activity… Council planning regulations taking far too long to release projects… Infrastructure delays in new development areas.

All of this will mean one thing.

That the housing shortage will continue to increase and prices will continue to push upwards… and the people most disadvantaged from this are the ones that the RBA boss, Glen Stevens is trying to help… those who are trying to buy their first home.

So all the shenanigans going on right now will push the expanding population into the rental market.

What does that mean?

Rents will significantly go up in the next 12-24 months.

Great if you’re a property investor, not much good if you’re a tenant.

So what I’m saying here is that there will be no property crash – full stop.

What we’ll see over the next several years is single-digit growth across many markets and if you’re smart and savvy within certain markets, you’ll be able to achieve much better than that.

You see, when most of the stats are quoted, they’re typically an average of all markets. So if we see 6% growth on average, it would not be unusual to have certain areas within property that have grown by 25%…

On the flip-side, some areas may fall by 10%.

That’s why I think you need to stay on top of your game, stay invested in areas that are likely to grow faster than others.

…research, research, research…

On another subject, and that is clearance rates, I often have a lot of fun with this sort of data… But here’s something you probably don’t know.

The clearance rates that the average investor seems to hang off every Monday morning reports only 20% of property transaction nationally.

That’s right, just 20%.

So does it really mean anything?

N.O.

Here’s something else that you need to know – all it really shows is people selling and buying.

12 months ago, we might have had a clearance rate of 55% with 400 properties on the market. In the current climate, we’ve got clearance rates of 67% with 900 properties on the market.

All this stuff is just noise to fill up newspapers and get your attention.

The macro picture (long term) is still so strong for property in this country that you’ll kick yourself if you sit on the fence again.

Interestingly, I was listening to professor Keen the other day and he is still ranting and raving about the 40% drop in real estate. The guy doesn’t give up.

He said that his initial prediction of a 40% drop was over a 10-15 year period… Not 2 years after the GFC hit. He was misquoted.

He also said that the fall would be from peak to trough.

What that means is, let’s say real estate has gone up 30% in the last 3 years since his prediction and it falls down by 30%, then Mr. Keen is right… Because real estate has fallen overall by 30% and it’s created a new peak and trough. (Economists are never wrong – they’ll find a way).

Confused, aren’t you?

It’s just more shenanigans by economists who are perhaps too close to the data for their own good.

My last point for today… What about a double-dip recession?

Here’s all I have to say about that…

It seems to me that everybody has almost guaranteed themselves that this is going to happen. From my experience, when the mainstream press and the man in the street are talking about a double-dip recession, then it’s likely not to happen and in fact go the other way.

Now of course in Australia, we never went into recession. And considering that I don’t think the global economies are going to go into a double-dip recession – I think it puts us in a good position going forward.

Just think contrarian (always go the opposite direction of the herd – most people are generally wrong).

They’re my thoughts.

Probably needs to be said, I failed high school, never did economics, wasn’t very good with maths, have absolutely no financial planning background – so everything I say here is basically my opinion based on my results (8-figure real estate portfolio, 7-figure stock market portfolio, 8-figure business).

…so please, before investing see a certified financial planner or follow the smart money.

That’s all for today.

Signed with Success,

Jon Giaan
Knowledge Source

P.S. So what do you think? Jump on your soapbox and let the rest of the Knowledge Source people hear your views below.

I know you like predictions – so I’m going to give you some.

Let me start off by saying that I have no economic degree, never been to university, failed HSC twice and only in the last 10 years have the lights gone on in regards to investing and business.

Since that time, I’ve turned over millions, invested millions, made millions.

By and large, I’m an investment fanatic because I want to control and invest my own money… and not be a victim to biased advice.

So on that basis, I want to give you a perspective on where I think we are globally and make some bold forecasts going forward for 2010.

I did this recently in October and it makes for very interesting reading.

If you missed that valuable article, click on this link right now and see how my forecasts have turned out even in this short period of time.

http://knowledgesource.com.au/my-predictions-the-next-big-moves/

Now a lot of my views for the local market still hold true.

But I’m looking at big picture now, globally… which will impact where, what and how much of my money I’ll be investing in these new developments.

>> Prediction #1: The American Dollar will get Smashed!

So what? You don’t live there – who cares, right?

You should – “There is gold in them thar hills.”

The American government will not stop printing money. I was recently over there and I can tell you things don’t look good for the Yanks.

Their printing presses will just continue to pump money in to the system until things settle down. That’s the only thing left that they can control… Their Reserve Bank is almost out of bullets by lowering interest rates even lower.

Amazingly, there has been over 120 bank failures and the official unemployment still rising is at 10%+.

In simple, layman terms… The U.S. government have settled on the fact that their only option is to print money and hope they recover fast.

That’s why their currency has devalued and ours has benefitted from that.

Expect the Aussie to be beyond parity half-way through 2010.

If you don’t have a plasma screen, wait 3-4 months and I bet you will get a killer deal. Even cheaper than they are right now. That goes for all forms of electronics.

Sorry, I digress…

Now, what’s the play on this forecast? Because I know that’s what you really want to know, right?

