MARKETS, REAL ESTATE & SME

Hello dear readers and welcome to another edition of Markets, Real Estate and SME. Being a short week and month end, I can tell you I am glad it's officially long weekend!
But back to what's important...

MARKETS

Respect the Market Trend, but Don’t Expect it to Last - View the original article here...

By +Murray Dawes  via +Money Morning Australia 

We saw some fairly serious selling pressure in Europe last night with attention turning to Italy, where it looks like they’ll have trouble forming a government. An Italian bond auction also fell short of expectations and so interest rates there headed sharply higher.

The banks of Europe have been hit over the last few days since the announcement of the Cyprus deal and the bumbling honesty of the Dutch Finance Minister Dijsselbloem (say that three times quickly).

The banks that are attached to the teat of the ECB via the LTRO (Long Term Refinancing Operation) are the main ones coming under fire, as you would expect.

But once again we were saved from the gates of hell by the US market, which opened down but then steadily rallied all day long to close pretty much flat on the day on very low volume and the lowest average trade size of the year.

Credit markets in the US are not being dragged along for the ride to the upside, and whenever a divergence opens up between credit and equities you can be sure it is equities that are living in dream land…

How to Trade the Market

But the fact is the old saying about the market is right. ‘Where the market goes that’s where it is.’ It sounds like a silly statement when you first read it, but when you think about it there is some good advice to be gleaned.

Our perception of the market is not the market. Whether or not the market is a completely fraudulent, manipulated farce (which it is) doesn’t matter. What matters is the price and only the price. We have to play by the rules we are given and there is very little point in jumping up and down when the price action doesn’t agree with our expectations.

Fighting the market is a losing game ultimately. Who is your opponent when you are fighting the market? It doesn’t take too long to work out that you are fighting yourself. The market is always neutral.

It doesn’t really care if you make a million dollars or lose your shirt. The battle is always internal. Every skip of the heart as prices move is caused not by the market but by our reaction to it.

As Marcus Aurelius, an Emperor of Rome and one of the great Stoic philosophers, put it, ‘Stop perceiving the pain you imagine and you’ll remain completely unaffected. External things are not the problem. It’s your assessment of them. Which you can erase right now. If the problem is something in your own character, who’s stopping you from setting your mind straight?’

And just to force the point home he also said, ‘I can control my thoughts as necessary; then how can I be troubled? What is outside my mind means nothing to it. Absorb that lesson and your feet stand firm.’

Marcus Aurelius fought battles with the rampaging Germanic hordes in the last decade of his life while he wrote the aphorisms above in an amazing book called The Meditations. If anyone has the right to give us advice on how to cope with the vagaries of life it is him.

I think we all know that it would take a super human effort to remain unaffected by everything that occurs externally from us. We are emotional beings filled with ego. It sounds great in theory to stand aloof from the market and make decisions without an ounce of internal disturbance.

I think the best we can hope for is to understand how irrational we can be in the face of a gyrating market and create as many rules as necessary to place a straightjacket around our impulses.

That is really the basis of technical analysis for me. It is not a crystal ball. It is just a windsock that gives you a hint of the underlying forces driving the market.

It helps to create lines in the sand where I can accept that I am wrong quickly rather than relying on hope, which we all know ‘springs eternal’. If you are interested, have a look at a presentation I have done about my trading approach and why I think there are some great trading opportunities coming up. You can view it here.

What I find intriguing about the current rally is that my trending indicators all turned up late last year but I chose to ignore them because I am fundamentally bearish. The feeling that, ‘I am right and the market is wrong,’ is a hard one to shake. The market, of course, is always right.

This then throws up the challenge to let go of all ‘views’ about the market and to rely purely on your technical indicators for all trading decisions. There is no doubt that whatever your view on the market happens to be there will always be a period where the market will make a fool of you.

The bulls get killed in bear markets and the bears are skewered in bull markets, like now. I don’t know of anyone who is bullish in bull markets and bearish in bear markets and constantly gets the shift in trends right. No one.

