Generation Y Investor

Thursday, 20 June 2013

MARKETS, REAL ESTATE & SME

Hello dear readers and welcome to another edition of Markets, Real Estate & SME.

We draw your attention to what has been happening in the US as unfortunately, the degenerates determining their monetary policy have an effect on our wallets and where we should be concentrating our investments. Take it away Mr Canavan...

Markets

QE is Dead, Long Live QE - (View the original article here)

By +Greg Canavan • June 20th, 2013 via +Daily Reckoning Australia

‘If only, if only…If only me aunty had bollocks she’d be me uncle’

David Brent, The Office.

Or to paraphrase Ben Bernanke, ‘If only the US economy would start growing sustainably will we consider scaling down our QE program.’

If only, if only…

Nothing really changed last night with Bernanke’s speech, except the market’s perception of what’s going on. Bernanke confirmed that the Federal Reserve may or may not ‘taper’ — it all depends on the incoming data. But whatever he said, the market wasn’t listening.

Try this headline from Bloomberg this morning:

‘Bernanke Says Fed on Course to End Asset Buying in 2014’

But in the meat of the article comes this quote from Bernanke:

‘“If you draw the conclusion that I just said that our policies — that our purchases will end in the middle of next year, you’ve drawn the wrong conclusion, because our purchases are tied to what happens in the economy,” he said. “If the economy does not improve along the lines that we expect, we will provide additional support.”’

The market isn’t listening to what Bernanke says…it’s panicking. Just about everything got hit overnight. Equities, bonds, commodities, precious metals, all were slammed as the US dollar rallied. The Aussie collapsed 2 cents…that’s a massive move in FX land.

The speculators got it wrong. They positioned for a soothing Bernanke statement. But they just got more of the same. That is, if the economy moves into a sustainable expansion, we cut out the asset purchases…if it falters, we’ll ramp them up.

That sounds pretty straightforward, but it led to a massive unwind of leveraged bets in anticipation of the beginning of the end of easy money.

Is it really though? The ‘end’ of quantitative easing (QE) might just be the thing that ensures it remains a part of the financial lexicon for years to come.

Why?

Well, bond yields are on the rise. The US 10-year bond yield, a benchmark for the global cost of credit, traded around 1.6% at the start of May. Following another sharp sell-off overnight, it’s now at 2.33%, the highest level in over a year.

In general, global market interest rates follow the lead of the US 10-year Treasury bond. So rising rates represent a tightening of monetary conditions in financial markets. Which means the US economy, for years heavily dependent on easy money, will come under pressure soon as higher interest rates begin to bite.

And if the US economy comes under renewed pressure, Bernanke won’t cut QE anytime soon. So no end to QE…long live QE!

But what if the US economy really is recovering? And what if this recovery DOES end QE sometime next year and then interest rates move back to normal in subsequent years?

That, dear reader, is not going to happen. It comes back to the ‘Holden Moment’ we talked about yesterday. The whole structure of the US economy (and much of the global economy to be honest) depends on easy money. Car sales, home sales, government spending, consumer spending…all depend on cheap money.

Years of zero interest rates have robbed the system of real savings. In its place, the level of total debt has ballooned to keep up the façade of healthy and sustainable growth. And in the meantime, the structure (industry, incomes, employment, profits taxes etc) of the economy grows around this ongoing provision of cheap and easy money.

If you try to take it away, the economy will fall in a heap. That shouldn’t be a big deal but we’re talking about the world’s largest economy, and consumer of last resort here. The US’ ongoing propensity to consume more than it produces is made possible by easier and easier money.

As money becomes cheaper, debt levels grow to fund consumption. The whole economic structure of the world economy grew out of this falling US interest rate/rising debt/excess consumption model.

You think we’re going to get out of it easily? You think the Federal Reserve can all of a sudden put an end to this multi-decade trend without major problems? Throw in the world’s second largest economic zone, (Europe) which is in the throes of its own painful structural adjustment…and the world’s second largest economy, China, which is about to experience what it’s like when a credit bubble goes bust, and…well, Houston, we have a problem.

As an aside, check out China's inverted yield curves (on the right hand side) here. Usually, in a non-QE monetary environment, inverted yield curves portend a major economic slowdown...

So if QE can’t really end, where to from here?

We'll go back to our comments from a few weeks ago. That is, confidence in the Federal Reserve and Bernanke is receding, and liquidity will soon follow. One of the most beneficial impacts of QE is that it instils confidence. Confidence creates liquidity which creates asset price inflation.

In the Q&A following the press conference, someone asked about sharply rising bond yields over the past few weeks, and how that reconciles with the Fed’s view that it’s the stock of assets it holds on its balance sheet that determines yields.

Bernanke responded that ‘we were puzzled by that’, and then tried to explain it away by citing other factors like potential optimism about the outlook for the economy (optimism not shared by any other asset class, by the way).

When you admit to being puzzled by the effects of the largest monetary experiment in history, which you implemented, it’s a confidence drainer. And with confidence goes liquidity.

