Markets, Real Estate and SME

MARKETS

I love posting articles by the guys at +Money Morning Australia and +Daily Reckoning Australia due to the fact that you get unbiased views about where the markets are moving and mixed opinions in-house as you will see from the article below by +Alex Cowie. His view contradicts posts of another great contributor, +Greg Canavan. I believe this makes the content from these publishers very relevant and one should try to understand the different points of view and learn from them all, allowing one self to make more calculated decisions with regards to your financial decisions in this global economy.

China Bull vs China Bear - There can only be one winner

No punches have been thrown in the office…yet.

It might not be long though. This China bull is taking on the office’s most devout China bear, Greg Canavan, in a war of words that’s on the verge of getting out of hand.

One of our colleagues suggested we dress up in bull and bear outfits, and just have it out on the streets here in St Kilda. He helped support his idea with some photo-shopped pictures of yours truly and Greg:

Source: Ninjali Design

What do you reckon?

Funny thing is, fighting in fluffy animal costumes in the streets of St Kilda actually wouldn’t raise many eyebrows. In fact, we’d probably make some money from hipster passers-by for our ‘street performance’.

But looking past the cute pictures, I want to emphasise that there’s a serious message here.

This starkly divided opinion in this usually united office is symptomatic of something – China’s economy is at a critical crossroads.

This is of paramount importance because which way China turns makes now either time to sell resource stocks and run for the hills as Greg instructs; or as I believe, it makes right now the best time in more than five years to buy resource stocks…

China bears are a bit overconfident right now, after having loads of mud to sling at us for the last two years.

You see, since the start of 2011, China’s growth decelerated steadily from 9.8% down to 7.4%.

‘Crashing Chinese growth’ has been the China bears battle cry!

Trouble is that neatly overlooks the fact that 7.4% is still a nitrous-oxide type growth rate!

To put 7.4% in context, it doubles an economy’s size inside of a decade. It’s fast. It also makes China’s growth by far the fastest growth rate in any large country globally. You have to start looking at tiddlers like Thailand (twenty times smaller than China) to find faster growth.

But it was the deceleration of growth that has the bears fired up. Would it continue and take China down in flames?

Short answer: no.

Bullish on China: Here’s Why

Over the last few months of 2012 (as far as I could see) it was obvious China was building for a solid bounce in economic growth. It was time to get bullish on industrial commodity stocks again. That’s why I started 2013 with a copper producer for Diggers and Drillers readers.

Sure enough, when China released its GDP data a week later, it showed a meaningful jump from 7.4% to 7.9% growth.

China’s Growth on the Way Back Up Again – Copper, Iron Ore and Coal to Boom

Of course, one stubby does not a slab make. We need a few more quarters to confirm this trend. But by then, the trading opportunity will be gone, so where do we look?

The ‘Purchasing Managers Indices (PMI)’ are one place.

Between the official and HSBC versions of this index, they survey 1250 ‘purchasing managers’ in the Chinese manufacturing sector. Businesses react to the market rapidly, and the purchasing manager has the best view and feel of the economic conditions.

It’s a ‘leading indicator’ of the economy. As such, it’s usually a pretty reliable guide of what the GDP will be for the quarter. And right now the PMI’s have been in positive territory for their last four monthly releases.

Of course, the only problem with trading on an official PMI, or GDP figure, is that they are government statistics. And as they say, there are lies, damn lies, and government statistics. Thing is there’s also an even worse category, called Chinese government statistics. So we watch them, but take them with a pinch of salt or three.

But if Greg pinned me down to give him one reason why I was so bullish on China at this moment, it actually wouldn't be the statistics.

The reason would be that in November 2012 China wrapped up the main parts of its once-in-a-decade leadership transition.

In short, this will be one of the major drivers of the commodity markets in 2013.

In my eyes, it’s an investing opportunity that you can either grab now, or kick yourself for at Christmas for missing the trade of the year.

The reason I say this is that, like clockwork, this leadership transition has unleashed a wave of infrastructure spending. This chart shows how this has jumped EVERY time in the last thirty years. The years after 1982, 1992, and 2002 ALL saw a huge move without fail.

Buckle Up for Huge Chinese Spending

Source: FT

The reason being that Chinese politicians have their hands tied until the transition passes, so once it’s in the bag, they play catch up on projects. Besides, they are smack in the middle of an ambitious five-year plan of spending targets and they need to pick up the pace to get there.

So I expected a dam-burst of infrastructure spending to be unleashed in early 2013. And that would drive commodity demand as project development growth moves up the gears again.

We had a clear signal of this in China’s credit figures for January.

After treading water for most of last year waiting for the leadership transition, the flood gates of lending have opened.

The ‘total social financing aggregate’, which is China’s most comprehensive measure of lending, has jumped from around one trillion Yuan a month, to 2.5 trillion a month.

China’s Lending Explodes: Total Social Financing Aggregate Soars to 2.5 trillion

Source: Bloomberg

Now China bears will probably be tearing their hair out at this point. Their beef is that this is a clear warning sign of a credit bubble.

This is the core of where the bulls and bears differ. Where the bears see this lending as a reason to run and take cover, I see it as a precursor to immense Chinese growth.

To me, the crux of this chart is that this lending will translate straight into demand for the raw ingredients of an economy: iron ore, copper, coking coal, and the scores of more obscure raw ingredients like manganese, tin or rhodium. Not to mention indirectly to demand for gold – one of the things Greg and I can agree on.

Some Words of Wisdom

But what about the idea that I'm overlooking the fact that half of China’s GDP figure is from lending what could become bad loans that will cripple the banking sector?

There’s no denying China has taken investment spending to nosebleed levels, and that it will need to unleash the value for the bets to pay off. But I'm more optimistic than the China bears on this happening, and thus preventing non performing loans from rocking the system.

And I’m also more optimistic on China’s ability to stretch and rewrite the rules to enable payment, and to use the raw power of urbanisation and also rising land prices to pay off debts. But that’s a story for tomorrow’s Money Morning.

In the meantime, don’t forget to check out our free Google plus pages. We've already served up a few exchanges on the bull and bear China debate. Check it out.

And even if I'm wrong on all counts, you can be very comfortable that even if a credit bubble bursts – China will pull rabbit after rabbit out of the hat to delay it.

I'm not denying that the China bears could even get it right in the end. We'll see. In the meantime, investors have any number of years in which to make money from the resource sector as this young resource rally builds steam again after its two-year sell off.

A hugely successful retired fund manager summed it up for me recently by saying, ‘Any punter on the street can always tell you twenty reasons to avoid the market – the trick is to spot the opportunities amongst the chaos, and then nimbly monetise them while the bears tie themselves up with thoughts of impending doom.’

Enough said.

Dr Alex Cowie
Editor, Diggers & Drillers

REAL ESTATE

Too small to buy?

Thinking of buying a tiny apartment to get on the property ladder? It may be tougher to get a loan than you think.

Buying a small inner-city apartment or bedsit could be "almost impossible" according to Scott BJ principal Scott Banister-Jones because almost all major banks and lenders won't grant loans for properties smaller than a certain size continue reading...

Signs of Rebound in Property

Buyers turned out in force over the weekend delivering a strong pass mark to the first test of the pre-Easter season.

Agents and buyer advocates cited low interest rates and pent-up demand as some of the elements drawing buyers back into the market after two years of lacklustre results and falling prices.

Melbourne's clearance rate of 73 per cent was achieved against a bumper crop of 903 auctions. The Real Estate Institute of Victoria said 541 properties were sold on the day, while 116 were sold before auction.

Of the 246 properties that failed to sell continue reading... 

New peak body for Real Estate launched

THE Real Estate Institute of Australia (REIA) has opened its doors to franchisors and networks by forming an Affiliates' Council.

REIA CEO, Ms Amanda Lynch was positive about the cooperation involved in creating the council.

"We are thrilled to announce that continue reading...

SME

Small Businesses are falling behind in Technology

Australian small businesses need to overcome their fears of being washed out by big companies and create a culture where they use technology to bring about change, Ita Buttrose said on Thursday night.

The 2013 Australian of the Year, who has seen a massive transition in the publishing industry from print to digital, told an audience of IT professionals at the Internet Industry Association's (IIA) 16th Annual Gala Dinner in Sydney that small businesses are continue reading...

5 dubious business ideas...

A unique business idea is essential for a start-up to stand out in the marketplace. However some ideas end up being more weird than wonderful.  

Here are five of the strangest business ideas around continue reading...

Entrepreneurs pin hopes on Google

Australian venture capitalists and entrepreneurs have welcomed the prospect of Google launching its start-up investment funding arm locally, after the search giant’s chief financial offer, Patrick Pichette, hinted at a global expansion last week.

Mr Pichette, who was on a whirlwind tour of Australia that included meeting Prime Minister Julia Gillard, told entrepreneurs at an event in Sydney that continue reading...

Until the end of the week dear readers. Stay safe in the wild weather and stay safe with your financial decisions...

Markets, Real Estate and SME

MARKETS

For those of you who don't know....the markets took a bit of a dive today due to a major sell off. Investors have been cashing in on the recent gains the market has been making. To me, this shows a lack of confidence in the recent rallies we have seen.

"The share market has closed at the day's lows, with about $35 billion wiped off the value of stocks in the biggest one-day fall since last May. The benchmark S&P/ASX200 index fell 118.6 points, or 2.3 per cent, to 4980.1, while the broader All Ords fell 115.8 points, or 2.3 per cent, to 4998.6."

REAL ESTATE

Units flying out the window!

UNITS in Melbourne are selling more quickly than houses.

An apartment in Knoxfield stays on the market for an average of just 22 days, according to the latest figures from RP Data.

Blackburn South apartments sell in an average of 26 days.

The only markets for houses that made the list of the 10 fastest sellers for the year to last October were continue reading...

Lend Lease experienced great increase in profits...

Australia's Lend Lease Corp Ltd saw first-half profits jump 39 percent on commercial sales for its $6 billion Barangaroo Sydney waterfront development -- a project that has underscored growing interest in Australian property from continue reading...

SME

Sensis sending Aussie jobs overseas

JOB cuts at Telstra's troubled Sensis division are merely a smokescreen for sending work offshore, a union says.

Telstra is axing 648 jobs from the business that runs Yellow Pages, White Pages and Trading Post and employs 3500 people across Australia.

The jobs being axed include continue reading...

RANT...

Though I don't consider myself a 'gamer' in any way or fashion, Sony has gotten me quite agitated with their sales tactics... Soon the new PlayStation 4 will be launched. Guess what. You can't play PS3 games or any of the previous formats on the 4 either... Read more about the PS4

Markets, Real Estate and SME

We're back! Apologies for  yesterday but due to some technical difficulties Markets, Real Estate and SME could not be sent out to all you loyal readers... Please note that as of next week, Markets, Real Estate and SME will only be posted on Mondays and Fridays.

SME

Has leadership in the digital age changed?...

Globalisation and the digital age has changed how business leaders lead and manage people. Today we face the mobile revolution that has changed consumer buying patterns and shortens the life-cycle of many products. It has reshaped continue reading...

REAL ESTATE

Sitting on a Gold Mine!

IT'S been a 42-year wait but the decision to rezone Badgerys Creek land in Sydney's west would be like winning the lottery for Harry and Brigette Green.

The couple, in their 60s, bought their 11-acre property for $12,000 in 1970.

But with the land around what could be Sydney's second airport due to be rezoned continue reading...

Veteran weatherman David Brown to start real estate career...

VETERAN Channel 7 weatherman David Brown will be making forecasts of a different kind when he starts a new career in real estate next week.

The qualified meteorologist has signed on with Hoskins Real Estate in Melbourne's east and has been sharpening his skills at the team's Donvale office.

Brown - who spent almost 20 years as a weatherman - is sure to turn a few heads continue reading...

MARKETS

Some great insight from Murray Dawes:

Have I Just Done Myself Out of a Job? (Click here to open Port Phillip Publishing's home page)
Wednesday, 20 February 2013 – Melbourne, Australia
By Murray Dawes

Have I Just Done Myself Out of a Job?

Can Turkey Cause a Global Power Shift?

In today's Money Morning:...no one can predict the future...how a trader approaches the market...a short signal in Europe...a possible new alliance for Turkey...

Have I Just Done Myself Out of a Job?

The financial media makes a living discussing the machinations of the economy and markets. Talking heads yap away about this economic indicator pointing to better times and that statistic signalling a coming recession.

People pass themselves off as 'experts' on economic matters and the general public assumes that they must know the answers and can predict the future of the economy better than a layman.

But the fact is not one person on this earth can predict the future. Sure you can get it right every now and again, even a broken clock is right twice a day as the saying goes. And the more general and sweeping the statements that you make the harder it is for anyone to pin you down and say that you were wrong.

Professor William Sherden wrote a book called The Fortune Sellers: The Big Business of Buying and Selling Predictions. Sherden tested the accuracy of leading forecasters over many decades.

The Investment Watch blog said his research concluded that there's 'no way economic forecasting can improve since it is trying to do the impossible'.

I will repeat his 11 findings as revealed in the above blog here because I think it is important for us to dispel the myths that are continually propagated...

Dispelling Some Big Myths

Here they are:

1. Economists' predictions are no better than guesses

Forecasting skill of economists is no better than guesstimates by Main Street investors.

2. Government economists often worse than guesses

Sherden discovered that predictions made by the elite economists on the President's Council of Economic Advisors, the Federal Reserve Board, and even the non-partisan Congressional Budget Office were actually worse than guessing.

3. Long-term accuracy is impossible

The accuracy of forecasting declines the longer the lead times.

4. Turning points cannot be predicted

Economists cannot predict the crucial turning points in the economy, confirming Siegel's research. Worse, the vast majority of all long-term predictions fail.

5. No specific forecasters are better than the rest of pack

Sherden also learned that no particular forecasters were consistently more accurate.

6. No forecaster was more expert with specific statistics

No forecaster has consistently higher skills in predicting any one economic statistic.

7. No one ideological orientation was better

No ideology perspective consistently produced superior forecasts.

8. Consensus forecasts do not improve accuracy

But still, the press and their readers love those lists, averages and consensus forecasts.

9. Psychological bias distorts forecasters and their forecasts

Some economists are naturally optimistic and bullish. Others are naturally pessimistic bears. Some are conservative, some progressive. Why? Look inside their brains or at their DNA. Every economist has mental biases and political ideologies that distort their choice of research topics and data selection, and therefore skew their predictions.

10. Increased sophistication does not improve accuracy

Sorry folks, but all the new scientific methods, technologies, algorithms and computer models of the economy can make forecasts worse. At least give skilled Wall Street insiders an even better edge over naive retail investors.

11. No improvement over the years

Finally, Sherden says there's no evidence that economic forecasting has improved in recent decades, despite vast new technologies.

That's a pretty damning set of findings to say the least. And yet every single night on the news we wheel out someone to comment on that day's price action in the market. They come up with some reason why prices moved the way they did and they make a sweeping statement about what will come next. What a farce.

So, have I just done myself out of a job?

Not so fast.

How a Trader Approaches the Market

The job of the trader is not to tell the future. The job of the trader is to accept that they don't know the future and then structure their trading activity accordingly.

I think accepting that the future is unknowable is the first step in creating a sound trading strategy.

Your whole way of thinking about the market is transformed when you look at it in this way. The first question you ask yourself when you know you don't know the outcome is, 'When am I wrong?' Also you can withdraw your ego from proceedings because you aren't trying to predict the future to prove your self-worth.

The game of trading becomes one of probabilities.

My long term aim is to have a strike rate (percentage of winning trades) of at least 50% and a risk reward of 2:1, meaning that I will make twice as much on my winners as I lose on my losing trades.

The fact is that the long term results contain a lot of volatility. You can have periods of a 20% strike rate and then periods of an 80% strike rate which averages out to 50%. It can be pretty tough to keep your eyes on the long term figures when you have been trading with a 20% strike rate, I can assure you.

The psychological battles that a trader must engage in are immense. And it's usually this issue that brings most traders undone.

Anyone can repeat the top ten trading rules that are necessary to succeed, but actually adhering to them in the heat of battle is another thing entirely.

It is only through actual experience trading the markets with real money that we can learn about our own weaknesses.

And the market is determined to prod at our weaknesses at every opportunity.

Most of the price action these days is trading algorithms hunting for traders' stop losses. First they suck you into trading and then whip you out of your position. It really is a battle of man vs machine and at the moment I reckon the machines are winning.

The only way to survive in the current market as a trader is to start thinking like the trading algorithms. Where are traders stop losses? Once traders are stopped out the market will usually reverse.

It is this sort of thinking that lead me to focus on false breakouts rather than breakouts.

There is a far higher probability that a breakout will fail to follow through than continue. The risk that needs to be taken when fading (going against) a breakout is minimal because you are selling into strength or buying into weakness. Therefore you can place your stop loss above or below the most recent extremity in price.

With this method you can join longer term trends by, for example, buying the false break of the lows in an uptrend or selling the false break of the highs in a downtrend.

Analysing the German Index

With this in mind let's have a quick look at the current chart of the DAX, which is the index for the German stock market.

The DAX has broken out to new multi-year highs recently, but the momentum has shifted back to the downside over the past few weeks.

German DAX Daily Chart

Source: Slipstream Trader

My intermediate trend signal is now down (The 10 day EMA below the 35 day SMA) and prices are now resting on the high from April 2011 (see solid blue line in chart above).

If prices snap below the lows from last week of 7,537 I would expect to see some profit taking come out of the woodwork. I wouldn't be surprised to see a pretty sharp fall towards the 200 day moving average at 7,060 which is over 6% lower than current levels.

Also notice the indicator in the bottom half of the chart. It's a 10 day average true range as a percentage of the price and inverted on the scale. It basically shows rises and falls in volatility. As the line rises volatility is falling and vice versa.

You can see on the chart that whenever volatility has fallen to current levels over the past few years and then turned back up a top has formed and the market has sold off over the next few months.

Will history repeat? I think so.

But as I said at the start, I know that I don't know the future. All I know is that now is a good risk/reward moment to start looking at the German DAX as an opportunity to profit from the short side.

+Murray Dawes
Editor, Slipstream Trader

From the Port Phillip Publishing Library

Until next time dear readers...

Golden Investment Insight!

Click on the title below to view the original article 

The Golden Bear - +Dan Denning +Daily Reckoning Australia 

By Dan Denning • February 18th, 2013 • Related Articles

Let's begin the week by congratulating the hardest working blue chip index around, the S&P 500. It closed up for the week on Friday in US trading. That's seven consecutive higher weeks for the index. It hasn't begun the year in such stupendous fashion since 1967. The longest weekly winning streak, by the way, is 1957, where the index closed higher for a lucky thirteen weeks in a row.

Hmm...1957. That was one year after Warren Buffet formed his first investment partnership, and two years before he met his long-time co-conspirator Charlie Munger. We'll come back to the dynamic duo in a moment. When you're comparing stocks to other assets (like gold) you have to include Charlie and Warren.

But first, Australia the brand is enjoying a good run in America too. The Australia iShares exchange traded fund (NYSE: EWA) is threatening to break out past its 2011 high of $28.27. When most American investors think of Australia, they think of iron ore, coal, koalas, and Crocodile Dundee. They might be surprised to know that 40% of EWA's assets are in the financial sector, although this would confirm that Australia is full of poisonous and lethal things.

EWA's Top Ten Holdings

BHP Billiton Ltd (BHP): 12.20%

Commonwealth Bank of Australia (CBA): 10.33%

Westpac Banking Corp (WBC): 8.65%

Australia and New Zealand Banking Group Limited (ANZ): 7.22%

National Australia Bank Limited (NAB): 6.32%

Woolworths Limited (WOW): 3.97%

Wesfarmers Ltd (WES): 3.90%

Rio Tinto Ltd (RIO): 2.94%

CSL Limited (CSL): 2.74%

Woodside Petroleum Limited (WOR): 2.40%

The one hope investors have is to buy shares of a productive business that can grow your money faster than the authorities can debase it. That is what 'civilised' people do, if you'll recall the wisdom of Charlie Munger from last year. We thought of Munger this morning when we saw that the S&P had closed higher for seven weeks in a row.

In particular, it seemed like a good time to go back and visit the ratio between the spot gold price and the 'B' shares of Berkshire Hathaway, the company Munger directs along with his pal Warren Buffett. How is Berkshire doing relative to gold? Have a look below.

The chart shows you how many 'B' shares it would take you to buy an ounce of gold. The lower the ratio, the better the 'B' shares are doing or the worse the gold price is doing. You can see that when the gold price peaked in 2011 above $1900, so did the ratio. Since then, it appears to be in decline.

What the chart doesn't show you is that Berkshire's 'B' shares closed at their all-time high on Friday at $99.77. The gold price, meanwhile, closed at a six-month low and briefly dipped under $1600. Yet despite all that, the price action in gold, at least in terms of Berkshire 'B' shares, has favoured gold since 2002.

Of course what we're really trying to discern is whether stocks will keep going as a result of monetary inflation. We'll cut to the chase for today and make a prediction: a combination of falling gold prices and rising stock prices will drive the ratio down to 14. But let's assume the worst.

Let's assume that gold does all of the falling while the 'B' shares stay put. And let's round the value of the 'B' shares to an even $100. That gives you a gold price of $1400 at a ratio 14. That's a 12.5% decline in the gold price from $1600. And that sounds about right. What do we mean by 'about right?' Tune in tomorrow...

Regards,
Dan Denning
for The Daily Reckoning Australia

This material could make you rich!

 The Two-Dimensional Diamond That’s Set to Turn Your World Upside Down - +Money Morning Australia 

View the original article here...

Here are a few Monday riddles for you:

What space-age material is two hundred times stronger than structural steel?

What conducts electricity so insanely quickly that researchers at IBM see ‘no intrinsic limits into how fast it can go’?

And which new substance is the subject of three thousand new research projects, and has just been given a one billion Euro research investment from the European Commission?

Amazingly, the answer is the same for all three questions…

I’m talking about graphene.

This is the brand new material that the world of science is salivating over.

Graphene is completely revolutionising the world of material science, even more than the arrival of plastics did last century. The unparalleled strength and conductivity of graphene make the possibilities so much more tantalising than plastics ever could have.

If this is the first you’ve heard of it, let me explain…

Graphene is produced from graphite, and is a two dimensional sheet of carbon atoms arranged hexagonally. At an atomic level it looks like chicken wire:

Graphene at an Atomic Level…or Chicken Wire?

Source: Nanotec

This simple arrangement of atoms is remarkably powerful, because it is essentially a diamond in two dimensions. Not only that, but this one-atom-thick ‘sheet’ of graphene is completely invisible, yet it so strong is will support a newborn baby’s weight.

That’s truly remarkable. But now imagine you made a sheet of graphene the thickness of gladwrap. It would be so ridiculously strong, that in the words of Professor James Hone at Columbia University,‘It would take an elephant, balanced on a pencil, to break through it.’

I’d pay good money to see an elephant balancing on a pencil, let alone on a sheet of graphene!

