Tuesday, 30 November 2010

Is Brisbane Cooling – Australian Property Market – November 2010 Update

The Australian Bureau of Statistics (ABS) in November published both its House Price Index and its Average Weekly Earnings Index. Let’s therefore have a look if the country which both avoided recession and seems to have a Central Bank that is interested in controlling inflation but which to me looks like it has a bubble of a property market is still as bullish. I say has an interest in controlling inflation. The RBA has been steadily raising its cash target rate over the last year and a half to 4.75%. This is in stark contrast to the Bank of England’s 0.5% who as I’ve described before has no interest in sticking to their inflation remit with inflation now above target for about 40 of the last 50 months. Regular readers of course know that I keep a close eye on Australia as it is still a potential “retirement” location for me even if £1 today only buys a poorly $1.6199.

Sunday, 28 November 2010

There’s still plenty of time for -60% – History of Severe Real S&P 500 Stock Bear Markets – November 2010 Update

I haven’t updated my History of Severe Real S&P500 Stock Bear Markets since August 2010. At that time QE Lite had only recently been announced. That strategy kept the dead US patient alive for 3 short months before the next load of stimulus, Money Printing 2 (sorry Quantitative Easing 2). Let’s put the $600 billion involved in QE2 into perspective. It’s the equivalent of $1,950 for every US man, woman and child. I was always taught “that nothing comes for free”. In parallel to this I also can’t help but think about Newton’s first law, “every action has an equal and opposite reaction”. As an Average Joe I’m just wondering what the penalty and opposite reaction will be. I guess time will tell but I still can’t help thinking it’s not going to be good.

Thursday, 25 November 2010

It must be nearly bonus time and the S&P 500 cyclically adjusted PE (PE10 or CAPE) – November 2010 Update

If you’re a bank, particularly a bailed out tax payer owned bank, who’s about to pay out £7 billion or so in bonuses (which is the equivalent of £113 for every man, woman and child in the UK), while everyone else in the country is going through austerity and slowly being made redundant, then you have a seriously hard sell on your hands if you don’t want to be lynched. Before announcing the bonuses you need to get your PR machine into gear and show the general public that you’re not immoral or greedy but instead a warm and loveable organisation who cares about the general public and wants to help society as a whole.

Sunday, 7 November 2010

A significant milestone plus the ASX 200 cyclically adjusted PE ratio – November 2010 Update

I blog for many reasons including to engage with/learn from like minded people, to hold myself to account, to ensure I stay on the mechanical investing path I have set myself and to chart my progress to retirement to name but four reasons. Charting my progress to retirement hit a significant milestone this week. Those with a keen eye who spend time on Retirement Investing Today will be familiar with a small chart on the bottom half of the left hand sidebar which asks “How close am I to optional work (retirement)?”. That chart has now hit a significant milestone passing over the 50% mark for the first time. Looking at my forecast today has me projecting retirement in less than 5 years at my current rate of progress. Sometimes it is really difficult to stay the course and continually month after month save up to 60% of your salary while friends and family have the latest television or mobile phone. However it’s days like today that make my strategy highly satisfying. Knowing I have no debt, are well on the way to financial freedom and at current rates will see “retirement” in my early 40’s has me smiling.

Saturday, 6 November 2010

Happy birthday to me and the FTSE 100 cyclically adjusted PE ratio – November 2010

Since my last post I’ve aged one more year. This has meant that in addition to spending enjoyable time with family and having one too many pieces of birthday cake I’ve also taken time out to assess the level of risk I want to hold in my low charge portfolio. As I’ve explained many times in the past (start here if you’d like to know the basics of my strategy) (http://retirementinvestingtoday.blogspot.com/2009/12/building-my-low-charge-investment.html ) my strategy is largely mechanical and centred around a basic strategic asset allocation of 28% ‘low’ risk (bonds) assets and 72% ‘high’ risk (equities) assets. This was then modified to add additional asset classes and to clarify exactly what I mean by bonds and equities. At the end of this process I ended up with a target strategic allocation of: