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How to do well in an economic downturn and why those who invested into a financial education years ago are well positioned financially to profit from the Global Crisis.
Many uneducated investors may be asking how they can do well in a downturn.
However, 21st Century Members who have followed the fundamental financial strategies taught to them at 21st Century over the last decade would be outperforming those who have neglected a financial education.
Why?
It’s simple.
21st Century Members have been taught to use property as their cornerstone investment and the share market for cash flow generation in addition to property amongst other strategies.
Not to mention building online business and negotiating pay rises etc
Well, those who have invested in real estate over the last decade would not only have done well, but would be enjoying record low interest rates now and high rentals generating positive cash flow on their portfolio.
Plus where the share market has crashed up to 50% since its peak in November 2007, these property investors have been sitting on only a mild 3% decline in property values since the share market has crashed [except top end properties and holiday homes which have dropped more significantly.]
This isn’t to beat up on shares, but is why 21st Century teaches property as the cornerstone investment and using shares as an additional cashflow generator.
Thus those who did also use shares and insured their portfolios would also have been protected or the more sophisticated investors would have done nicely from the current volatility in the share market and the record high share renting premiums that have never been better in my investing career.
But what if the property market crashes?
There is some, such as Professor Keen of Sydney who are predicting Australian Property will crash up to 40%.
Personally professors are professors for a reason, they are good at theory but in this case that’s about it.
They don’t understand the fundamentals of property.
There is greater chance the property market will boom 20% then crash 40%.
I said this some time ago and now look what’s happening.
The property market in Australia hasn’t crashed and now the bottom end of the market is booming again.
This doesn’t mean it will remain this way, but let’s look at some facts.
1. Australian property leveled out in 2003, unlike US and UK which kept climbing to 2007. If ours had as well then yes we may have suffered a 20% decline almost as bad as UK and US but it didn’t
2. Our interest rates are at a 30 year low. If property was going to crash then why would it crash when it’s cheaper now to hold property than ever? I mean it would have crashed when interest rates were 8 plus % a year ago. Interest rates dropping to 5% doesn’t cause a property crash
3. Australian homes are too expensive. Maybe, but they have been for decades and kept going up. Plus, now Australian homes are the most affordable they have been in a decade, with homes becoming more affordable this doesn’t cause a property crash. It causes a possible property boom, as is now happening in the bottom end of the market.
4. But we are in a recession, thus property will crash and there will be increasing unemployment. Really, if that’s the case how come Australian Properties actually rose in the last two recessions, even when there was much higher unemployment then we have experienced yet? Plus in the 90/91 recession we had skyrocketing interest rates and unemployment and property still increased.
5. Banks have tightened lending. True
However, our banks are the strongest in the world and we didn’t do subprime lending like the US thus our default rates are low, plus banks are still lending even if it’s tighter.
6. Australia has an ever increasing population both now from migration at record levels and new births and we’ve had a construction industry not building enough new houses for years. Actually within 3 years we could have a massive 250,000 shortage of homes. Doesn’t sound like something that will cause houses to drop 40%.
Put it this way if Australian Property crashes 40% then it won’t be for the reasons the so called “experts” predict.
It will be from a total economic meltdown and even then property will most likely outperform.
Example
The world has been on the edge of total economic meltdown for some time now and what’s happened to the share market?
It’s crashed up to 50%
What’s happened to Australian Property in the same time?
It’s dropped 3%, except for the top end which continued to boom from 2003 to 2007 thus only retreated from the extra gains it made or areas that continued to boom since 2003/2004 have retreated some of their gains, ie Perth and some parts of Queensland in particular.
No one knows what the future holds, however the money investors have had to go somewhere. And those who invested the most into property in the past would have to be very happy now. It’s proven to be a good investment in good times and a solid performer in extremely tough times.
How much more could we ask of an investment, other than something totally guaranteed that you’ll never get, property has been the next best thing.
And combined with the knowledge of how to suck out cash from the share market right now a smart educated investor can do very nicely from the current economic meltdown.