But let me ask you, will you do anything with this information?

Let’s see – time will tell…

Now, because of the acceleration of the US dollar demise, global investors will “crap” themselves and will want to reduce their risk by selling out of the US dollar.

So, the abandonment of the dollar will see tangible assets come back in favour. Real estate, stocks, resources, especially silver, copper and of course gold. When I talk about real estate in this context, I’m talking about the US.

I’ve already started investing in hard US assets in the form of real estate. I believe this is one of the greatest buying opportunities of any asset class I’ve seen for 40 years.

I’m buying properties at $25,000 – $30,000. The last time they were these prices was in the 1970′s. If I told you that you had an opportunity to buy real estate today at 1970′s prices – how much real estate would you buy…?

As much as you could afford. But so many people just hesitate. I understand that, if you don’t do the homework, research… you’ll never know if anything is a bargain or not – correct?

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>> Prediction #2: Gold will reach $1,500 per ounce.

Gold is on its way to that target and is trending up strongly. The central banks, who are moving out of US dollar are moving into gold in a big way.

One country that is highly exposed to the US currency is China… and let me tell you they’re buying gold not by the ounce, but by the tonne… and in Australia’s case they just buy the whole bloody mine.

This forecast has been so obvious to me and others, and again it’s directly attributed to the “money print on demand” mentality of the US government.

The play on this one is simple.

A: Buy gold bullion.
B: Invest in gold stocks.

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>> Prediction #3: Oil to go back to $100+

This one will confuse a lot of people because the obvious thought is that oil should come down in value because consumption will follow the economic slide down.

However, the reverse will happen.

Here’s why…

The money to fund oil explorations has literally dried up. This will impact upon the supply and demand principle greatly. I’ve even heard stories that large oil tankers are parked in the sea, unwilling to dock until oil prices rise again.

Crazy, I know. But these sorts of actions will drive oil prices higher.

I expect oil prices to range between $75 and $110 throughout 2010.

Investment play: Buy companies that specialise and have good supply lines of oil.

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>> Prediction #4: Economies of China, India and Brazil will grow four times faster than the US. Check this out…

The GDP of the US is growing at 1.5%… Europe is at 1.5%… (at least it’s growing)

China is at 8%… India at 7%… and Brazil at 5%.

What about Australia?

Well, we’re benefiting from the Chinese and Indians and are growing at 3.4%.

China will grow at incredible break-neck pace next year, pushing 10-12% growth. They’ve got a $580 BILLION spending plan that is not being funded by borrowed money (like the Americans), they’ve already got it in cash.

Investment play?

Anybody who sells stuff to China. Sorry to be cryptic, but an obvious one here.

The Australian stock market will be a major beneficiary of China’s growth next year, especially resources.

Also, Asian real estate will grow consistently throughout 2010. Especially places like Indonesia, Vietnam and Thailand… I haven’t bought anything there yet, I’m doing my due diligence and research.

Sidenote: The well-cashed-up Chinese are already making an impact in the Australian property market in a lot of areas. They are single-handedly pushing up prices by 5-10%.

More about this in articles to follow… But here’s a tip.

BIG TIP: Look for the best PUBLIC high-school areas (not private) and you will notice a growing trend of Chinese buyers pushing prices through the roof. I did this 18 months ago and have had almost a 29% increase in value.

(Thank me later on that one)

…There you go, I’ve got more but they’re the big ones for 2010.

So what will you do with this information?

Sit on the fence?

Think about it?

…or will you seriously consider what is currently going on in the world and benefit from it by taking some meaningful action?

Me personally, I’m invested in tangible US assets in real estate and have put a big chunk of cash into the Aussie market.

I’ll be doing more of this going forward.

Hope this helps.

Let me know your thoughts, are you going to sit on the sidelines or take action?

Comment below.

Signed with Success,

Jon Giaan
Knowledge Source

P.S. If you don’t have the time, skill or a large capital base… then you really should be looking at what Justin Beeton is doing for investors, to be able to take advantage of these trends in 2010. http://knowledgesource.com.au/jbglobal

In fact, I’ve been doing this all year.

Ringing in my head is the old saying that fortunes are made in times of recession.

I’ve lived through a few, but like all things you need to experience a couple before you finally realise that the above statement is so true.

I get a sense though that some people are missing out. Confused, uncertain, standing on the sidelines and unwilling to make a move.

That’s a bad decision…

My work is to make sure that you take the opportunities that are there right now and clearly see the big picture.

So hera re my precitions of the big next moves and also what I’m up to and where I’m putting my money.

The more I look, the more opportunity I see in all areas right now.

Property, stock market and business…

Since March of this year, the All Ordinaries has gone 53% higher. I think we’re at the start of a decent upward swing that will probably see our market go very close to its previous all-time high within the next 18 months.

I’m backing this view up by putting a substantial amount of capital in the market as of two weeks ago.

I’m not being foolish about this and I’m taking the precautionary steps of protecting my capital just in case I’m wrong.

My view is there’s no point looking back in 2 years time saying, “Damn it! I knew I should have done something – now it’s too late.”

That may be the case in 2 years time, I don’t know. But if you read my newsletter, you know that I don’t sit on the fence.

Roll up your sleeves and take a view either side.

“No view” is simply dumb.

So here we go…

Real estate is going to go higher – we’ve been shouting this all year. The message is starting to get through, but again I get a sense that some people feel that they’ve missed the boat.

It’s really simple. Average selected property will probably rise by about 20-30% in the next 3 years.

If you simply use a 20% deposit to secure a piece of real estate and it rises by 20%, you’ve basically got a 100% return on your money without doing a great deal in the process.

If you don’t understand how a 20% rise can return 100% on your money, then you need to get some basic real estate education under your belt and understand cash on cash returns.

So I’m buying. With a bit of experience, even in a hot market you can still buy under the market and that 20-30% increase can easily become 50% over the same timeframe.

That means a 200% return on your money. Not many places you can go to and get that sort of return without doing a great deal.

Here’s something else that I’m up to… and it’s purely come about the rising Aussie dollar.

I’m going to make a special mention here about the rising Aussie dollar which in real terms means the fall of the US dollar.

I’m doing some research at the moment on the real estate market in the USA, the reason why is with a rising Aussie dollar it means that we here in Australia can buy in the depressed market of the US almost dollar for dollar.

Why is that important?

Well, when the US dollar regains strength (and it will), and the Aussie dollar goes back to 70 cents (which is normal), if you’re holding US assets you’ve just made 30% on the currency fluctuation.

Do you get that? Think about it for a moment if you don’t.

Also, whatever cash flow you’re receiving from US assets, they’ve also increased by 30%.

Don’t be mislead though, I wouldn’t buy US assets just on the dollar-for-dollar parity that we’re about to experience. The deals have to stack up for themselves.

Now, I know you’re not going to believe this – I didn’t believe it at first either, but right now I’m looking at certain areas in the States where the previous sale price was around the $120,000 US mark, and I’m looking to pick up the exact same property for about $10,000 – $15,000 US.

The yields of these crazy low prices are around 30%.

I know, I know… How can this be so?

Im sceptical too… But I’m heading over there mid-November to personally check it out. I’ll keep you updated.

Next, gold, gold, gold…

The demise of the US dollar, which is likely to continue for at least another 12 months will see gold prices head higher… much, much higher.

I think gold hit $1,063 US at the close of trade today and I think that is confirmation that we’ve entered into a new phase of a gold bull-market that could see gold at $2,300 per ounce (inflation adjusted) in the next 12-18 months.

The US dollar slide which will go lower, almost guarantees that gold will go in the reverse.

Two ways you can play this… Just ring up the Perth Gold Mint and simply buy chunks of gold. Or, look at specific gold stocks in the Australian stock market and start investing in those.

Whilst I’m bullish on the stock market, not everything is going to go up. My focus is tightly held to the gold and resources sector.

But what about if you’re in business for yourself?

Well, now is the time to steal market share from your competitors by being aggressive rather than passive.

I recognised this late last year and went on a crazy spending spree of marketing that was tested and measured to the point where I could almost guarantee that for every dollar spent in advertising I would get $3.50 back.

Instead of pulling back, I went forward in leaps and bounds. A couple of things happened.

I doubled my turnover. Yes, that’s right. In the worst economic climate I doubled my business.

I didn’t take any massive risks here, I was testing everything and making sure that I was getting a return on my money fast.

The next thing that happened is that we’ve grown our list size by 250%… and in our business, the real money is in the list.

If you’re in business and you want to take advantage of the emerging mega-trends, you really need to start thinking about growing your business and your cash flow so you can start to build capital and invest in the real estate and stock markets.

That’s all for now.

Let’s see how my predictions pan out in the next 3-6 months. We’ll know by then if I’m right or wrong.

Either way, I’m not waiting around to see what happens.

I suggest you don’t either, jump on board and make things happen.

No time to be a spectator here, spectators don’t make the real money – it’s the guys in the game who make the big bucks.

Talk soon.

Firstly, I believe what I’m going to reveal here is primarily why the Australian economy did not go into an official recession.

…and why this research could be the prelude to great prosperity and wealth for Australians in the next 10 years.

I can really sum it up with one word, however I know you’re going to want more.

I’ll tell you the word anyway… “CHINA”

For many there are no surprises there, however for a lot of everyday investors, I think they truly do not understand the potential and the opportunity for significant wealth.

There is a major shift in economic power from the west to the east.

The main reason for this is credit creation and investment. Whilst credit in the US and Europe is literally drying up, credit in China has been flowing and even accelerating.

Consider these mind-boggling stats for the first half of 2009…

In China, new lending by banks grew 201% to more than $1 trillion.

Capital investing by the government is also up by 34.4%.

The key difference here with the US is when the Chinese government pumps money into the banks, the banks pump that straight into the economy.

In China, the banks are owned by governments and if banks don’t loan out the money they get fired.

In the US, the banks use the money to buy smaller banks and try to remedy their mistakes or to pay out big bonuses.