There’s a Difference Between Trading and Opinion

Most market commentators aren’t traders. They just wax lyrical about the markets and their views but they never say when they are proven right and when they are proven wrong. No targets and no stop losses, just sweeping views that make it impossible to pin them down later for being wrong.

Actually trading the markets is a completely different kettle of fish. Volatility is so intense that you can be completely right about your big picture view, but if your timing is out you lose money. You can get stopped out of a stock and then watch in horror as it turns around almost immediately and heads in the direction you expected.

When that happens should you jump back in? It’s moments like these that no one tells you about before you start trading. The learning curve when entering the markets is immense and really it’s never ending because the market itself is always changing.

The rise of High Frequency Trading (HFT) has changed the structure of price action, perhaps forever if the regulators aren’t willing to step in and level the playing field.

Another factor affecting asset markets is of course the worldwide money printing and ZIRP (zero interest rate policy) of the major central banks.

This is a new world that we live in. How long this game lasts is really anyone’s guess. I think there are many people that know it can’t go on forever but as always it all comes down to timing.

My ‘view’ is that we are close to a major market top, but as I said above ‘views’ aren’t worth all that much. While the trend remains up in the US markets I will just have to accept the fact, and wait until my charts tell me that the trend has changed.

So get prepared for the headlines screaming that all is well and new all-time highs have been reached in the S+P 500. But don’t believe for a minute that the price of the market is a true reflection of the state of the real world.

Murray Dawes
Editor, Slipstream Trader

REAL ESTATE

Australia taking lion's share of Asia Pacific commercial property investment: Report

Nearly half (45%) all real estate investment into the Asia Pacific region is flowing into Australian commercial property markets.

This is double the next biggest markets of Japan (19% of investment) and China (18%), according to Jones Lang LaSalle, with investors attracted to Australia by its transparent markets, efficient regulatory regimes supported by solid economic fundamentals and relatively high yields.

Offshore buyers of Australian commercial property are now around...continue reading

Easter property bounce shows sellers are no bunnies

Hold on to your hats: it looks as if Australia's property markets are about to take off and the Easter sales will show just how far and how fast the ride will be.

Housing Industry Association chief economist Harley Dale says this will be one of the most important Easter sales in a long time.

"Sales are...continue reading

Investors Enjoy ‘Perfect Storm’

Conditions for investing in property are becoming increasingly attractive as lower mortgage interest rates and high rental yields multiply Australia’s positive cash flow opportunities.

This is according to Smartline executive director Joe Sirianni who points to record low interest rates and some of the best...continue reading

SME

2013 MYOB Business Monitor: SMEs reveal top initiatives that would turn their vote this election

Dissatisfaction with Federal Government drops from record high, but rises among start-ups

MYOB released new research in the wake of the Federal Government’s appointment of the fifth Minister for Small Business since 2010. The study reveals more than half of Australia’s small to medium business operators (SMEs) are dissatisfied with the government’s support for helping businesses like theirs succeed.

Dissatisfaction has dropped from the record-high found in the previous study, completed in May 2012. However...continue reading

Govt pledges $100m for tech start-ups

The Australian government’s Innovation Investment Fund has pledged at least $100 million to local venture capital funds, climate change, industry and innovation minister Greg Combet has announced.

The government funding will be matched dollar-for-dollar by private sector investors such as superannuation funds and high net worth individuals. It will see MH Carnegie & Co.’s Carnegie Venture Capital receive a combined $80 million, while GBS Venture Partners and Innovation Capital Associates will each receive $60 million.

“Successful start-ups are essential to...continue reading

Franchisees making the cut

The franchise sector in Australia recovered from the global financial crisis in a stronger position than small business, with a net growth of 4.4 per cent for new franchise businesses during the past two years.

Australian small businesses grew only 3.6 per cent in 2010 and 0.4 per cent in 2011, according to data from the Australian Bureau of Statistics.

The resilience of these businesses during difficult economic times can be attributed to the...continue reading

That's it from us for this week. Have a fantastic, safe and blessed Easter long weekend! Until the next time...