21st Century’s Homestudy Membership is tailor made to teach you how to do all this and more and very successfully. With the right education you too can discover the fundamental strategies taught over the last decade and could be outperforming those who have neglected a financial education and others relied on the dangerous advice of Financial Planners trying to sell investment services. Why listen to someone who earns a commission on your investments rather than paying for an education and getting unbiased investment knowledge.
As a 21st Century Member you will have access to a variety of strategies, taught by specialists in the fields of Property and Share investing. The 21st Century Homestudy Program will show you how to best extract wealth from the current environment and how to combine property with cash flow strategies in the share market ideal for the market place right now.
Here’s some reasons why you shouldn’t delay in becoming a 21st Century Member…
| SUCCESS STORY TESTIMONIALS |
| I would like to say a big THANK YOU from my family and myself for all that you have done, still do and (no doubt) will continue to do. Your book (the first one) was only the second book that I had read in twenty years and when I had finished, it in less than two days, I sat down and cried knowing that I had just found HOPE. I knew if I had nothing but the shirt on my back everything was going to be all right from now on. Not just for me and my family but for those less fortunate and unable to help themselves as I knew I was about to acquire knowledge, guidance and strategies to enable me to do so. THANK YOU. Martyn Barnwell |
| Hi Jamie, It has been a year and half since we purchased your home study. When we watched the free DVD we were convinced that something needed to change in our lives and even though it seemed like a lot of money to spend at the time we thought doing nothing would cost us a lot more in the long run. Even though it was a struggle to pay for the home study it was the best money we have ever spent (EVER). We attended the four day seminar in November 2008 at Gold Coast – since then our lives have totally changed. There has been so many opportunities open to us that we didn’t even know existed. One of our biggest goals was to retire from a J.O.B. (Just On Broke). At age 28 and after a year and half of purchasing your home study we have both sacked our employees and have retired from a job!!! WOOO HOOO!!!!! I would not hesitate to recommend anyone purchase your home study – it has been the best investment we have made!!! I wanted to send this letter to say THANK YOU!!!!! If it wasn’t for you wanting to help others this would not be possible. You are one incredible person to dedicate your time to help other achieve their goals and to make the impossible possible. Words can’t describe the gratitude and appreciation we both feel towards what you have given to us. Thank you!!!! Dennis and Julie |
Ready to achieve the same success? ENROL NOW!
| SUCCESS STORY TESTIMONIALS |
| Kia ora, I have used the home renovation strategy 2006-2007-in Dannevirke – creating more equity ie $80+k less 20% re: bank requirements. The home was originally valued at $70k & re-valued at $152k – it was run down & in need of renovating. After doing all the research about what jobs needed to be completed, I used $15k from bank account, a GE Finance card 100 days $10k interest free, visa card & mastercard. I ran-up $30k of debt on the 3 cards. I used my $15k to pay the builder, painter, plumber & electrician. Once the job was completed, I got the home re-valued. This generated a new valuation of $152k, creating $82k in equity. 20% was deducted as per bank requirements – $30,400 which left $121,600 minus original valuation $70k which left $51,000 equity. I repaid the $30k to the 3 credit cards. This left $21k in equity. With this equity I purchased another home in Te Karaka where I currently live. Althoug h the equity was not substantial I was able to renovate my Dannevirke home, pay-off my credit card debts & purchased another home in Te Karaka. Therefore, I have assets now worth approx $300k. After renovations I rented out my Dannevirke property. Prior to the interest rate increases I was $18.00 positively geared. Afterwards I became approx $130 negatively geared. Now that the interest rates are slowly coming down I am now approx $100 negatively geared. – you get no B.S. from me… Michael Haami |
| Since reading the book I got a line of credit on my House and started trading the stock market in blue Chips. To date since Late November 2008 I have made a profit in excess of $98,000. I would like to get more details on financing real estate to help my sons and daughter. I plan to come to the 4 day seminar in Melbourne . Any advice you can give me would be greatly appreciated. Kind Regards David Ross |
Take Action! ENROL NOW!