China figured out early in the piece that its stimulus package had to be focussed on domestic infrastructure. So they went berserk on developing highways, railroads, oil and gas distribution…

Right now there are 275,000 construction programs underway in China.

So far, the Chinese have spent $586 billion on stimulating their economy. They key here is that they paid it all in CASH, not debt.

Unlike the US, the Chinese don’t have to borrow money, don’t have to rack up budget deficits, they have their money in cold hard cash.

Their reserve holdings are still rising and has just hit $2.13 trillion… up $178 billion in the second quarter. That’s evidence that the country is still profitable and going strong.

If you’re an armchair economic expert, you might be surprised at these figures because you’re thinking, “Isn’t China a net-export country and the manufacturing powerhouse for US consumer goods?”

Yes, you’d be right in thinking that… but the Chinese realised this early in this down-turn and that’s why they have focussed on their own domestic market.

They realised they could not rely on exports forever and the secret to their prosperity is domestic consumption. This is not a new phenomenon for them, in a lot of ways they saw the writing on the wall and have been actively promoting domestic consumption for years.

Here’s another mind-numbing statistic…

Through June of this year, auto car sales increased a record 17.7% to 6.1 million vehicles.

China is now the largest car manufacturer, and this is another mega-trend with long-term growth potential.

Here’s why…

There is only 1 car per every 100 people in China. Compare that to the US where there is 7.6 cars per every 100. Incredible upside.

Here’s another reason that is going to push domestic growth through the roof…

Beijing recently enacted consumer loan reforms that allow credit card companies (local and foreign) to expand into financing durable goods purchases such as appliances and electronic goods.

You probably weren’t aware of this, but until recently the Chinese could not buy an air conditioner, a stereo, or a flat screen TV on credit – now they can!

All of the above has incredible upside if you’re an Australian.

As the domestic Chinese market matures over the next 10 years and Australia being a resource of raw materials, we will be swept along for the ride of our lives.

You can sit on the sidelines and be completely ignorant to what’s going on – or you can participate by expanding your awareness and keeping in touch with this mega-trend that has already begun and hunt for profit opportunities.

Here’s how…

What you have to do is think of all of the resources that the Chinese need, which companies in Australia supply them and simply and astutely invest in them for the long term. This has already happened with the likes of Rio Tinto and BHP. There are others of course.

I’m not just talking about the stock market… Property investors will make a fortune.

Also, you might consider where these companies are situated in regional centres within Australia and also invest in the real estate that surrounds those areas, where you’ll get both positive cash flow and capital growth.

Here’s another phenomenon that is currently happening that is really underpinning what the Chinese are up to.

The Chinese have a large war-chest of American dollars. With the demise of the US currency of late, that has given the Chinese a once in a lifetime opportunity to use the current financial crisis and the weakness in the dollar to conquer the world on the cheap.

They’re doing this primarily by the acquisition of primary resources. This does two things for them. It gives them control over global commodities and it gives them a built-in hedge against a dollar-decline.

Here’s what’s really important – when the US dollar declines, the price of tangible assets… oil, copper, gold, iron, nickel all rise. Are there any companies in Australia that you know of that supply these raw materials?

Yes, we truly live in a lucky country and it’s about to get a lot luckier.

I sometimes find it amusing when I meet people and they say they’re either a property investor or a stock market investor… Personally myself, I follow the money and don’t have a bias as long as I can control my investments and jump on board some significant mega-trends.

I’m a long-term investor with a 7-10 year horizon. Right now is a perfect time to build a substantial capital base that will set you and your family up for life.

Will you do it?

Signed with Success,

Jon Giaan
Knowledge Source

P.S. Yes, it would be easier if you could just invest in Chinese companies – but you can’t. So you have to do some homework and figure out who will profit from this mega-trend in Australia and invest in those companies specifically.

P.P.S. You can also invest through specific managed funds with a heavy Chinese focus. I’m working at the moment with one group who is bringing a new concept together that is heavily focussed on Chinese growth opportunities. More about that at the end of the year.

Gordon Gecko was the fictitious character in a movie called, Wall Street.

When he said that, initially it stirred my stomach up. At the time, I was struggling myself and couldn’t really relate to high-flying stock market gurus fleecing companies and destroying jobs in the process.

So, is greed good or bad?

Here’s another take on it.

You may have heard this recently in the media… It comes from the great man, Warren Buffet.

He said…

“When there’s a lot of greed, it’s time to be fearful and when there’s a lot of fear, it’s time to be greedy.”

…So is Mr. Buffet saying that greed is good? ‘

I suppose it just comes down to a perspective and more importantly the… TIMING.

So right now I think it’s time to be greedy.

On the weekend, I went to 3 auctions. All of them passed in without anyone lifting a finger to put in an offer.

For the uninitiated, that would seem like a desperate situation and perhaps an indication that you should do nothing right now in the way of investing.

My thoughts are that right now would be an excellent time to be greedy and pick up property for a song!

Anyone who is selling in this marketplace and is willing to consider offers is for whatever reason a “willing vendor”.

What that means is that you can bring forward future profits right now.

I know what you’re probably thinking, “what if the property market collapses?”

Some experts are saying that they may see a 30% fall in property prices over the next 2 years.

I sincerely hope you’re not taking advice from those experts. Maybe they’re the same guys who said that once the stock market breaks over 6,000 points it’s going to roar ahead like thunder.

Wrong then… and they’re wrong now.

But lets get this straight…

Property prices are not going to boom just yet.

Here’s what’s happening on the ground…

Rentals are getting more expensive every single moment someone comes out of a lease.

Here’s a case in point… On the weekend I drove past another property that I thought was up for sale, simply because there was a large group of people standing outside it.

I looked for a board but couldn’t see one because it was obscured by the crowd. I parked the car and thought I’d at least see what was going on.

As I walked closer to the property, I didn’t see an auction sign or a For Sale sign.. Guess what I saw?

… A sign that said, “For Lease”.

I was blown away.

Probably 15-20 couples all lined up in an orderly manner.

I have to say that I have never seen that before.

So here’s what I think will happen…

Rents will still climb and interest rates will come back.

Meaning that at some point, people are going to start to realise that it’s cheaper or affordable to buy instead of rent.

That’s when we’ll see another property upswing.

Pretty simple, I know. But it’s basic economics really.

Here’s another reason why property wont crash.

If the typical home owner’s house goes from $700,000 to $500,000, it’s really meaningless until they have to sell.

So unlike the stock market, there’s none of this short selling or panic-selling stuff that goes on in the property market.

Of course, this all depends on leverage and borrowings. The other thing to note a lot of the stock on the market right now that doesn’t meet the vendor’s price will simply be taken off the market and sold at a later date.

So what about shares and stocks?

Ok, I wouldn’t be buying equities right now unless I had a time frame of at least 3-5 years.

That doesn’t mean I’m not interested in the stock market. I know of dozens of “traders” (not buy, hold and pray investors) who are making an absolute killing trading this market rather than investing in it.

(There is a difference).

So what am I up to with the stock market?

I’m nibbling at it…

What does that mean?

30% of my available cash has gone into the market in the last 30 days.

Interestingly (and this is good if you’re a parent), I’ve bought my 3 sons each shares in BHP. They’re all around the 10 – 12 age group, so this is a perfect period not only to teach your children about money, but also an opportunity to do something proactive and invest in their future.

Your children have the greatest resource available today… And that is… TIME.

So what will I do if the market edges down a bit more?

Have another nibble at some quality blue-chip shares.

What if it goes up? Do the same…

At all times I’ll be leaving a little bit of cash on the side just for future opportunities.

One more thing.

I’m not buying shares with any margin or borrowings. It would be really dumb to do that in this market.

Anyway, that’s all for now.

Signed with Success,

Jon Giaan
Knowledge Source

P.S. The education that is available today through simply following the current financial climate is invaluable, regardless of whether you’re a beginner or professional.

The stock market has come roaring back, hasn’t it?

So you’re wondering, is now a good time to get back into the market?

I don’t know. What does your stock broker think?

I bet you that he’s happy that they can actually make a buck or two. You’ve probably received more phone calls this week from them than you have in the last 2 months.

You want to know my view?

STOP! Don’t do it!

Renegade Cash Flow Trader Defies the Downward Trend and
Picks-Off an Impressive $320,000 Profit in the Last 12 Months.
http://knowledgesource.com.au/cashflow-traders

It’s what we call a Bear Market Rally. I don’t mean to be skeptical, however it’s usually designed to lull the unsuspecting, bruised, battered and desperate investor back in.

Most investors are cut at the moment. They’ve seen their portfolios halve at record pace and they want revenge.

Anyway, I’m not buying into it for one minute.

Why?

It’s not an investors market.

What I mean by that is now is not the time where you simply look to buy and hold for the long term. I think there will be cheaper days just around the corner.

How do I know so much? I’m not exactly a stock market guru.

Sure, I’ll admit to that. But I use the “Henry Ford Method”.

What’s that?

Quickly, the Henry Ford Method is:

Don’t BE the expert, it takes too long. It’s far easier and faster to surround yourself with experts.

…and that’s what I do.

Renegade Cash Flow Trader Defies the Downward Trend and
Picks-Off an Impressive $320,000 Profit in the Last 12 Months.
http://knowledgesource.com.au/cashflow-traders

Do you want the insider’s take on this? Here it is…

The stock market at the moment is good for one thing, and that is for those who understand how to trade it using “un-borrowed leverage”.

What’s un-borrowed leverage?

Well, that’s a simple tactic that smart traders use to magnify their gains without having to borrow money or use a thing called margin-loans.

Lots of investor got in to some serious bother using margin loans to leverage their portfolios in the last 12-18 months.

The fact is, you don’t need it. There are other smarter ways of doing it.

The problem is, not many people actually know about it – and the ones that do are skeptical and afraid.

Do you know how to bust through skepticism and fear?

Education. Pure and simple.

I’m going to dedicate most of next week to bolster your education and bring on several of my experts to give you a first-class knowledge on exactly how to take advantage of the current stock market.

