Jen’s Note, November 2008
The world is a very different place this morning as I contemplate the USA. They have finally become engaged on a large scale with the way they are governed. With what seems to be the biggest turnout of voters ever Barack Obama has been elected President of the USA.
He has control of all houses of government and one can only hope for three things; that no one tries to assassinate him, that he considers very carefully just how he will guide the USA out of the financial disaster they are in and how to extricate the USA out of unwinnable wars and bring the troops home.
Not only do the American people have high hopes for his success, the whole world needs him to succeed so that once again we have a break out of peace and the financial world settles to clean up the mess that it is in at present.
That said we can now see the way forward. In Australia we will have more company collapses but the belief is that we know who they will be and why. We will see a growth unfortunately in unemployment to probably around 6%, on the upside interest rates should probably fall another 2% in the next 12 months.
The share market has started to trend higher and although there will be continued volatility with some days and weeks being much better than others over the next 6 to 12 months, the trend as the old saying is your friend so it is a very good time to restructure the holdings of your portfolio to reflect the changing times.
Paying down debt is still a sound strategy and we would not recommend that anyone take on debt to buy shares at this point in the market cycle. We probably will not get the tax reductions that were proposed in the last budget as the Government has in our view foolishly offered to guarantee banks that did not need to be guaranteed as a kind of international “me too “gesture. Australian banks have always had very sound provisioning requirements as a matter of law; the Government does not need to lend them our money.
We hope that the Government does stimulate the economy by bringing forward infrastructure projects to provide employment and improve our efficiency as a nation with better rail and port facilities.
We have included 2 reports for you this month, one is the usual as at the last day of the month and the other is the date of the USA elections so you can see how just how much movement there was on this once in a lifetime occasion.
It was also close to the anniversary of when the market was at the top last year. So it is good to show you that markets do turn eventually
After a very dry October there seems to be a bit more rain about so far this November, so here is keeping fingers crossed for more. Thank you for those of you taking a keen interest in Lina the canine receptionist, she is becoming more experienced in meeting
new people on a regular basis and although she still does a spectacular deep growl, she now does understand that she is not to consider being rude to someone twice.
Her swimming skills have improved and trips to Gardiners Creek on the weekend are favourite outings. We do hope that she is not going to be a tomato thief like Tam was as we have planted a few in the hope of enjoying nice home grown toms with our salads this summer. Tam ate them all last year and we only got two out of the whole crop, she certainly was an efficient picker of toms.
Christmas is only six weeks away and we think that many folk will elect to have a more modest Christmas this year. Home made presents are often the most appreciated, if you are not a “crafty” person you might be able to offer “help vouchers”.
I am no dressmaker and was totally delighted one year when my sister gave me a voucher for a “new jacket and slacks“, and as she is a prize winning dressmaker that was a real treat. Perhaps you can offer a “clean out your linen press” voucher or similar.
Home made jams and sauces are always special, and they are not hard to make and many can be microwaved.
One aspect of this global downturn is this. It will be a break for the environment, we will drive less, waste less, be more careful with how we spend money and the best thing is we will all get to know our friends and neighbours better.
So here is hoping for lots of rain, for your veggies to thrive and that being on a budget will be more of a fun challenge than an arduous burden.
Think of the glass half full rather than half empty.
Jen, Rose and Lina the canine receptionist.