| SUCCESS STORY TESTIMONIALS |
| 10 years ago I did the Homestudy Course that 21st Century had and with as little as $3,000 I started trading and in 2 months turned this into $20,000 then turned this $20,000 into $50,000 the next month. Now I pull out of the market each week using this $50,000 bank average $40,000. If I had a bank of $150,000 the weekly turnover would be in the vicinity of minimum $80,000 – 150,000 to a trader who has at least 2 -3 years experience. Just want to thank Jamie for awakening the Entrepreneur in me that was laying dormant before I did the Homestudy Course. Cheers Vern Taikato |
| Hi guys, I signed up with 21st century academy in 2007. It has been an amazing experience for me to be part of 21st Century and it has taken my life (in only 1.5 years) in so many great directions, meeting so many amazing and inspiring people and being able to help others to reach their goals. Thanks again for everything you offer and I hope that I will be able to join you in helping others create wealth in the near future. Kind regards Kevin St Mart |
Plus as a 21st Century 5 Year Member, you will be able to take advantage of our 4 Day Education For Life Events, to be updated with the current economic environment and how to navigate successfully through these very interesting times. The live 4 Day event accelerates what is taught in the 21st Century Homestudy Program.
Read To Take Action! ENROL NOW!
OR
Please contact our Member Support Team:
Email: membersupport@21stca.com.au
Phone: 1800 999 270
Yours Sincerely,
Vivienne Warren
Customer Service Manager
21st Century Education
www.4daybonus.com
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“It is CRUNCH time!
It’s now 30 June and the government expects you to lodge your tax return.
For some, it is that dreaded time when you have to get down to your accountant, get all your paperwork together, and lodge the darn thing…..Yuck!
But at 21st Century Accounting, we don’t see your tax return as a chore. We see it as a wonderful chance to get you LOADED WITH CASH! If you’re entitled to a refund from the ATO, it’s simple. The sooner you lodge your tax return, the faster you can have extra cash in your pocket, not in the ATO’s hands as an interest-free loan.
(I’m sure you don’t want to give the government an interest-free loan!)
Call 1800 704 674 for a free discussion with one of our team today to get your tax return underway and get that money in your pocket! In these challenging economic times, we want that money in YOUR pocket where it belongs.
It can be the difference between getting that new car. Or going on that holiday around the world. Or spoiling your loved one with a surprise gift. The faster you take ACTION, the faster we can put that money in your
pocket right where it belongs.
You want accountants who can get you the MAXIMUM amount of refund back in your pocket, or if you have to pay tax, to ensure that you pay the LEAST amount of tax that you legally have to.
Does your accountant know how to:
- Claim car expenses WITHOUT receipts?
- Claim your office at home where you do your internet marketing
or options trading or home business? - Claim your education expenses for your home study pack or
other 21st Century courses?
At 21st Century Accounting, we do! We know the law inside out, and we make sure that while keeping within the law, we can claim the expenses for you that otherwise can give the ATO a free gift.
What are you waiting for?
Call 1800 633 000 for a free discussion with one of our team today to get
your tax return underway and get that money in your pocket!
Or email us at enquiries@21stca.com.au and get your accounting underway TODAY!
More Power For the Fed? Seriously?
by Mike Larson 06-26-09
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In last week’s Money and Markets column, I gave you a broad outline of the Obama administration’s regulatory reform scheme. This week, I want to zero in on one of its weakest links. I’m talking about the idea of making the Federal Reserve an “uber-regulator,” responsible for managing system-wide risk.
First, what in the world is system-wide risk?
Well, that’s the risk that interconnected-institutions will drag down the whole financial system when they gamble with other people’s money and then blow up! Think AIG, Citigroup and other disgraceful members of the notorious “Too Big to Fail” club. Obama’s plan calls for giving the Fed more power to oversee these guys and to proactively head off any future systemic risks.