Until then…

Exactly when will this financial madness settle down and everything can get back to normal?

To give you the answer to that, I think it’s best we go back to project forward.

The past can be a great predictor of the future.

OK, let’s get into it…

Consider that this crisis is the worst since the 1930′s depression. The good news is that we’re not going to go into a 30′s style depression.

Here’s why…

Back in the 30′s, the whole banking and credit system collapsed. Thousands of banks around the globe went into liquidation. There was no safety net, no bail-out plan, no soft landings – it literally was an almighty collapse.

The economy came to a halt, people literally stopped spending, unemployment hit 25% (today it’s 6%) and it took 12 long years to recover the losses.

Incidentally it was World War 2 that turned things around, when governments started to spend big again.

So the good news is, there wont be a depression.

Let’s look at recoveries of recent years… Maybe this can give us a bit of an idea of when our markets will get back to normal.

Here are some stats from the All Ordinaries Index during and after a bear market.

Note that I’ve also included the percentage returns once the market bottomed… Very interesting.

APRIL 1981 – 15 month downturn, dropping 38%
** (Following 12 months after downturn, a 44% return)

SEPT 1987 – 5 month downturn, dropping 47%
** (Following 12 months after downturn, a 22% return)

SEPT 1989 – 16 month downturn, dropping 32%
** (Next 12 months, a 34% return)

FEB 1994 – 12 month bear market, dropping 18%
** (Next 12 months, a 21% return)

APRIL 1998 – 7 month downturn, dropping 11%
** (Next 12 months, an 11% return)

MARCH 2002 – 12 month downturn, dropping 20%
** (Next 12 months, 27% return)

Interesting stats aren’t they?

If you were to average them out, you get an average downturn of 11 months and a 28% drop… and a rebound in the following 12 months of 27%.

OK, so what does this really tell us?

Here’s what we know already… The downturn (now some will argue with this) started in November 2007. Our equity markets have lost 47% in 12 months.

Considering that this is the worst since the depression, I think it’s fair to say that we’re still in a bear market and unlikely to have begun a recovery.

The longest downturn prior to this was the ’89 bear market which lasted 16 months. Add to that, the ’87 crash which was a sharper percentage drop and a shorter downturn period of just 5 months, we’re probably unlikely to see a full blown recovery for at least another 8-12 months.

What that means is if you invest now in equities, you could have your money sitting around doing nothing for at least 8-12 months minimum.

The good news though, is when the market does bottom and turn around, the next 12 months should be spectacular.

Whilst a lot of experts are calling this the buying opportunity of the century, I don’t think you should be going in right now, I’d wait a little bit more and reassess the market opportunities around March 2009.

Sure, you can have a nibble at it and pick up the likes of BHP, QBE, WBC, WOW… but I’d only be spending about 20% of my available capital now and more importantly, my investment horizon would be at least 3-5 years.

Of course, if you’re a trader and you don’t care about buy and hold, then this market has been incredibly profitable. I know of several traders who are making thousands of dollars PER DAY using the volatility to their advantage in this climate.

So there you have it… Still a while to go yet for a major turn around.

This doesn’t mean you should sit idle and wait, there are countless strategies that you can use right now to make serious money with the stock market.

I hope this helps.

Signed with Success,

Jon Giaan
Knowledge Source

It’ll be remembered and etched into history.

Black Friday.

Sounds so dramatic doesn’t it? (Dark and ugly)

The emotions of fear and uncertainty that many are feeling today will lay the foundations of the results they get tomorrow.

It’s already hard enough to create wealth.

So let’s turn black Friday on its head and call it…

The dawn of a new and exciting financial opportunity.

It’s important you embrace this now. Because what you’re feeling and thinking will really make all the difference.

Here’s a story…

Imagine a tree, let’s suppose that this tree represents a tree of life. On this tree there are fruits, in life the fruits are called our results.

So we look at our fruits (our results) and we don’t like them. There aren’t enough of them, they’re too small or they don’t taste good.

So what do we tend to do?

Most of us will put even more attention on the fruits (our results), but what is it that actually creates those particular fruits.

It’s the seeds and the roots that create those fruits. It’s what’s under the ground that creates what’s above the ground. It’s what is invisible that creates what is invisible.

So what does that mean?

It means that if you want to change the fruits, you’ll first have to change the roots. If you want to change the visible, you must first change the invisible.

That was an incredible lesson for me all those years ago. It led me on an incredible discovery and philosophy that is deeply embedded in my wealth-blueprint.

And that is this… That your outer-world is a mere-reflection of your inner-state.

Mmmmm…. Something to think about.

Signed with Success,

Jon Giaan
Knowledge Source

P.S. We’ll be discussing more on how to create incredible outer-success with some specific inner-secrets. It’s never been more important to believe in yourself than it is right now.

He just forked out $3.7 billion to buy a big chunk of G.E.

Earlier in the week, he fronted up a huge $5 billion to be the knight in shining armour for the boys at Goldman Sacks.

So what does “the Oracle of Omaha” know? …and does this herald the bottom of the market …as well as guaranteeing that the bail-out plan will get passed tonight?