So where do you hide in a market that has lost confidence in its chief puppeteer? Gold? It’s falling too, right? There’s more to that question than meets the eye.

Tuesday, 11 June 2013

MARKETS, REAL ESTATE & SME

Hello dear readers and welcome to our usual Tuesday edition of Markets, Real Estate & SME, the news-filter that gives you access to the things that affect your wealth! Let's get straight into why we are here with an interesting read by Kris Sayce from Money Morning Australia.

MARKETS

Three Technology Breakthroughs You May Have Missed… (Original article here...)

By +Kris Sayce via +Money Morning Australia

An old pal cornered your editor over the weekend. He asked:

‘Don’t you feel annoyed that all this news has come out about tech firms letting government spies in through the back door, just as you launch your new technology service?‘

We had a simple answer, ‘No‘. Why? Governments spy all the time.

They’ve done it for thousands of years. You could argue that one of the most famous examples of government spying and treacherous behaviour appears in the Bible. You’ve heard of Jesus Christ, Judas Iscariot and the Romans, right?

We agree that it’s annoying from a liberty perspective. But not from a technology investingperspective.

From that point of view, regardless of what immoral and maniacal governments and politicians get up to, one thing is clear – you’re living at a time that could deliver one of the biggest technological advances in history.

That’s something to embrace, not fear…

You’ve doubtless heard of codes and ciphers. These go hand in hand with spying and have existed almost since humans began to write.

So, while we may abhor governments spying on people, we have to just acknowledge it and move on.

After all, if our ancestors had given up on technology advancements due to spying by the Pharaoh’s, the French Kings, or European Emperors, we would still be rolling around in our own filth.

But fortunately, our ancestors didn’t give up. They pushed on and got on with trying to improve their lives – despite the best efforts of governments to hold them back.

And getting on with things is exactly what the world’s top scientists, researchers, innovators and inventers have done over the past week…

While You Weren’t Watching – a Cure for MS?

While everyone else seemed to focus on the US government and its corporate patsies, or the latest feuding in the Aussie federal government, you probably didn’t notice three key scientific breakthroughs:

5 June, The Independent – ‘Scientists are claiming a breakthrough in the treatment of multiple sclerosis after an experimental therapy given to a small group of patients had dramatic results.

‘The therapy involved extracting white blood cells from the patients which were mixed with proteins and re-infused producing a 50-75 per cent reduction in the body’s immune response.

‘In multiple sclerosis the immune system attacks the myelin sheath that surrounds the nerve fibres causing symptoms ranging from numbness to paralysis.‘

5 June, Science Daily, – ‘Researchers at the University of Copenhagen, in collaboration with Seattle Biomedical Research Institute, the University of Oxford, NIMR Tanzania and Retrogenix LTD, have identified how malaria parasites growing inside red blood cells stick to the sides of blood vessels in severe cases of malaria. The discovery may advance the development of vaccines or drugs to combat severe malaria by stopping the parasites attaching to blood vessels.‘

7 June, Latinos Post – ‘Humanity may not be able to beam someone to and from a planet’s surface like in Star Trek, but according to a new report in Nature Physics, we’ve just found out how to perform quantum teleportation reliably – which is something that, dramatically, the crew of the Enterprise never seems to be capable of.

‘Researchers working at the Niels Bohr Institute at the University of Copenhagen have successfully teleported information between two clouds of gas atoms using a laser. ‘

We noticed them. That’s the type of thing your editor and our technology analyst (Sam Volkering) look out for every day. And just as importantly, finding ways to profit from them.

Those are just three breakthroughs. There are many tens, hundreds if not thousands of revolutionary breakthroughs happening every day.

Most of them stay within the confines of the science world because the mainstream press is too busy focusing on things that most people knew anyway – that the government is spying on you.

That’s a shame, because there is so much opportunity out there…

Twenty Thousand Years of Progress in One Century

As we say, you could just give up on the future and assume things will get worse. We’ve no intention of doing that. Or you could take a positive outlook and believe that things will get better.

That’s how our ancestors dealt with adversity. You can look at the folks who used new technology to flee persecution in Europe and build a life in the New World.

Or you can look at the Pamphleteers in the 17th, 18th and 19th centuries who used the printing presses to get their message out. Not to mention the scientists and innovators who heralded the Industrial Revolution.

And now the human race is at another inflection point. One that could result in more technological advances and more wealth than all previous advancements combined. As futurist Ray Kurzweil notes:

‘Because of the explosive nature of exponential growth, the 21st Century will be equivalent to twenty thousand years of progress at today’s rate of progress; about one thousand times greater than the 20th Century.‘

In other words, if you thought the rate of technological change over the past 40 years was impressive, it’s nothing compared to the rate of change you, your children and your grandchildren will experience over the next 87 years.

It will be truly revolutionary.

This is why we believe it’s so important for you to not stick your head in the sand and keep all your money in cash. Because if you want any chance to profit from this new revolution, you can only do so by taking part in it.