Clearly graphene is set to turn the world of engineering on its head. Lighter, stronger parts would obviously be useful in aircraft, for example. Really at this stage, it’s just the imagination holding back graphene’s potential applications.

But it gets stranger.

This material also heals itself.

That popular bedtime-read, Mesoscale and Nanoscale Physics reported that scientists at Manchester University have proven that holes in graphene sheets completely fill up, without trace, when carbon atoms are sprayed at it. The loose carbon atoms are just absorbed, and line up perfectly in new hexagons. Now THAT is just plain bizarre.

A small rip in a soldier’s bulletproof graphene-jacket during battle?

Easy! Just spray it with Graph-plugTM to quickly close it up! (OK, I made that up.)

And maybe I’m getting ahead of myself here, but the point is this: we just don’t know how graphene will change our world, but we can be sure that it will.

Graphene is All Set to Shake Up the World

Its physical properties set it apart, but its electrical properties really take the cake.

Electrons move so freely across the matrix of hexagons, that it could be used to make microprocessors that are many time faster than conventional silicon based ones.

This has already been done by IBM. Their first attempt resulted in a transistor running at 150 GHz. The fastest silicon peer runs at 40GHz. Not bad for a first attempt! And they see no ceiling in how much faster they can go with future attempts. It seems like computers are going to be getting much, much faster.

A combination of the tough, conductive properties of graphene make it perfect for touch-screens on mobile phones.

Samsung sees it going well beyond just replacing this conventional touch-screen technology though, to become something much bigger. They have already developed a 25-inch graphene touch-screen. Even more remarkable, it can be folded up.

Imagine a high powered computer you can fold up and stick in your wallet. It sounds crazy, but it may not be that far away.

We already knew Graphite is excellent in lithium ion batteries, but now graphene is proving to be even better.

Taking it one step further researchers now expect graphene can be used to make ultra-capacitors which hold as much charge as a lithium ion battery, but can be charged in minutes. That would really shake up the electric car market, which is being held back by very long charge times for vehicles.

The list goes on, and keeps growing. Graphite seems set to shake up the world of solar energy as well. The medical sector should benefit too as graphene can be used to enhance medical tests.

You can rest assured that in the next few years, graphene will become a household word. This is one of the stories I’ll continue to follow. And you can follow me and my thoughts on it (along with a bunch of other things) on my free Google plus page.

Readers of Diggers and Drillers would know I tipped a graphite stock last May. It’s now up 230% to become the world’s largest graphite company. It’s developed a resource larger than all the others combined, and is set to get much bigger yet.

The reason I went for graphite last year was not graphene – rather it was more about growing demand for graphite from the lithium ion battery industry.

At the time I didn’t see that graphene would generate any commercial demand for graphite. Even though graphene was clearly very exciting, it was a sideshow to the graphite market.

But over the last year that has started to change rapidly. US manufacturers can now produce meaningful quantities of high quality graphene.

The Nobel Prize in physics recently went to graphene pioneers including Professor Andre Geim. And he now reckons graphene products will be commercially available within a few years.

At the current speed that the research – and resulting progress – is moving, it won’t be long before graphene becomes a serious source of demand for what is already a ridiculously tight graphite market.

Make no mistake this is the start of something big. Quality graphite deposits already looked like agood investment – but they just got a whole load better.

Dr Alex Cowie +Alex Cowie
Editor, Diggers & Drillers

Markets, Real Estate and SME

The Australian share market closed 0.5% higher today. more info...

REAL ESTATE

Vibrant city vision for Adelaide

The China-Australia Property Development Group's connection to Adelaide started off as personal, and has developed into a prominent business, with a $75 million project soon to get under way continue reading...

Should you buy an Off the plan apartment?

If you want to buy an off-the-plan apartment and make it your home, this could be a great strategy so far as lifestyle is concerned.

These apartments are often located close to the CBD, employment nodes and facilities such as cafes, restaurants, theatres, etc. However continue reading...

MARKETS

Got to love it when companies cut jobs when their profits rise....

Amcor soars despite the odds... - 18/02/2013 12:10 pm

Amcor cuts 300 jobs blaming the Aussie dollar... - 18/02/2013 - 15:15

Investors ready to embrace retail...

After being labelled by many as the outcasts of the stock market for what seemed like an age, discretionary retail stocks are at last back in vogue continue reading...

SME

Small business finished 2012 on a sour note...

Australian small businesses face tough conditions and finished 2012 on a pessimistic note despite a series of interest rate cuts.

National Australia Bank’s quarterly Small and Medium Enterprise (SME’s) survey showed both confidence and trading conditions fell continue reading...

Entrepreneur Special

The rise of Company Builders

Entrepreneur-turned-investor is a classic story arc in Silicon Valley but recently the plot has earned a twist. Certain operators are foregoing the traditional path of joining a traditional VC to instead create a studio-like holding operation. By doing so continue reading...

Need a tech co-founder? Meet one at a dating site...

Gina Lujan did not meet her Hacker Lab co-founders the usual way. They were not childhood friends. They did not launch their business from their Harvard dorm room, or at incubators like Y Combinator or TechStars.

Lujan first met Charles Blas and Eric Ullrich after they responded to her personal ad on Craigslist that read: “seeking all hackers and enthusiasts – where are you? continue reading...

Ernst & Young Research Says Entrepreneurs Will Drive Global Workforce On Innovation In New Emerging Markets

More jobs are expected to be created globally by entrepreneurs driven by innovation and emerging new markets, according to a new research published February 14, 2013.

Ernst & Young’s research “Global jobs creation” indicated that more than half of the 600 plus major entrepreneurs across the world surveyed said they expect to increase their work force in 2013 – with the numbers showing remarkable similarity across the Americas continue reading...

Entrepreneurs Clinic - Sir Richard Branson spotlight - via +Forbes +Richard Branson 

View the original article here...

What does it take to start so many companies?