Well, let’s have a closer look at this…

I don’t know what the deal with G.E. was yet, but let’s analyse the Goldman Sacks deal and see whether you can do something similar?

First, you can’t buy the kind of stock that Buffet got in the market anywhere in the world. Buffet bought $5 billion of perpetual preferred stock with a 10% coupon.

These shares are senior to Goldman’s other preferred stock. Which means that no other shareholder will receive any dividends until Buffet is paid his 10% in full each year.

That’s not all.

Buffet’s deal also included a long-term call option that entitled him to buy $5 billion in regular stock at $115 per share. Goldman is trading at about $130 now.

He’s bought seriously wholesale in a market that has been smashed. So in 3 years time or 5 years time, if Goldman is trading at $200, Buffet can go in there and buy $115, making an absolute killing.

I don’t expect you to be an expert when it comes to Options, so I’ll give it to you in layman’s terms.

The value of an option to buy stock in the future at a fixes price is based almost entirely on the duration of the option. The further out you go in time, the more valuable they become. Right now, the only similar options you can buy on Goldman are $120 calls that expire in January 2011 – about two and a half years from now. These options would cost you $42 to buy today.

Talking to some of my option-trading mates, they estimated the options Buffet received are worth about $78 each.

So in other words, Buffet received a security worth $3.2 billion in exchange for his $5 billion investment. His net exposure of $1.8 billion.

Quick calculation on his cash flow on his $5 billion investment and 10% equals $500 million a year income. That’s a 27% return on his $1.8 billion exposure. (The rest is protected by his options).

So my friends, the long and short of it is that you and I will never get access to a deal like this in a million years.

So don’t go out tomorrow and buy investment banks like Macqaurie and Babcock and Brown. Unless of course you want to hold them for 3-5 years.

The lesson here is that Buffet was cashed up and he was predicting that the banks were going to come crashing down for at least 3 years… Patiently waiting on the sidelines to strike when the time was right.

So whilst you can’t be Buffet, you should be totally immersed and watching what is going on right now in the markets, regardless of whether you’ve got any money or not.

This will prove to the greatest buying opportunity in your lifetime.

…But hold you horses, be patient grasshopper. You may be a little bit early and regret it in the short term.

Take a leaf out of Buffet’s book and wait. Your chance will come very soon.

Cheers,
Jon

P.S. Here’s something interesting most people don’t know… Buffet gave his good ol’ mate, Billy-boy Gates $37 billion for his charity/foundation. So what do you thing Bill did with a large chunk of cash like that..?

Well, he’s no dummy. He looked around for a good place to invest the $37 billion. Do you know what he invested it in..?

He bought shares in… Berkshire Hathaway. Hmmmm… Isn’t that interesting?

Where do you think Buffet has come up with all the cash to go on a spending spree?

Do you have an opinion as to whether the pollies in the White House should give Wall St. a free lunch?

Well, I want to give you my perspective on the $700 Billion Plan in this email… But first, it seems like everybody has got an opinion and also a solution.

I’d hate to say this, but this guy is Australian (Well, maybe in this case we can give him back to the Kiwi’s). I’m talking about Russell “Rusty” Crowe.

Damn good actor, horrible mathematician.

Last night on the Jay Leno show, I swear Russell, if he was running for president and the election was held last night, he would have won by a country mile.

Russell said he’s been following the financial crisis intently and has got the perfect solution that would cost the American Government only $300 Million, meaning that they would be left with a bit of change from their $700 Billion bail-out plan.

Here’s what Russell suggested…

Why not give everyone in the States $1,000,000. Everyone would have lots of money to spend… Problem solved.

Right about then, the audience on Jay’s show gave him a huge round of applause, approving his simple but effective bailout plan.

Why wouldn’t you love the guy? He’s made you an instant millionaire.

That’s the financial crisis that I’m sure we’re all looking forward to. Why is it that Aussies always miss out?

Jay, being a bit of a smart-ass, and probably not all that good at arithmetic anyway, asked him about the tax on that money. Both agreed that it was a good plan.

Ummm… Rusty, my arithmetic says that 300 Million times $1 Million is actually $300,000,000,000 (3 hundred trillion dollars). I’ve probably left out a few zeros, because even I don’t know what that looks like.

Considering that the War on Terror has cost just $3 Trillion, Russell’s plan is a little bit crazy.

Russell’s $300 Million bail-out plan, saving the Western World from financial destruction really means that the U.S. citizen gets a whopping $1 (at least they’re not in debt).

Not to worry though, I’m sure Russell wont be short of a dollar, he was on the show promoting his brand-new movie, can’t remember the name, but I’m sure it’s a damn-good one.

Anyway, I thought you’d be amused, I certainly was when I saw it.

So what’s up with the markets?

First up, I think most Australians foolishly believe that for whatever reason that it isn’t going to impact Australia as much as it’s currently impacting Europe and America.

Let me say this… Even the Yankees haven’t felt the full impact of this financial tsunami. Most believe that it’s isolated to a couple of over-paid, money-hungry investment banking firms that simply are feeling the pinch.

