I could tell you a few stories about what this market is doing. But does it matter?
So we’re in the middle of the Knowledge Source Power Challenge – track back and find them all here. Do it. It’s the quickest thing you can do to set yourself up for a full-power year.
But today, let me ask you a question. How do empowered investors meet the current market?
I mean, I could tell you some stories.
Like, last year APRA continued to clamp down on credit, leaning into a cyclical unwinding that was already taking place in Sydney and Melbourne. This left over-indebted households scrambling for finance, investors shut out of the market, and with a glut of high-rise stock driving vacancies up and rents down, prices found themselves without support. Prices are down about 7% but this is only the beginning. Hold on to your hat / arse.
What do you think of that story?
Or I could tell you a different story.
I could tell you about an Australian economy that continues to perform well. With unemployment holding around 5%, the labour market remains very tight. Structural changes in the labour market, particularly high levels of immigration, have eroded workers’ bargaining power and have kept wages growth lower than what you would normally expect. However the first signs of stronger wages growth have emerged, and with the prices of consumables continuing to fall, households are feeling wealthier.
At the same time, high levels of immigration have meant that our biggest cities remain chronically undersupplied, and demand remains hot. Prices are coming off their peak, but the market had got ahead of itself and a consolidation was always inevitable. The (hopefully) temporary restrictions imposed by APRA should also wash through the system relatively quickly. Once these factors have run their course, we will see that the fundamentals of the market are solid, and growth should resume in the second half of the year.
What do you think? Am I telling a good story?
Now, you’ll hear a lot of people out there say that investors should ignore all the fear and negative hype. They should keep their mind’s eye set on story two, and keep their mood bright and buoyant, a sparkle in their eye, a swing in their swagger.
But to the empowered investor, it just shouldn’t matter.
The empowered investor, or the empowered individual, is not influenced by stories one way or the other.
Content and self-sufficient in themselves, they are able to take the posture of a disinterested observer – someone watching things play out, disentangled from the drama.
The empowered investor needs to know the balance of risks and they need to have contingencies built into their strategies, but they’re not getting buffeted about by whatever the market appears to be doing.
The empowered investor should have enough faith in their inner resources, and enough faith in their strategies that they can sit back and watch it all play out, the good and the bad, without getting caught up in the drama.
They can hold themselves in their power.
This is something to aspire to as an investor, and it’s something to aspire to in life.
So this year, let go of the stories. Give time to your inner resources. Hold yourself in your power instead.