Our big signature project is..the NBN…now isn’t that scary!?! It is already a mess, will be built using imported technology and by the time they have it up and running (and I doubt it will ever been completed as planned) it will be dated! Oh we are so 21st century aren’t we

Cue Oliver Twist…”please, sir, can I have some more?”…

I think the BRW rich lists have also been shown up as being pretty inaccurate. Clearly many people that make the list either have large personal debts or the companies they own have. So when party stops and the income falls they end up bankrupt, which is actually not an easy thing to do is you have little debt and a well managed, cash flow positive business.

Taking on debt itself is not a problem, but it has to be a reasonable level of debt and the borrower needs to have a plan in place to cover the interest on the debt even if things do not quite work out as planned.

My own little rule of thumb is to be prepared for around a 30% hit across all my investments at any time and be able to deal with at least 2 years where returns are reduced by a similar amount. So far this little bit of planning has allowed me to sleep at night even during the GFC, which I quite openly admit has been more severe and longer than I thought it would be.

I’ve wondered how he made out since – I left that job in 2007. I didn’t “invest” – As it broke one of my fundamental financial rules of life – Namely if you have a mortgage free house to live in you don’t jeorpordise that financial security for noone, no way, no how! Smile.

I also know people who used debt to trade shares online. Frankly, they were gamblers – they had exactly the same personality, body language, everything, the same as a punter at the races. And when the crash happened many of them refused to believe it until it was way too late.

So I think it’s all a matter of knowing what the hell is going on, and not believing the hype. Nothing wrong with using whatever is around to spin hay into gold, as long as you understand the poisonous nature of debt.

Your point that the volatility is pretty off putting is a good one – That always served to keep me from having any interest in knowing more. But I have at least learned from this GFC that there is such a thing as a trailing stop loss. Which seems to be handy knowledge even if I never do choose to buy a single stock myself?

Looking back, one of the biggest mistakes I’ve made is not being prepared to use much debt – In relation to property anyway. But I wouldn’t recommend that right now of course – In relation to anything? The thing that will be interesting will be to see if that changes over time. As in will the world fundamentally lose its taste for debt for some time? It doesn’t really seem possible the way all our financial systems are structured??? But is just one I’m bearing in the back of my mind for now.

The Oz tax review is going to come at a very convenient time for government. For some reason I had the feeling that one of the original thoughts behind it was that with all its wealth, Oz could afford to become more caring and sharing (read socialist). But now it has the potential to have considerably more urgency behind it and bite to it.

And it will fit one of the teflon man’s numerous seamless styles very nicely – Of course he doesn’t want to do nasty things, but Mr Henry says it is necessary, so what is a poor helpless leader to do? (He has many hats does our Kev – Smile!)

Not a lot can be done about it though – We live in a democracy and the expectation that government will provide has become increasingly more entrenched in the Oz public’s mind over many years – So outcomes that support that are going to be popular. Even more so than in America where there still seems to be a collective self perception that they are all really successful capitalists who just mightn’t have got their turn yet? While Aussies seem to have collectively decided that the truly clever are those who’ve worked out how to spiv their livlihood from the government gravy train.

While one waits for outcomes of Ken Henry’s pontificating and Rudd’s subsequent poking moist pinkies up to see which way the wind blows, it’s just a matter of committing to nothing much new. Then subsequently reorganising as seems best.

The question is where will the Rudd Government for example try and claw money back from us? I would guess Superannuation is a major target? But of course if they have a go at Super you can be sure that the politicians pension scheme will not be touched.

Dan – I think there is a level of corruption in most things. There is always going to be inside trading and stock manipulation and someone knowing a little more then others and take advantage of it. But there is also the same type of people in property as in the share market. There are the dodgy agents/brokers and property seminar spruikers who promise amazing returns. I think we all have to be vigilant and try our best to avoid such things. But I think in terms of level of control over an investment, property, defiantly has to be up near the top of the list. Owning shares your fate and that of the company is ultimately in the hands of the directors. Where property, it is all yours 100% and you can call the shots. It also moves at a slower pace which gives you time to reposition your self or a chance to think things through a little longer. Where the share market can wipe you out in a day if you’re not careful.

