Is now a bad time to invest in Australia?

We talk about timing and entry points a lot with investments. Often times they can make or break returns.

There is a lot of talk at the moment about the bleak future of Australia's economy off the back of a looming property crash, rising interest rates, and the weakest employment data in a long time. Which begs the question, is it a really bad time to invest in, well, anything in Australia?

Would a property crash bring down share prices with it? Large portions of LIC portfolios are derived of financial holdings such as banks. Would a downturn in property bring shares down with it? Would a crash itself be a much more opportune time to invest? So many questions. Please vote.

 

Reading between the lines, it seems that you are looking for a reason not to invest. Instead of giving your attention to all the negative stuff in the media, I' suggest you focus on a strategy to get where you want to be, rather than come up with excuses as to why it can't be done.

 

Thanks for your input @Propertunity. I sense frustration in your post. I'm assuming as a buyer's agent you'd prefer the circumstances surrounding the Australian economy to be somewhat brighter.

 

Your own personal circumstances dictate descisions more than outside factors. People make money in all economies

 

Fundamental rule #1: Generally speaking, no-one knows for sure what is going to happen (the Governor of the reserve bank knowing a 5% interest rate hike is on the cards may have an idea, but he won't be telling you). Recent example: people saying don't buy property in Sydney in 2010, 2011, 2012, 2013, 2014, 2015 etc

Therefore, you could sit out and watch while the ASX goes gangbusters for 3 years, or you could watch it fall starting today, or tomorrow or some other unknown day. However, are you willing to take the risk of not investing now? I read some article explaining how the risk of NOT being in the market is more damaging than the risk of being in it when it falls.

Fundamental rule #1a: You can't time the market.

Conversely, I think there is a fair argument for having a bit more money in cash. All the LICs look fairly expensive (although I got BKI at 157.5 yesterday) as do all the indexes. I've been picking up FGG at $1k a shot as a forced savings plan with free brokerage for a good cause. At a macro level all the signals for an expensive US market are there, which happens to be more overheated than Australia. Global Stock Market Valuation Ratios (Shiller PE, CAPE, PB...). When the US market tanks it will probably drag the ASX down. When one goes, they will all go. But that will be your opportunity to buy more.

Property market crash will definitely hurt bank shares and ultimately most of the large cap Australian LICs and ETFs. I don't know the detailed economics of how a property crash would impact share market as a whole. Does the Stock Market Affect the Housing Market?

But don't take my advice, read about it yourself and make your own decisions.

 

Voted yes assuming it's property and shares asset class.

Investing in other asset classes instead.

 

The secret to investing is to do a little bit often.

Do not do big transactions that have big outcomes. It will require you to think about the future and wot not and you will end up doing nothing forever.

 

No, quite the contrary. We have never been busier in the buyers agency. Dealing with 30-40 groups of buyers through Open homes that we have to compete with is what is frustrating me!

 

Property? Depends on where you buy I guess. Sydney and Melb are too hot for me.. SE QLD looks like it has good prospects, Adelaide too, and if you like juggling knives Perth has opportunities too.

Shares.. I don't get why people are soo worried. Record highs?? Not yet... The thing to remember is that at some point the stock-market will keep hitting record highs. That's what growth does! The term "reversion to the mean" is more about mean growth, which is by nature a trend-line that continually increases as companies keep reinvesting their profits.

Perhaps the ASX AO growth so far is only reverting upwards to the mean?? Just depends on how you look at it.

 

I think @izzy16 is spooked by people claiming the ASX is trading at near record highs. A quick check of the index shows that is simply not true.

But @izzy16, I understand where you are coming from. I always buy shares and property at times when the market is recovering but I am convinced it is about to collapse.

 

Why is that? I don't see any markers pointing to a correction yet.

 

Every time I buy shares or property I am convinced the market is about to collapse. Oh, except for the purchase in Perth last year. I knew the Perth property market wouldn't collapse. To give some examples, Melbourne 2007, I "knew" the market was peaking (it wasn't) and Perth 2011 same, I was really sure the market was topping out but it was only the start of a recovery trend that lasted 4 years in my area.

 

This will always be a loaded question on a property forum, property investors in the main will always find opportunities. I would be more interested to find out whether investors can make money when cycles change, and how will they tweak their strategy... probably need a new thread for this one

 

I heard a ceo the other day saying that thr Aus economy as a whole is not bad at all (not fantastic but not bad either) and that it's much better than people/news articles mention.
I agree with this. Thus, I would say it's definitely a fairly good time to invest in Australia.-especially property.
Might be some wobbles in the next few years, but it should not be anything significant - part of normal course as the economy as a whole moves away from its historical dependence on things that come out of or grown in the land.

 

The thread is in 'Other Asset Classes' so I would assume it is about shares, LICs and ETFs.

Is it a bad time to buy these assets? Not really, no.

 

oops, I missed that?? What if LIC and ETF are also close to peak? which I am hearing, no expert in this area but same rules apply, never buy close to peak, at least I think so??

 

I keep reading that the ASX is trading at near record highs. This simply is not true, or I can't read a graph?

I am using XAO as the index.
Peak: On 1 November 2007, the XAO was at 6873.20, its highest value ever.
2015 high: On 3 March 2015 the XAO high was 5,962.
Current: current data (20 min delay) shows the XAO trading at 5,734.50.

Current trading is lower than 2015 and much lower than 2007... 10 years ago!

I am completely new to this so could be way out but how is that trading close to peak?

 

I am chicken little, I have cash ready for the SHARE MARKET BIG CRASH...., but what do I know this market may keep rising.

 

I know what you are saying and this viewpoint really appeals to me too. What puts me off is people waiting since 2010 in Sydney for a property crash so they could buy in. How much has the Sydney market risen since 2010? If the Sydney market crashes, will it crash back to 2010 levels? If not, how much time and money have people wasted waiting for the crash that never happened?

Of course the Australian stockmarket will crash again. Stockmarkets always do. The question is how much money are you prepared to waste waiting for a crash? I don't mean you as an individual, because you are investing in a rising market in the USA, so you are making money and not wasting money waiting. I just mean this as a general observation.

 

No disrespect intended to anyone but I think it says a bit that you will often see investors that are perhaps newer or less experienced in shares discussing record highs, waiting for market crashes and trying to time the markets. Those who have been in the game longer tend to block out the noise and invest sensibly with the long term in mind. Timing the market is extremely hard to do even for professionals let alone those who are beginning to invest in shares.

My recommendation for those starting out is just to keep it simple, have a regular investment plan and a diversified port-folio and stick to it.