Of course, if you’ve got any money tied up in shares, you know that it isn’t just the fat cats who are losing big-time.

The crash, as evident as it was yesterday, isn’t coming – it’s already here.

Despite a jump on Wall St. last night and a 180-point gain on our markets today.

So what about the $700 Billion bail-out plan?

Here’s the problem with it… It seems to me that there’s a war at the moment and that is between Wall St. and Main St.

Wall St. knows all too well the impact of zero liquidity and are desperate for the government to bail them out.

Main St. which is folks like you and me can’t think of anything more disgusting than bailing out these greedy investment bankers who lived in the lap of luxury for the last 7 years… Private jets… First class accommodation… Huge fat bonuses… etc, etc, etc.

Unfortunately, what Main St. doesn’t really comprehend is that without liquidity in the market, and a sense of calm between the banks, then the impact will be felt on the street, hitting the folks that can least afford it.

I’m not going to go in to details of the bail-out plan… It’s far too complex and confusing at best.

From your point of view, it isn’t that important. But there is one thing that’s important for you to know… And this has been the big area of contention and hence the battle between Wall St. and Main St.

What should the U.S. Government pay for these “toxic assets?”

If they pay too little, then we’re going to have a disaster on our hands because the money will be completely ineffectual from a bank and lending point of view, sending banks to the wall and not offering a solution in liquidity – which is the real crisis at the moment.

Pay too much, and they could be indebting the U.S. tax payers for decades to come.

The problem is, no one really knows how to value these toxic assets.

Last night’s jump on Wall St was consolidated when it was agreed by the “big-wigs” that the toxic assets should be valued not on current market value (there is no value – because there’s no market), but on realised value 3 years down the track.

I hate to say this, and it isn’t my money anyway, but it’s probably the best possible solution for the markets at the moment.

Here’s what’s interesting though…

When we had the last similar crisis which lead to a depression (I wasn’t around, and probably you weren’t either), the way out, back in the 30′s was for the government to start spending to get the economy back up and running.

Back then of course, they didn’t act as swiftly as congress is attempting to do now, they waited until they went into a depression before they figured out that the only way out was to spend.

So what about Australia? What’s our exposure to “toxic assets?”

Well, let me give you some figures…

In Australia, the percentage of our securitised mortages that fell into the sub-prime category was one percent of all mortgages… In the States, it was a huge 13%.

Now that’s a big difference. Considering as well that the U.S. market is 12 times the size of ours.

We were at the early stages of the “sub-prime money-lending” when the poo hit the fan here in Australia, with the likes of MFS and Allco.

Our low-doc market, which some Australians mistook as sub-prime money was 8% of total mortgages.

Now the low-doc loans, if you’ve ever been a borrower, started back in the early 2000′s and you had to have minimum 25% deposits.

In 2007, the deposit for some low-doc lenders was just 10%. That by the way was RAMS. No coincidence that when the sub-prime hit hard, they were the first to go in Australia.

Anyway, low-doc loans are not sub-prime loans. With 25% deposits, most lenders are covered.

So we’re unlikely to have the same catastrophe that the States are experiencing at the moment.

Here’s where it hits us…

The U.S. are probably in a recession and it will be interesting this Christmas to see their retail figures compared to last year… Let me tell you that they’re not going to be great.

So if the mother of all consumers stops spending, and retailers stop stocking up, then it will effect manufacturers all over the world.

That’s where we come in as a commodity producing nation, riding the boom all the way up in the last 15 years. We’ll be effected by the slow-down in consumer spending in the States.

How bad?

Not sure. Depends on the Chinese and Indian markets as to whether the slow down will be a prolonged one.

Don’t worry, the news isn’t all gloom and doom… You really do live in the lucky country.

Because with the slow down, I think what you’ll see is an acceleration of interest rate cuts, maybe, just maybe, a full 2% spread over a 12-16 month period.

Now of course the current financial crisis is a lot more complex than my simplistic explanation. However, at the end of the day you have to grab on to a simple explanation that puts thing into perspective.

Anyway, I thought I’d give you an investor and business-owner’s view. I don’t want to complicate it, but let me tell you that it’s been an education in itself this week, just watching the market’s reaction to news and events.

For what it’s worth, U.S. Congress meets on Thursday (their time) and I think that they will pass a “punch-drunk” bail-out plan, calming things down and probably sending the stock market on a rally upwards.

If you’re in a position and cashed-up, my intuition tells me that whilst the rally will be strong, it’ll be short-lived and the buying season hasn’t started yet.

It reminds me early this year, when a friend of mine was jumping up and down, boasting to me that he’d bought BHP at $34.50 in February this year… It was $31 yesterday.

That’s the sort of thing I’m talking about. How cheap and how far the market will fall, no one really knows.

I’m personally looking to January/February of 2009 to see some serious consolidation before I enter into this crazy market.

At the moment, all I see is panic, irrational behavior, confusion, volatility.

Good if you’re a trader. In and out on the same day.

But if you want to build long-term wealth in the equity market then I think patience is in order.

My thoughts…