In younger days I was in the know of who was who and what was what in greyhound racing, and I can tell you that if you knew the right trainer, you could find out after a few beers which dog was doped and which wasn’t. It got a bit out of hand when a dog would win 20 races in a row, sometimes by 40 lengths. The poor punters at the TAB didn’t have a hope. I think stocks might be similar in many respects, especially after reading about the Madoff story.

Again, as Greg has said in the past, lots of people don’t buy it primarily as an investment. But for those who do, we SHOULD have some VERY clearcut ideas on just what made that specific property a buy while all the others we considered were not.

Its at times like these, a bloke like me who does have serious skin in the game (in terms of the $ values he thinks in anyway), has to decide to just what degree his ability to pick an investment property might protect him against any potential falls. Especially if he is prepared to put a bit of cash and labour behind supporting his punt – If necessary – I’m not easily seperated from either my cash or my labour – Smile!

While that may well sound arrogant, I do think I’ve got some idea of what I’m good at and what I’m not good at. I go all brain numb at the prospect of picking stocks??? – Not my thing! No idea!! Dumb As!!! Could I learn from reading and the internet? Maybe?? But it isn’t a real substitute for having “owned” one’s first block of dirt at 8 and striding over it with a sense that it is very important this high grass is cut down and I am responsible for things like this and having grown up on building sites chewing on asbestos shavings and sitting around filling in time while waiting to give a hand with cramping up the floor boards and just generally soaking up a daddy’s property musings maybe? – Plus noting his mistakes – And later one’s own.

Funny stuff property – Might be a good idea if I hedged out of it – Smile!

As for Rudd gallivanting with his international counterparts – I don’t think they really know what to make of him. I see the German interpreters defiantly had a hard time interpreting his Ruddish.

But as I’ve also indicated elsewhere, if I HAD to make a choice between some gold and a house at this time, with the longer term in mind, I’d go for the house – Again, because as Greg says, it returns rent. And one can put that rent into some bullion (10% ?) and some cash (15% ?) and some Oz blue chips (45% ?) and some more speculative Oz stocks (15% ?) and some BRIC stock (15% ?) – Maybe?

At even $9K pa going in from the after tax rent on a pretty modest house (more if it’s held in the name of a low income earning spouse or a family trust or a superannuation fund) and with a little bit of growth(?), that could potentially build up into a pretty useful nestegg over 10 or 15 or 20 years. Plus whatever the house may be worth then?

Re photo shoots: I’ve been a little bit curious as to who exactly the nuggety middle aged ginger haired lady is who is often seen gazing adoringly up into Barrack Obama’s eyes from a person or two away from centre of his shoots? (While Bernanke seems to be battling the temptation to wipe the perspiration off his pate and Giethner seems torn between deciding on whether he would best serve the nation by focussing on not blinking or refraining from relieving that irritating itch in his nostril.) Is she really one of the US policy movers and shakers??? Or is she just a devious Democrat PR plant put there regularly to reinforce the perception of matronly American voters that Mr BO remains deserving of their adulation too? (Smile.)

Greg, some days I wonder if KEV understands much of what he is saying? It certainly is a real big challenge for us lesser mortals! (Triple Smile!!!)

I am not anti-gold but like I have said a few times I am just not a fan of gold at over $900 USD an ounce especially when gold miners get it out of the ground at between $400-600 USD an ounce. I feel there are a lot of people with vested interests in the shiny metal talking it up a lot, and this raises a question about their “independence” in my view.

Ned – don’t you just love those staged photo opportunities at the gathering of world leaders? Personally I like the APEC meetings because of the loud shirts that are worn.

As for Kev I am sure he is a legend in his own little world. I do wonder what the other world leaders think of him though…do they understand much of what he says?