If the bears are right
If the bears are right, an Australian property bubble, a recession for retailers and dramatically slowing Chinese growth rates towards the end of the year, combined with record high asset prices — especially assets that produce no income such as art and two-digit licence plates — are a recipe for a meltdown.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Partha
:
Roger what is your view of on the $1 million median price in Melbourne. How near or far are we from a serious correction?
Roger Montgomery
:
I’m not certain of timing but I am sure that the median price is of itself not a catalyst Partha.
andrew ronan
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It’s very scarey, and the more one investigates the current situation in the financial and investment world the deeper one keeps digging to bury ones cash.
Roger Montgomery
:
yes, it seems more money is chasing fewer ideas, pushing valuations to levels in danger of sharp and painful reversals.
Cameron Hawkins
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I work with a developer who is currently trying to offload 50 or so apartments in one line at a 30% discount in Fortitude Valley, Qld – a shame for the buyers of the other 100 units in the complex!
Roger Montgomery
:
thanks for sharing Cameron.
Chris
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“You have to wonder whether the trickle of sophisticated money towards hedge funds, alternative funds and long/ short funds turns into a tidal wave.”
But Roger, they can’t ALL be right at the same time unless they are all invested in the same thing and heading the same way, so putting money into them is no sure fire guarantee, even if things DO come to pass.
There are two sides in any trade – a buyer and a seller – and only one person can be right. It’s a zero sum game.
Roger Montgomery
:
Chris, they can both be right if they have different time frames in mind.
Sam
:
Hi Roger
But what about the huge amount of infrastructure building occurring in NSW at the moment and the large amount that is in the pipeline over the next few years ie new roads, light rail, tunnels, airport , schools and hospitals (as well as numerous upgrades). I see this as having a very positive impact on NSW at least (and hopefully the broader economy) and will support the construction industry and local economy as the retail construction booms winds down. Do you think the bears are underestimating its positive impact or am I being overly positive?
Sam
Roger Montgomery
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big infrastucture employs far fewer people than residential construction.
Paul Audcent
:
Dear Rodger I saw your viseo via the ASX site and the fact that you went to an auction to buy art! Luckily the eventual price exceeded what you were willing to pay and you withdrew to your evident relief. But looking from another viewpoint you and others in your bidding helped to elevate the eventual price! But I did admire your openess and honesty, I think the funds we invested in are in good hands.
Roger Montgomery
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I was once wisely advised to only ever buy art at auction (not from a gallery). only then will you pay the market price.
Chris Pyad
:
Hi Roger
I would love to invest in one of your funds that include a short strategy however 50k is simply too much of an entry barrier. Have you considered lowering this to 25k to match some of your other funds?
Roger Montgomery
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Not at this stage Chris. Nevertheless we’d be delighted to work for you when you are able.
wade.number
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Is this a new case for commodities and crypto currency?
Andre
:
Roger, on the Ross Greenwood show a gentleman (his name escapes me) from HSBC was interviewed last week and the view of HSBC in regards to the Australian economy moving forward was in stark contrast to the comments you have provided. In fact, it couldn’t be more different. He stated that residential house prices would grow at up to 10% in 2018 and we would see an uplift in commodity prices from a renewed Chinese economy. Furthermore, Gerry Harvey was also on Mr Greenwood’s show confirming the strong growth his stores are enjoying. Whilst personally I agree with your sentiments it will be interesting to see what will happen in the future
Roger Montgomery
:
So one of the larger lenders to property investors, particularly Chinese investors, and developers says property prices are going up? Don’t ask a barber whether you need a haircut!