Well, that’s the risk that interconnected-institutions will drag down the whole financial system when they gamble with other people’s money and then blow up! Think AIG, Citigroup and other disgraceful members of the notorious “Too Big to Fail” club. Obama’s plan calls for giving the Fed more power to oversee these guys and to proactively head off any future systemic risks.
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| Obama now wants to make the Fed an “uber-regulator” in order to head off any future systemic risks. |
There’s just one humongous problem: The Fed has proven time and time again that it isn’t up to the challenge!
It has been too timid to use the regulatory authority it already has. It has repeatedly proven to be behind the curve when it comes to both cutting and raising rates. And lately, it has sacrificed all semblance of being an independent body. The Fed is now clearly a politicized institution, working hand-in-glove with the Treasury and the rest of the administration.
In short, the Fed is NOT an independent body willing and able to see around the economic corner and take decisive, proactive steps to head off disaster. Instead, it’s an institution that has failed repeatedly to uphold its responsibilities in the regulatory and monetary policy arenas. And thankfully, policymakers are coming around to that view, which I’ve expressed time and again over the past couple of years.
A Sorry Track Record on Bubbles, Inflation,
Regulation — You Name It
You probably don’t need me to tell you the whole long, sorry history of the Fed’s easy money policies — and their repercussions. Suffice it to say that under former Chairman Alan Greenspan, and later Ben Bernanke, the Fed’s policy has been to ignore asset bubbles as they inflate … then come in with monetary guns blazing when they burst, thereby laying the foundation for the next bubble.
In 1998, the Fed went totally overboard after the collapse of Long-Term Capital Management, slashing rates to soothe the capital markets even as the economy was heating up. Then it pumped huge amounts of money into the economy out of fear of the Y2K bug. These two events pumped even more helium into the Nasdaq bubble, which then popped in 2000.
The Fed’s response to that bust was to drive the cost of money into the gutter. Thanks to that policy, and the reckless disregard for prudence throughout the lending industry, we experienced the biggest housing and mortgage bubble in the history of the U.S. We also saw too much dumb lending and asset inflation in the leveraged buyout business, in the commercial real estate arena, in commodities, and in the emerging markets.
Rather than combat those bubbles head on, though, the Fed deferred. And now we’re living with the painful fallout.
Yet remarkably, after two huge bubbles and busts fueled in part by misguided policy actions, the Fed is going back to its old playbook. It’s flooding the economy with the biggest tsunami of easy money the world has ever seen. And predictably, it’s having a whole host of unintended consequences, as I spelled out on in my June 12 Money and Markets column.
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| Greenspan pooh-poohed the housing bubble while everyone else saw it coming like a runaway freight train. |
Look, how many speeches did Greenspan give pooh-poohing the housing bubble, even as anyone with half a brain could see disaster coming?
How many Fed governors essentially washed their hands of any concern for asset bubbles?
How many said that these bubbles were too tough to identify in advance, and that the only rational policy was to let them inflate, then burst, and then try to clean up the mess — rather than proactively attack them?
And what about Bernanke? The Wall Street Journal noted this week that it had sounded a huge warning about the falling dollar, surging commodities prices, and the inflation threat they posed way back in late 2003. In an editorial called “Speed Demons at the Fed,” the Journal urged policymakers to start reversing course and lay off the monetary gas pedal.
Bernanke’s response?
According to minutes of a Fed meeting at the time, he reverted to Ivory Tower theory to play down the inflation threat. He cited studies that essentially said the declining dollar doesn’t matter, commodities prices don’t matter, and weak labor markets would keep inflation tame. He added that anyone who disagreed with him was “not particularly well informed.”
Oops!
Within a few quarters, home prices were soaring at their fastest rate since the late 1980s. Oil prices surged 782 percent from their low. Gold more than quadrupled. The Consumer Price Index eventually notched a 5.6 percent year-over-year gain — the biggest in 17 years. Import prices soared by a whopping 21 percent in 2008, the biggest increase in recorded U.S. history.
