The market has fallen by a staggering 5.2% and the All Ords sits at 3,778 points this morning.
…So far, a 15% drop in 7 days… 25% since April!
But – as bad as the news is, we have seen it all before, right?
What's currently going on only happened a couple of years ago.
Same scenario, the great recession of 2009 is back.
So what is likely to happen going forward? Look, nobody really knows… But here's a few certainties.
We're going to see the RBA seriously look at interest rates and act when they meet again to maybe drop rates by 0.5%.
In the next 6-12 months, my prediction is that the rates will fall to our 50-year low and hit 3% (that happened in the early part of 2009)… The cash rate at the moment is 4.75%.
There will be a flight to cash, gold, silver and despite the carnage, commodities.
There will also be a flight back to real estate.
I wouldn't be entering into any new deals at the moment, I would be conserving cash and waiting for things to play out over the next 3-6 months.
Forget about fixed-rate loans. Forget about picking the bottom of the market.
…But I know from first-hand, traders have made a small fortune in the last couple of trading sessions.
The great uncertainty at the moment will have everybody worried, especially real estate vendors trying to sell their properties right now.
You'll see a lot of crazy offers being accepted, simply because nobody is sure what might happen next. But that will be a mistake from their point of view, because I think interest rate cuts and the uncertainty of the equity markets will see real estate prices start to improve.
However, the top end of the market will be smashed… If you want to buy a cheap $10 million property – now is the time to sharpen the axe. You might pick it up for $5 or $6 million.
The bottom end of the market, the one that you should be interested in should stabilise and start looking cheap in a couple of months time. Don't expect price drops, it'll be cheap because there are likely to be increases.
You know, in times like this, rather than put your head in the sand and just forget about it… Getting educated in strategies that are perfect for this uncertain climate is what it's all about.
Remember, future profits will be made today. If you sit on the sidelines and trace no action, especially with regards to your education, you'll kick yourself in 12 months time for sure.
Signed with Success,
P.S. Hey! Personally, I've got several million invested in the market. And, probably lost a couple of hundred thousand in the last day or two. So I'm not totally real estate biased… But in the last GFC, I made a killing in the real estate market. I expect to do so again.
P.P.S. Bad news, yes. But a screaming buying opportunity for certain equities. But hey, not just yet… Let's see what happens over the next couple of days.