Inquisitiveness, I suppose. As I traveled in life, I felt I could improve on the way things were being done by people. One of my favorite phrases is "screw it, let's do it." We just love going in and trying to shake up industries and doing it better than it's been done before.

What's the difference between creating something from scratch and buying an asset?

Well, 99% of everything that Virgin's done we built from scratch. In the case of Virgin Money, we already had a great financial services company and felt we could buy the license to get into banking, buying a bankrupt British bank at a time when banks had a dreadful reputation. It's gone fantastically well. But the pleasure I get is from starting things, literally from scratch.

Are entrepreneurs or governments better in making effective change in the world?

If we could get every businessperson to use some entrepreneurial skills to adopt a major problem in their particular industry or their nation, we could get on top of most of the problems of the world.

What's the one risk that Richard Branson will not take?

I have put my life at risk on many, many different occasions and have been fortunate to survive. But I take calculated risks in trying to go to the bottom of the ocean in a little submarine or going to space or whatever. Hopefully, I can die in my bed an old man one day.

Markets, Real Estate and SME

What can I say... Thank goodness it's Friday!

SME

Nominations open for 2013 Entrepreneur of the Year - +Dynamic Business magazine 

Nominations are now open for the 2013 Australian Ernst & Young Entrepreneur of the Year.

Each year, global leader in assurance, tax, transaction and advisory services, Ernst & Young, conduct a search to find the best entrepreneur in Australia and in over 50 other countries continue reading...

REAL ESTATE

Property Slump hits Budget

The cooling property market is tipped to deliver a $334 million hit to ACT government revenue during the next four years.

The ACT government's budget position has improved by nearly $20 million according to the latest economic update but taxpayers have been warned continue reading...

Why you should not rely on Property Data reports

Property Observer has written a great article on listing website Domain's new property price estimates that highlights several of the pitfalls of relying on data reports.

Some good points have been made, including: "APM stresses the figure does not take into account the potential impact of external influences such as continue reading...

MARKETS

+Greg Canavan has delivered another great read:

As Gold Flows Eastward, It's No Longer Money - View the original article here...

15th Feb 2013 via the +Daily Reckoning Australia

By Greg Canavan

Is gold money? Or is it a store of wealth? Or both? We'll have a crack at answering these questions in today's Daily Reckoning. We'll also delve into some very interesting recent developments in the gold market, which suggest the interminably long correction in the gold price could be coming to an end.

Right then, let's talk 'money'. Many gold bugs claim gold is money. But is it really? In a recent issue to subscribers of “Sound Money. Sound Investments”, we looked back through thousands of years of history to show that gold was simply one form of money.

But it rarely passed from hand to hand. It was too valuable for that. The value of gold was a store of wealth and as a unit of account.

As societies and economies grew and became more sophisticated in the 19th century, gold performed a little too well as money. Back then, gold used to be the monetary base of the financial system. Banks could still expand credit, if enough good credits walked through the door. But when those credits turned bad, the 'money' previously created by the granting of credit disappeared. There was no central bank around to monetise this debt and so deflation set in.

That's why the 19th century was one of booms and busts. Gold as money didn't stop economic volatility. It kept a check on the price level over the long term, but in the short term the price level moved around quite a bit - both up and down.

When the First World War forced the abandonment of the gold standard in 1914, it was pretty much game over for gold as money. The 'Genoa Conference' of 1922 devised the 'gold-exchange standard', which was a gold standard in name only. It allowed the reserves of the banking system to grow (by making the pound 'as good as gold') which allowed the banks to find many more 'good credits' in the economy than had previously existed. In other words, lending standards dropped...a lot.

That's why the 1920's was one long credit boom. It finally ended when no more 'good credits' walked through the banks' doors. This ended the Ponzi scheme and the bubble burst.

But central banks didn't know how to handle the aftermath. They still thought gold was money, even though they stood by and watched the 'gold as money' function hijacked during the boom.

Hence a nasty deflation ensued. It put a nail in the coffin for the 'gold as money' function for some time. The post-Second World War Bretton Woods system revived it for a time by trying to attach gold to the reserve asset, the US dollar, but it didn't last for long.

Ever since, gold has not performed as 'money' in any official sense. And we're not sure if it will again. But as a store of wealth? That's another matter.

Check out this article from Sober Look. It looks at the recent turmoil in Egypt, the run on the Egyptian pound and the search for dollars. It quotes a story from Fox News:

'A run on Egypt's pound has left foreign currency in short supply and driven some dealers into the streets in search of people with U.S. dollars to sell, spawning a new black market.
"There are no dollars. Everyone that walks in asks for dollars but supply is scarce," said one of the dealers.'

Those in need of liquidity and 'money' are after dollars. But those with 'wealth' want to store some of that wealth in gold too.

'Anecdotal evidence suggests that a number of wealthy individuals and businesses are quietly converting savings into hard currency and to the extent possible depositing funds abroad. Some are buying gold as inflation accelerates.'

That's just an isolated anecdotal case of what people do when their currency fails to perform adequately as money. But it's telling nonetheless.

The other case for gold as a store of wealth and not money is a developing one, with a couple of parts to it.

Overnight, the World Gold Council reported 'Gold Demand Trends Q4 and Full Year 2012'. Amongst the highlights was central bank demand of 534.6 tonnes for 2012, up 17% on 2011 and the strongest demand since 1964. This could be an unwinding of the gold leases undertaken by western central banks in the 1990s and early 2000s, or fresh buying, we're not sure.

Either way, it indicates the central banks are increasingly interested in a store of wealth to support their currencies (money).

And earlier this week, Goldcore reported:

'Gold continues to flow from the west to east. Reuters reports that U.S. Commerce Department data showed U.S. exports of nonmonetary gold, which excludes central bank transactions, climbed by 43% to $4 billion in December from the prior month.

'That's the highest total and the largest month-on-month jump in U.S. private gold exports since September 2011, when gold rallied to a record nominal high over $1,920/oz. Hong Kong accounted for nearly half of the $4 billion.'