Is there any doubt that Bernanke was dead wrong … and the Journal dead right? I don’t think so.
Then there’s the Fed’s regulatory track record. As I discussed in my landmark 2007 white paper, “How Federal Regulators, Lenders, and Wall Street Created America’s Housing Crisis — Nine Proposals for a Long-Term Recovery”:
“By 2004, it was nearly impossible to ignore that the housing market was overheating …
“Yet the Federal Reserve did not believe it should play a forceful role in stemming this mania via monetary policy, focusing instead on traditional measures of inflation, and deciding not to begin raising short-term rates until June 2004. Furthermore, the rate adjustments were slower and more hesitant than those of the preceding down phase of the interest rate cycle.
“Adding fuel to the speculative fires, monetary policymakers used their public pulpits to send mixed signals to the marketplace, often encouraging continued risk-taking that has proven harmful to borrowers, lenders and the industry as a whole.”
In the paper, I added that …
“Federal regulators, for their part, warned about high-risk mortgage lending. But they failed to back up those warnings with rules or regulations designed to contain or reduce lending abuses. So lenders routinely ignored the warnings.
“We believe these constitute a series of fatal policy errors. And we believe they virtually ensured the outcome: A climactic period of unrestrained risk-taking in the residential real estate market, followed by the painful bust we are now witnessing.”
Fed-Worship Finally Ending …
Good Riddance!
Throughout the 1990s and early 2000s, Fed worship was widespread in Washington. We had to endure endless claptrap about how great Alan Greenspan was (remember his nickname, “The Maestro”?).
That’s ancient history. A new skepticism is apparent in Congress and elsewhere in D.C., and I couldn’t be happier. Heck, when Treasury Secretary Geithner went before the Senate Banking Committee to champion the Obama regulatory plan, he got an earful from legislators:
- Sen. Chris Dodd of Connecticut said giving the Fed uber-regulator status was “like a parent giving his son a bigger, faster car right after he crashed the family station wagon.”
- Sen. Jim Bunning of Kentucky said “Your plan puts a lot of faith in the Federal Reserve’s ability to spot risk and exercise its power to prevent the next crisis. However, if the Fed and other regulators had been doing their jobs and paying attention to what the banks and other firms were doing earlier this decade, they almost certainly could have prevented the mess … What makes you think that the Fed will do better this time around?”
- In an interview given to The American Banker, Senator Richard Shelby of Alabama went even further. He said: “The idea of putting more and more power in the Federal Reserve is, in my judgment, a huge mistake … They have utterly failed the American people as the regulator of the bank holding companies, most of which have gotten into bad, bad trouble financially. They are doing so many things outside the norm that nobody knows — no accountability for — and to run to the Federal Reserve and to say ‘Gosh, they are going to be the winner of everything out of all this,’ that is just nonsense.”
My bottom line verdict: Entrusting the Fed with more power makes no sense. Policymakers there have gotten so many things so wrong over the past several years, that you could easily make a case that the whole lot of ‘em should get the hook … not the keys to the financial kingdom.
JAMIE MCINTYRE’S COMMENTS:
I agree completely with the article below.
Obama has a lot of potential and I think he is a huge improvement on his predecessor like almost everybody, but giving the Federal Reserve more power is a huge mistake.
Considering the Fed is privately owned by the largest banking families in the world,has little or no accountability to the US Government. And is largely responsible for the Global Credit Crisis and many say deliberately caused the Great Depression for its own advantage to buy up many bank assets at rock bottom prices. Obama should be sacking the Fed Board Members and bringing the printing of US dollars back under control of the American People instead of the US Treasury going into debt every time the Fed Prints more fake money and charges the US Government and its taxpayers interest..
Instead he is doing the opposite and giving more power away by boosting the Feds power even further.
A decision I’m sure hell live to regret and unfortunately we may all pay for in Western Societies by rampant profiteering by the Feds owners at the expense of the US taxpayer.
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