On a net basis, the US exported about $20 billion in gold in 2012. On the other hand China imported over 200 tonnes in 2012. At US$1,650 an ounce, that's US$11.76 billion. That's not big 'money' in this world where trillion is the new billion. Perhaps that's all China can buy without causing a price explosion?

With new storage vaults for gold opening up in Asia, you have to suspect that the 'gold flowing from west to east' meme has merit.

After all, the gold 'in the west' is a remnant of the days when gold was money. That's why the gold/dollar swap trade is still massive in London. It's where the bullion banks get together to swap gold for dollars and vice versa. They're still behaving as if gold is money.

But the interest rate on gold, the 'Gold Forward Offered Rate' (GOFO) is now mysteriously low. It hasn't been this low since mid-2011 when Europe was falling apart. And soon after, the price soared. According to the London Bullion Market Association (LBMA), 'the major determinant in the calculation of this rate (GOFO) is the availability, or 'liquidity', of gold...'

So as gold liquidity dries up, GOFO heads lower. One would think the weakness in the gold price would suggest lots of selling and abundant liquidity. But that's not the case. Maybe it just reflects abundant US dollar liquidity, in which case you could be seeing Gresham's Law in action...bad money pushing out the good.

Perhaps our theory is completely wrong, but maybe, just maybe, the West still thinks of gold as money, but in the East it's a store of value. With the way the West treats its money, no wonder gold continues to flow east. The bad money is pushing the good money into another function, as an exclusive store of wealth, with an eventual much, much higher price to safely store all that wealth.

Greg Canavan
for The Daily Reckoning Australia

Is there any difference between an online marketing plan and a general one?

By +Amanda Watts ~ 15th February - Startupsmart

How should my online marketing plan be different to my general marketing plan? Or should there be no difference?

First we need to take a big step back and recognise that any marketing plan should focus on one thing first – your customer.

How is your product or service going to help them, save them time or make them more money?

(Before we go any further, just a note to say I have taken ‘online marketing’ to mean ‘digital marketing’. Online marketing generally refers to marketing techniques that people engage with only when connected to the internet, not other digital outputs like touchscreens, digital signage or kiosks.)

Once you have established a clear idea of who that is, you can use different channels (which just mean ways or devices) to reach them.

Digital marketing channels include continue reading...

Thought you were saving to fund your retirement?...Think again!

Some insight from +Kris Sayce to start your day, and if you haven't already, get you planning for safer investment and strategies for your retirement. - View the original article here

Be warned, there’s trouble on the horizon. And it could have major implications for every Aussie wage earner, saver and investor…

Two worrying news stories came across our desk this morning. First this from ABC News:

‘Federal Treasurer Wayne Swan has refused to rule out increases in income tax as the Government tries to plug a revenue shortfall in its budget.’

And this from the Australian:

‘Treasury officials are sharpening their focus on the $460 billion held in self-managed superannuation funds as the Gillard government searches for ways to recoup tax revenue to pay for disability services and school reforms.’

Got that? We bet you thought you were saving to fund your retirement so you don’t have to live off tinned hot dogs and two-minute noodles.

But what’s really happening is that the Australian government needs your retirement money so it can fund its wasteful and excessive spending.

Four years ago we warned about the government’s plan to raid your retirement savings. Few people believed us, but now it’s happening.

Last year we decided we’d had enough. So we founded and set up the Hands Off My Super petition. You can sign it here.

Maximising Your Returns Safely

But there was a key paragraph in the Australian article. It’s this:

‘Critics of self-managed funds believe they use the capital gains tax exemptions more aggressively than others because they usually have only one or two members who can move quickly to buy investment properties, while big funds hold large property portfolios over longer terms with benefits shared by hundreds of thousands of members.’

We've got one word for you: Socialism. If you want to take care of your own life, savings and retirement, then clearly the government and lobby groups consider you to be selfish and a threat to society.

This is why it’s more important than ever that you fight back against the incursion of the State into your private affairs. A topic we've discussed in Pursuit of Happiness is the opportunity for Aussies to live overseas when they hit retirement.

Our old pal Nick Hubble has even come up with four top overseas locations where Aussies can live almost like a king.

But living overseas isn't practical while you’re working and trying to save for retirement. That’s why it’s important you use the period of your working life to safely maximise your investment returns.

Will Commonwealth Games rescue Gold Coast property?

The Commonwealth Games may prove the elixir of life for the Gold Coast’s feeble property market, but whether the effects will be felt by the local population as a whole, or merely a select view housing prospectors, is up for debate.

Using information garnered before, during and after the 2000 Sydney Olympic Games, Residex founder and analyst, John Edwards said there’s significant evidence to show that major international sporting events have a positive impact on local housing markets continue reading...

20 Aussie property markets that are set to sink...

View the original article here...

20 markets where rent and prices are set to sink

by Aiden Devine

Investors beware. Victoria’s Bellarine Peninsula, a community just east of Geelong, is set for a tough time for property price growth – according to DSRscore.com.au data.

Four of the peninsula’s prominent suburbs, which include St. Leonards, Portarlington, Indented Head and Drysdale, are within a list of 20 national suburbs where prices and rents are set to remain flat or decrease over the coming months and, possibly, years.

The list included only suburbs with at least 15 properties being listed on the market.

Other property markets set to struggle include five suburbs spread across Tasmania, as well as Agnes Water, just north of Queensland’s Sunshine Coast.

Scotland Island, 30km north of Sydney and within the local government area of Pittwater, is the only suburb from New South Wales to crack the top 20.

The top 20 suburbs were ranked according to their DSR score – a measure of the ratio of supply to demand. A high DSR score indicates a market where prices are likely to increase. A low DSR score indicates a market where a number of indicators show that growth in prices and rents is set to perform badly.

In each of the 20 suburbs on the list a number of factors combined to show that property prices were likely to fall. Each suburb had a high rate of vacancies, low rental yields and, most importantly, a very high percentage of properties being sold on the market.

For Redwerks research director Jeremy Sheppard, inventor of the DSR score, the last factor is particularly significant in markets where there is already lacklustre demand for property.

“Market prices move in response to the changes of demand and supply. New infrastructure projects, rising population, new education or health centres, good employment opportunities and the like, all influence the demand for property in a particular location ... prices will rise if demand exceeds supply,” he says.

By that logic, Sheppard says that in markets with low demand and a high supply of properties, prices will struggle to grow. The same is equally true of rents. High vacancy rates tend to indicate markets with an oversupply of rental accommodation. In these conditions, rental prices are unlikely to increase.

20 markets where rents and prices are set to sink

Markets, Real Estate and SME

Markets

The market closed positively today. At the close, the benchmark S&P/ASX200 index was 32.2 points, or 0.66 per cent, higher at 5,036.9 while the broader All Ordinaries index was up 32.7 points, or 0.65 per cent, at 5,057.2.

On the ASX 24, the March share price index futures contract was 39 points higher at 4,995 with 25,967 contracts traded. Translated into plain English...nothing to get excited about.

Cash Converters Profits Rise - This makes me concerned, not excited when second hand stores business increase whether through sales or through lending.

"Cash Converters' half year profits have soared nearly 40 per cent, thanks to a boost in revenue from its personal loans business.

The second-hand goods retailer and supplier of personal finance on Thursday posted a net profit of $18.4 million for the six months to December 31, up from"continue reading...

Real Estate

Property Investors unlikely to profit from surge of Asian buyers

We are, by many accounts, living in the Asian century; a time when the nations of the world’s largest continent, led by China, will dominate the global economic, social and cultural landscape. In light of the enormous strides since just the turn of the millennium by the likes of China, South Korea and India, and the rise of brands like Samsung and Lenovo, it’s not a forecast I wish to contest (although forgive me if I don’t extrapolate too much from the success of Gangnam Style!) continue reading...

The history of Australian property prices...Are we in a bubble? A masters student's perspective...read here

SME

What drives the best entrepreneurs? - Original article on Forbes.com

The EXIT…that elusive pot of gold at the end of the entrepreneurial rainbow.  Whether by acquisition or IPO, the exit ranks as priority number one for investors and, with the increasing trendiness of running a  “startup”, many aspiring entrepreneurs.  The phenomenal success and 'celebritization' of Silicon Valley tech entrepreneurs like Zuckerberg, Dorsey, Page, Brin, and others has created a wave of would-be startup billionaires dreaming of Gulfstreams and Maybachs.  The allure of fame and fortune has attracted many to the world of entrepreneurship, but for as attractive as the siren of fortune may be, its sole pursuit can sow the seeds of destruction for any new venture.

It is said that the love of money is the root of all evil.  While this point is certainly debatable, current academic research is becoming increasingly clear that such a love, if not evil, is certainly isolating—a fate equivalent to death for ambitious entrepreneurs.

In his book Thinking Fast and Slow, Nobel Prize winning economist Daniel Kahneman cites compelling research done in the lab of Dr. Kathleen Vohs at the University of Minnesota on the psychological effects of money on human behaviour   In her work, Dr. Vohs focuses on the effects of psychological “priming”—the near subconscious influence of environmental cues—on human interactions.  Her work on the effects of monetary priming prods subjects with subtle cues like words and images associated with money.   She then measures various metrics such as persistence at difficult tasks, self-reliance, and selfish inclinations.

The results are compelling.

Test subjects that received monetary “priming” cues were statistically differentiated from those receiving neutral cues on a number of metrics.  Major differences were seen in specific characteristics of individualism and included:

• A two-fold increase in the persistence time to solve a difficult task
• A significantly reduced willingness to help a fellow student with a task
• A significantly reduced willingness to volunteer assistance to a stranger
• A significantly greater physical separation when seated across from a person during an introductory conversation.

For sure, a strong sense of individualism and persistence are essential attributes of successful entrepreneurs.  Yet other characteristics identified by Dr. Vohs as associated with a monetary focus such as a reluctance to be involved with or dependent on others, or to accept direction from outside parties are almost certainly detrimental.  The myth of the solo entrepreneur has been debunked in a number of forums and it has become a point of general agreement that great ventures require successful teams to execute.

Given this research, if great ventures result from great teams, it can be concluded that financial gain is not the primary driver of great entrepreneurs.  Unless we assume that entrepreneurs are crazy, the fact that the probability of windfall profits is vanishingly small for the vast majority of ventures only adds to this argument.

But then we must ask ourselves: why do entrepreneurs do what they do and take such great risks?  It seems clear that financial gain is not a sufficient explanation. 

 It is both too rare and, according to the research, actually impedes an entrepreneur’s ability to build a team that would produce great returns.  From a classical risk-reward perspective, it is simply not worth it.  

But the fact that entrepreneurs continue to take extraordinary risks for a small expected return (from a probabilistic standpoint) indicates that something else is balancing the scales.

The answer lies in what are becoming known as extra-rational motivations.  Such motivations lie mainly in the psychological rewards of being an entrepreneur and include benefits derived from:

• the thrill of competition
• the desire for adventure
• the joy of creation
• the satisfaction of team building
• the desire to achieve meaning in life
• and a host of others that have not been traditionally considered as drivers of economic growth.  

For entrepreneurs that, admittedly, take great risks for the slim chance of substantial financial success, these extra-rational motivations help to tip the balance.

The recognition that behavioural psychology plays a central role in economic development is profound and flies directly in the face of traditional theories of prosperity that focus solely on optimal resource allocation.  So the next time you see an entrepreneur and think they must be crazy for taking such risks, or dream of quitting your job to pursue a startup and become fabulously rich, make sure you check your assumptions, ponder your motivations, and reflect on the true drivers of great entrepreneurship (hint: it’s not the money).