Cheers,
Kris

REAL ESTATE

Sydney ranked in top five most expensive cities for construction, as auction clearance rates fall

The Australian construction market is the most adversarial in the world, with high costs placing Sydney as one of the five most expensive cities in the world to build commercial, multi-unit high rises and hotels.

In global firm AECOM's annual collection of data from more than 10,000 construction projects around the world, Sydney ranked in the top five most expensive cities for each category of development because of market conditions, including ...continue reading

Tax Issues For Foreign Investors

Australia’s real estate market is attracting a large number of foreign investors looking to get into this lucrative sector. Eddie Chung explains the tax considerations foreign investors need to take into account when investing in Australia

The Australian property market has remained a relatively stable and attractive option for investors, particularly when compared with ...continue reading

Investors keen on property

Investors appetite for investment property is on the rise with confidence high due to low interest rates, according to a new Mortgage Choice survey.

Mortgage Choice found one quarter of Australian homeowners were considering buying an investment property, with over half keen to get the ball rolling in the next ...continue reading

SME

Launching start-ups not enough to make them fly

It was a big week for start-ups in Sydney – and by extension Australia. SYDStart was a sold-out success with great presentations, interesting life stories of successful entrepreneurs, company exhibits, pitches and lots of energy. And CeBIT StartUp, one of several CEBit conferences at the Sydney Convention Centre, was packed with its own set of exhibitions, programs for entrepreneurs and pitches.

There's no doubt that start-ups are a hot topic in Australia. It seems we are in the middle of a start-up revolution. And what's not to like about start-ups? Nothing – but ...continue reading

Coalition backing the competition watchdog against Woolies is a sign of things to come

If the Coalition wins government in September's election it's clear Australia's competition laws are going to get a major revamp in a move which could boost small business.

The Coalition has already promised it will conduct a "root and branch" review of competition policy if it is elected.

It's a policy the Coalition says will ensure small businesses are given a fair go and it's promised the review within the first 100 days of Tony Abbott being in office. Continue reading

Women-run start-ups missing crucial opportunities for capital

Y Combinator is arguably the best-known start-up incubator in the world. It's basically a fusion between The Apprentice and a 'live-in camp'.

The organisation holds two three-month sessions every year during which time those ideas that made it through the rigorous 'camp' selection criteria get mentored on everything from technical aspects of their particular model, through to the crucial art of the pitch.

In the most recent period, January to March, Y Combinator received 2633 applications for its bootcamp intake.

Among the eight start-ups that graduated from the San Francisco-based incubator's first class in the summer of 2005 was the social-news site Reddit, recently valued at $400 million. Today the average value of a Y-Combinator-financed start-up is ...continue reading

Until the next time dear readers...

Tuesday, 4 June 2013

MARKETS, REAL ESTATE & SME

Hello dear readers and welcome to another edition of Markets, Real Estate & SME.
The RBA decided to keep the cash rate on hold for another month at 2.75%, not that we expected them to do anything different but what we would like to know is have you seen any change in your personal spending capacity?

MARKETS

Whether or not you agree with him is irrelevant but you have to admit, Greg Canavan always gets you thinking...

Big Trouble in the Australian Economy....Everybody Relax

By +Greg Canavan • June 4th, 2013 View the original article here

In the movie Big Trouble in Little China there’s a classic line by the ‘hero’ of the show, Jack Burton. The group he’s leading is in a panic as they’re getting away from the bad guys. But Jack reassures them in a swaggering drawl… ‘Everybody relax, I’m here.’

Yesterday, Atlanta Fed president Dennis Lockhart did his best impression of Jack Burton. In a Bloomberg television interview he said,

‘There certainly seems to be an acute fixation on the timing of any adjustment to the asset purchase program and I guess I would just encourage everyone to not lose sight of the bigger picture.

‘Any adjustment is not a major policy shift. The high level of accommodation will stay in place.’

There you go…everybody relax, the Fed’s here.

Or maybe just the Atlanta Fed. Because before that, San Francisco Fed President John Williams said an improving US economy would allow the Fed to pare back its purchases of bonds in the coming months.

This has all got beyond ridiculous. These Fed muppets have absolutely no idea what they are doing. They are desperately trying to placate markets while pretending to be committed to price stability and withdrawing record stimulus.

Our friend Jim Rickards summed it up best in a recent tweet. ‘After two years of “risk on, risk off”, we now have “taper on, taper off”. Madness. There are no markets left, just puppet shows by the Fed.’

It wasn’t long before poor economic data turned the market from taper on to taper off. Because soon after the various Fed verbal acrobatics, we got news that US manufacturing contracted in May. The widely watched Institute of Supply Management’s gauge of manufacturing in the US fell to a four year low of 49, down from 50.7 in April. Any reading below 50 signals contraction.

But who needs manufacturing and the production of real stuff when you have the Fed?

Well, China could do with a bit more of it. After the ‘official’ reading came out over the weekend showing modest expansion, the HSBC reading out yesterday showed a manufacturing contraction. There’s a dilemma for you…do you believe the Chinese government or a bank? Either way, it shows China is struggling.

And you’d think Australia's economy could do with a little more manufacturing activity too. Our index came in at 43.8 in May, marking the 23rd consecutive month of contraction. While it was a better reading than the depression-like conditions of April (where the index had a reading of 36.7) our makers of ‘things’ are still clearly hurting.

That hasn’t been an issue for the past 20 months or so because we’ve had the mining boom to cushion the impact. But now that is going, going, gone.

So what does the Australian economy rely on to drive growth now? The RBA hopes that lower interest rates will lead to another boom in housing and consumption. Phil Anderson argues it doesn’t really matter…the stars are aligned to give housing another 14-year bull run.

Phil makes a convincing argument, but we’re sceptical. Then again our scepticism comes from taking note of the ‘fundamentals’, those quaint little bits and pieces of data that are meant to provide the foundation (or otherwise) for asset price movements. And they don’t seem to matter anymore.

Although RP data did report a 1.2% fall in Aussie house prices during May. Just a blip, we’re sure…

Anyway, we’ll see just how concerned the RBA is about the Australian economy at 2.30 today when it announces its interest rate decision. The consensus is that it will remain on hold. We have no idea what they’ll do. We can only tell you that rates will probably be a lot lower in six months’ time.

Because we doubt a new consumer or home construction boom will take up the slack of the slowing mining boom. So the RBA will have no choice but to resort to the same playbook that every other central bank in the developed world is resorting to. That is, cut interest rates and pray.

But Australia has one disadvantage in this game. We’re a peripheral economy and a large debtor nation. That is, we don’t have the same ability as the US, Japan, or even the UK to cut interest rates to the bone and still be able to attract foreign capital to fund our $800 billion-odd debt pile.

Yes we can cut interest rates, but that will send the dollar lower, which will eventually feed through to higher inflation, which will force interest rates back up. Keep in mind that although the higher dollar has hurt manufacturing and many other parts of the Aussie economy in recent years, it has enabled interest rates to remain very low and provided an added benefit for our foreign creditors to keep providing credit (that is, a currency windfall).

The strong Australian dollar has kept a lid on imported inflation…so even though domestic prices seemingly rise every other day, import prices have ‘deflated’ keeping the overall price level stable (that’s if you buy a mass-produced electronic item with your shopping every week).

A weakening dollar will slowly (it takes a while to flow through into the economy) seep into higher imported inflation…and combined with higher domestic inflation, you’ll eventually see rising prices play havoc with the RBA’s ability to blow another bubble…somewhere, anywhere.

But that’s probably a story for 2014. Exchange rate effects take time to flow through to consumer prices and you have to take into account the fact that companies might absorb or pass on higher costs emanating from a weaker dollar.

For now, it’s fair to say that Australia is between a rock and a hard place. Slowly but surely, the vice is tightening.

But don’t worry. Channel your inner Micawber. Something will come up.

Everybody relax…

Regards,
Greg Canavan
for The +Daily Reckoning Australia

REAL ESTATE

Rick Otton Reveals How to Get the Property Investment Answer You Want

Real estate millionaire Rick Otton’s recent Creative Real Estate podcast sheds light on tricky property investment questions. In a recently released episode, Rick, with one of his most successful students, tackles some listener questions about property investing. Mr Otton discusses a strategy to challenge the standard property investment mindset, using reframing to get the answers you want to common questions from ...continue reading

Falling Australian dollar could discourage Asian apartment developers: MacroPlan Dimasi

A continued fall in the Australian dollar could discourage Asian developers from buying up development sites and undertaking new apartment projects, property consultants MacroPlan Dimasi have warned.

The argument is counter-intuitive to the traditional notion that a weaker Australian dollar makes it cheaper for foreign investors to buy Australian real estate.

However, according to ...continue reading

Investment diversity key in volatile times

IT'S one of those times when Peter Gunning's investment view dovetails nicely with his personal circumstances. For the past few years the chief investment officer for Russell Investments has been earning US dollars and spending Australian dollars on his family in Sydney.

The exchange rate has been going the wrong way pretty much since Gunning's wife and four children moved back from the US to Sydney so the children could attend high school.

That is, until May, when ...continue reading

SME

Increase in minimum wage bad for business: ACCI

The $15.80 a week increase in the minimum wage is a "body blow" for business, the Australian Chamber of Commerce and Industry (ACCI) says.

While the Fair Work Commission awarded a "modest" increase that was less than last year, ACCI chief executive Peter Anderson says the decision is still excessive.

"Today's minimum wage decision by the Fair Work Commission is a body blow to Australia's small and medium business community which do the bulk of ...continue reading

Investors: the missing link for female entrepreneurs

Wendy Simpson knows the one thing she would do to raise the number of women in business leadership.

"For all the discussion about the statistics on the number of women on boards (15.7% on the ASX200), and the number of women in senior management, the number that upsets me the most is that only 2% of venture capital money goes into businesses led by women," the Springboard Australia chief says.

"If we fixed that, think of [how that] will shift our economy, and women's leadership in general."

The pressures women face sourcing capital is an issue close to Simpson's heart, given she experienced them herself back in 2010 while attempting to buy out ...continue reading

Australian Startup Incubator Pollenizer Reveals How It’s Making $3m Revenue A Year

Startup incubator Pollenizer made revenue of $3 million last financial year, pulling in about $750,000 in corporate consulting fees, $750,000 in startup consulting fees and $1.5 million from the 17 surviving startups in its incubation program.

But there was no profit: according to CEO Phil Morle, revenue barely covered operational costs, as Pollenizer provided design, mentoring, accounting and office space to its startups at cost price.

Pollenizer was founded by ...continue reading

That should do it for another week folks. Until the next time...

Tuesday, 28 May 2013

MARKETS, REAL ESTATE & SME

Hello dear readers and welcome back to another edition of Markets, Real Estate & SME.
This week it is all happening in Sydney with regards to the Technology world and Tech Startups alike with +SydStart and +CeBIT currently underway.

For those of you who are able to go to either of these events... I envy you! For those of you who are still unsure... Give someone else your ticket! These are not to be missed.

MARKETS

Who's right? Who knows! As far as I'm concerned, stay cashed up to exploit buying opportunities rather than jumping into investments to avoid missing out on a deal...

Why Australian Stocks are in Dangerous Territory - Original article here...

By Dan Denning • May 27th, 2013 +Daily Reckoning Australia

The Australian stock market has opened down. But our friend Phil Anderson is not worried. We’ve been working with Phil on a new project that you’ll hear about later this week. He reckons the all-time highs on the S&P 500 and the Dow Jones Industrials are confirmation that markets are heading much higher rather than crashing.

Phil looks at short-, medium-, and long-term cycles. The core of his work is the contention that an 18-year property cycle is at work in Australia, derived from a similar cycle in US land values. His basic claim now is that the US stock market is a signal that the Australian property market is on the verge of…well, we’ll let him tell you later this week.

But it was his forecast for commodities that caught us most off-guard when we last spoke with him. Phil has studied the work of 20th century Soviet cycle theorist Nickolai Kondratiev. Kondratiev argued that commodity prices moved in long cycles, or waves, of 60 years, with 30 years up and 30 years down.

Do a bit of googling and you’ll find many an analyst who tells you we’re in the middle of a Kondratiev winter. That is, folks will argue the commodity market peaked in 2007 and we’re in the early stages of a long-term downtrend. This is a version of Vern Gowdie’s secular bear market, but applied to commodities.

Vern’s position on Australian stocks will be correct if we’re in a 30-year bear market for commodities. But in the meantime, in his recorded remarks, Phil has told us that the commodity cycle isn’t even halfway over in Australia! You can imagine our surprise hearing that. But he made his case in detail.

You’ll hear more about that case in the coming days. But for now, have a look at the chart below from Australia’s official resource forecaster, the Bureau of Resource and Energy Economics (BREE). Last week, BREE reported that investment in the resources sector has reached a cyclical peak at around $256 billion.

BREE also reported that over $150 billion worth of projects have been cancelled or delayed in the last twelve months. It concluded that, 'The stock of committed investment has peaked and is projected to decline over the next five years as a result of fewer high value projects progressing through the investment pipeline.' Uh oh.

Source: BREE

This is a dangerous moment for Australian stocks, maybe as dangerous as any since 2007. Foreign capital seems to be leaving these shores. The Australian dollar's fall makes the country’s assets riskier than they have been in the last three years. This is through no fault of the Australian dollar. It’s simply the weak Japanese Yen making US-dollar denominated assets more desirable.

But there ARE signs of domestic unhappiness in Australia. The terms of trade are one such sign. The coming blow to national income through a falling terms of trade could be much bigger and burlier than is commonly expected, at least according to chart published last week by the Australian Parliamentary Budget Office. Have a look below.

Source: Parliamentary Budget Office

When we showed the chart to our colleague Greg Canavan at Sound Money Sound Investments — who’s been following a version of it for over a year now — he sent back the following reply, ‘Thank goodness for iron ore and coal huh? Now for the aftermath…national pay cut, which will manifest in higher unemployment, and a renewed downturn in property prices.’

There you have it! On one side of the argument you have forecasts for a stock market crash, a secular bear market, and falling property prices. And on the other, an argument for higher stock prices and an 18-year property boom. Who’s right? Stay tuned for more tomorrow.

Regards,
+Dan Denning
for The Daily Reckoning Australia

REAL ESTATE

PIPA upholds anti-spruiker campaign

Property Investment Professionals of Australia (PIPA) has continued the call for caution in light of recent spruiker concerns, urging investors to ensure full due diligence is carried out before signing the dotted line.

PIPA chair, Ben Kingsley, says the opportunity for investment in property is ...continue reading

Why investors should consider alternatives to residential property

As interest rates fall, making cash and term deposits less attractive to investors, there’s an increased level of interest in property. However, a stampede back into the old stomping grounds of residential property might not be in their best interests, as Mark Pratt reports.

Investing in ‘bricks and mortar’ property has long been an attractive option for ...continue reading

How to invest in property without getting burnt

If you want to invest in property, you’re in good company.

Of the 200 richest Australians in 2012, 55 made their fortune in real estate – by far the biggest single millionaire-factory in Australia.

And it’s not just the top end who are getting rich off land. The financial security of millions of middle-class Australians, perhaps yours among them, is maintained into retirement chiefly by the value of their homes.

Property is Australia’s largest asset class. But most Australians don’t use property for investment purposes. Which is exactly why you should continue reading...

SME

Budget changes are sting in the tail for Australian companies expanding overseas

The government this month announced a number of changes to the corporate tax regime intended to limit the ability of multinational corporations to avoid paying tax in Australia.

But the changes make it more expensive for Australian companies to raise ...continue reading

City of Sydney seeks to boost start-ups

The Sydney government wants to boost startups as it's a key part of the city’s economy, according to Deputy Lord Mayor Robyn Kemmis.

“The city will continue to identify opportunities for creative enterprises, and in particular technology startups,” Kemmis said in a keynote at the SydStart conference.

“We do recognise their signal presence in the new economy and recognize they play a critical role in ...continue reading

Start Your Pitches: It’s A Huge Week For Start-Ups In Australia

It’s a big week for the Australian startup scene with hundreds of investors due to attend two major conferences in Sydney.

About 400 startups and 200 investors have registered to attend the sold-out SydStart event at the Federation Conference Centre in Surry Hills on Tuesday.

The twice-yearly event launched in 2009. It features a conference, expo, presentations by startups and investors and a ‘pitchfest’ that determines who wins the SydStart startup trophy.

Meanwhile, German-born technology conference CeBIT will host 100 startups on its exhibition floor at the ...continue reading

Well there you have it folks. There is a lot to see this week, especially in Sydney... As a matter of fact, here is a list of events thanks to +Albert Mai on behalf of Startup Digest you may find interesting. Until the next time dear readers...

What's Going on in the Sydney Startup Community

CeBIT Australia ($44-$99)
Tuesday, May 28 - May 30 | Sydney Convention & Exhibition Centre, Darling Harbour, Sydney | View in Calendar

Australia largest event for Cloud, Big Data, Public Sector ICT and Security.

SydStart 2013
Tuesday, May 28 @9AM - 5PM | Federation Conference Centre @ 37 Reservoir St, Surry Hills, 2010 | View in Calendar

SydStart is Australia's largest professional tech startup event focused on disruptive innovation startups enabled by technology, investors, talent and our industry ecosystem. SydStart is the home of the tech startup community in Australia. Last year we had 1,100 tech entrepreneurs and investors and aspiring entrepreneurs. This time we have international and national keynotes, 20+ speakers lined up and more to come.

NSW Girl Geek Coffee Meetup
Tuesday, May 28 @12PM - 3PM | Max Brenner Ultimo @ 179 Broadway, Ultimo, 2007 | View in Calendar

This is a casual meet up and does not include presentations or activities. However, this is a great opportunity to meet other women in STEM (Science, Technology, Engineering and Mathematics) like yourself in a friendly environment.

The Startup Kids
Tuesday, May 28 @6PM - 9PM | Hub Sydney @ 2/ 101 William St, Darling Hurst, 2010 | View in Calendar

Hub Sydney will be doing a special screening of The Startup Kids, a documentary about young web entrepreneurs across the U.S. and Europe. There are interviews with the founders of Vimeo,Soundcloud, Kiip, Dropbox, Foodspotting and many others who talk about how they started their company and their lives as an entrepreneur. Learn more about The Startup Kids and check out the trailer.

Sydney ALT.NET: Practical DDD and Code Perspective
Tuesday, May 28 @6PM - 9PM | Thoughtworks @ 8/51 Pitt St, 2000 | View in Calendar

This month topics are Practical Domain Driven Design - Mohammed Abed and CodePerspective - Brendan Forster

Failcon Sydney ($99)
Thursday, May 30 @9AM - 5PM | Museum of Contemporary Art Australia @ 6/ 140 George St, 2000 | View in Calendar

It’s time to stop being afraid of failure, and start embracing it .FailCon will benefit anyone wanting to bring about change in their professional life, but who are hesitant to do so. Or, those people who have failed and are uninspired to try again.

Product Camp Sydney
Saturday, June 01 @9AM - 5PM | Atlassian @ 6/ 341 George St, Sydney, NSW | View in Calendar

ProductCamp is Sydney's premiere event for Product Management, Product Marketing, and Marketing professionals to teach to, learn from, and network with each other. ProductCamp is an un-conference, meaning that it is FREE to you! Your only cost is your participation – bring your ideas, lead a session in your area of expertise, facilitate a roundtable discussion, network, or volunteer.

Random Hack of Kindness (RHoK) - Global Hackathon for Humanity
Saturday, June 01 @9AM - June 02 @5PM | DiUS Office @ 8/ 220 George St, 2000 | View in Calendar

Random Hacks of Kindness is a global initiative that was started by Google, Microsoft, Yahoo, NASA and the World Bank. It brings hackers together with experts in things like bushfire response, climate change and other natural disasters. The aim is to spend the weekend building practical, open source solutions to real world problems. For more details, please go here: http://rhoksydney.org/.

Sydney Testers: Agile Testing
Monday, June 03 @6:15PM - 9:30PM | Atlassian @ 6/ 341 George St, 2000 | View in Calendar

Brad Futter will share some of my thoughts and experiences on how you can build quality into software while using agile practices, before inviting you to join me in an open forum. This will be a chance for you to nominate topics for discussion around agile delivery and building quality in. The topics will then be voted on with the top topics being discussed.

Tuesday, 21 May 2013

MARKETS, REAL ESTATE & SME

Hello dear readers and welcome to another edition of Markets, Real Estate & SME.
We have been rather quiet the past few weeks and hope to provide you with what you have been craving!
Lets get to business...

MARKETS

Once again Mr Canavan hits the nail on the head...

The Warning Signs for Australia’s Economy - View the original article here...

By Greg Cananvan • May 21st, 2013 +Daily Reckoning Australia

Now’s not the time to buy, but it’s certainly a time to do your research and work out who will continue to perform well in a more subdued spending environment. The question is though, just how subdued will the spending environment become as the China rebalancing story plays out over the next few years?

Well, Ross Garnaut, Australia’s well-known China watcher, is vying with your editor to be the biggest China bear. He reckons mining investment as a percentage of GDP in Australia's economy will fall from the current 8% all the way back to 2%. And if that happens without consumption or housing or business investment taking up the slack, come 2014 Australia could be looking at its first recession in 23 years…

We’ve been making the same argument. We’ve been saying this recent rally in shares and house prices is a trap…a trap to make you think everything is as it’s always been.

But the point of our (and Garnaut’s) warnings is that Australia's economic future will be very much unlike its past. Our largest trading partner is undergoing a dangerous economic rebalancing which will mean much less demand for our raw materials.

The profit warnings from all the mining services companies are simply a warning for Australia's economy. Times are changing!

But if the action from the mining services sector portends a different, more austere future for Australia's economy, no one is telling Commonwealth Bank investors. Yesterday, the stock hit an all-time high. On a price-to-book value basis, it’s the most expensive bank stock in the world, according to analysis from UBS.

‘Price-to-book’ simply tells you how much of a premium a company’s share price has to its equity, or ‘book’ value. According to UBS, Comm Bank trades at 3.6x its tangible equity value. That’s high, and reflects the banks’ very strong competitive positioning and high return on equity.

But you would have to question how long Comm Bank, and Australian banks in general, can maintain world-beating levels of return on equity as the economy faces a mining induced slowdown. Don’t forget, banks are highly leveraged entities. They do very well in good times due to this leverage. But as the Australian economy slows and unemployment picks up, the leverage works the other way.

The recent reporting period for the banks showed profit growth on the back of cost cutting and lower bad debt levels. Top line growth was flat at best. And as the Australian economy slows, you would expect to see bad debt levels pick up again. This is not an environment that appears to justify record high share prices for the sector.

If Australia’s outlook is changing, then the banks are yet to admit it…

Regards,

+Greg Canavan
for The Daily Reckoning Australia

REAL ESTATE

South Korea shows rising interest in Aust property sector

The sale of GPT Group Ltd's half-stake in the $800 million Erina Fair shopping centre in NSW to South Korea's National Pension Service (NPS) is expected to set off a flurry of activity as South Korean groups eye Australian real estate, according to The Australian.

Up to $1 billion worth of Australian real estate could ...continue reading

No plans for Labor or Coalition governments to abolish negative gearing

The Coalition currently has no plans to remove negative gearing tax breaks used by a third of Australian property investors if it wins power in September.

Even if removing negative gearing were recommended as part of a broader White Paper tax review, it would only seek a mandate to change tax rules as part of a second term election campaign.

A story on thewest.com.au claiming shadow treasurer Joe Hockey would review negative gearing tax breaks for property investors as part of an incoming Coalition government tax review, has been rubbished by ...continue reading

Lend Lease receives industry acclaim at prestigious Property Council of Australia Awards

Lend Lease has been recognised as one of Australia's leading property companies, receiving seven awards at the 2013 Property Council of Australia (PCA)/Rider Levett Bucknall (RLB) Innovation and Excellence Awards.

The Awards, presented at a gala dinner in Sydney on Saturday 18 May, celebrate innovation and leading practice within Australia's property development and investment industries.

Competing against the country's premier development projects, the $500m Darling Quarter and Commonwealth Bank Place precinct in Sydney received ...continue reading

SME

Small business warns unemployment will rise if the ACTU's wage claim succeed

Unions and the small business lobby are at loggerheads over a pay rise for the country's lowest paid workers.

The Australian Council of Unions (ACTU) says a $30.00 per week increase in the minimum wage is necessary to prevent the country's lowest paid workers from falling further behind.

The ACTU's Ged Kearney says those most at risk work in ...continue reading

Number of businesses in Australia continues to stagnate: ABS

The number of businesses in Australia remains static and has failed to increase according to data released today by the Australian Bureau of Statistics.

The ABS figures show less new businesses are starting up in Australia, but the number of businesses shutting up shop has also decreased slightly.

For the 2011–12 financial year, the entry rate of businesses at 13.5% was higher than the exit rate at 13.1%, resulting in an incremental increase in the number of overall businesses.

This means the number of actively trading businesses in Australia has ...continue reading

Angel investors at the table

Imagine ten of Australia's hottest technology start-ups champing at the bit to demonstrate their wiles in front of four wealthy, "angel" investors. At stake isn't the usual $50,000 to $100,000 "seed" money, but a chance to take the business pitch to Singapore and meet an array of cash-rich south-east-Asian investors.

At e27's Echelon Ignite conference in Sydney on 8 May, ten pitched but only one ...continue reading

Try not to do this when you pitch for capital...

That's it for today dear readers, thank you for the messages we have received, your feedback is of immense importance! Have a fantastic week! Until the next time...

Saturday, 27 April 2013

MARKETS, REAL ESTATE & SME

Good morning dear readers! For those of you that missed our post yesterday, do not fret, we will provide an update later in this edition of Markets, Real Estate & SME. We won't muck about, lets get straight into it!

MARKETS

Bravo Nick! A wonderful illustration on the perception of value and where you can go buy 18 tonnes of Pork Belly!

Is this: Inflation or Deflation? (View the original article HERE)

By +Nick Hubble • April 27th, 2013

The biggest question facing investors in this new age of centrally planned economies is this: inflation or deflation?

That sounds like a mind numbingly boring idea. So let’s put it another way.

Right now, the world’s policy makers are walking a tightrope. On the one side is a plunge into inflation. On the other deflation. The dramatic part about this tightrope is that it isn’t flat. It’s leading higher and higher. The further we go along the wire, the more dangerous a fall becomes.

If we get severe deflation, the entire monetary system of the world could collapse. Stock markets will crash, banks will fail, and paper and electronic wealth will disappear. It only gets worse. Without banks, supermarkets wouldn’t be able to restock inventory, petrol won’t be trucked to petrol stations and Tasmania would become a desirable place to live.

‘Inflation’ means a world just as chaotic, but in a different way. Prices would rise so fast that restaurateurs have to reprint new menus each week. Your spouse would rush down to the supermarket as soon as you’re paid to try and buy things at reasonable prices. Your entire investment portfolio would double, but only be worth half.

Now the question of inflation or deflation really means something, right?

But could things really get that bad? The answer to that question is yes, depending on how far we let central bankers and governments go along the tightrope. Back when your editor used to teach tightrope walking, we never got very far at all. In fact falling off elegantly was our speciality.

So in that spirit, how do you fall off a monetary tightrope without wiping out your wealth? How do you secure yourself from both an inflationary and a deflationary drop?

Get Real

The only kind of wealth that can survive both inflation and deflation is real tangible wealth. Real stuff has the advantage of being real (believe it or not). Its cash price can go up, down and all over the place without changing what it is. So, deflation or inflation, it doesn’t change.

Money is just a measurement. Well, it’s actually much more. It’s a unified medium of exchange allowing division of labour and solving the double coincidence of wants. But when it comes to investing, it’s important to realise that money is just a measurement.

If the price of a porkbelly on the Chicago Mercantile Exchange (CME) goes up 10%, it’s still just a porkbelly. What’s really changed in that scenario — the value of the porkbelly or the value of money?

You might answer that the value of the porkbelly has gone up, as you can sell it and get 10% more wheat bushels for your money. But what if you really want porkbelly? Hasn’t money then lost 10% of its value in your eyes?

Of course, porkbelly prices might fall 10% instead. Your money would be worth 10% more in terms of porkbellies, but 10% less in terms of everything else.

Now you probably don’t want any porkbellies from the CME (they come in lots of 18 tonnes). But if you can find things you do want, what would the effect of investing in them be? Would you withstand both inflation or deflation? Yes, because the value of your money would change, but the value of your real stuff wouldn’t.

Of course, you could end up selling the real assets you decide to invest in. Some of them tend to rise in real value over time. The word ‘real’ is crucial in that context. The value of a banana can increase even if its price falls. That’s because the prices of other items can fall faster, leaving you better off.

But porkbellies and bananas have a fairly poor investment history. Incidentally, bananas have outperformed the stock market though. The Dow Jones Industrial Average used to be worth more than double the amount of bananas it is today. In other words, the prices of shares have lagged well behind the price of a tonne of bananas.

Source: Sovereign Man

What other real investments might there be for you to protect yourself from inflation and deflation at the same time?

Real Investments

The March issue of The Money for Life Letter featured investing in wine. We can’t reveal exactly how, but it involved a time travel discount. You can find out more here.

Gardens are another opportunity. Fruit trees, vegetables and herbs can save you big dollars in the long run. Not to mention improving your lifestyle and health. Some families make a living by charging other people to pick their strawberry fields. How’s that for a life? All you do is own a real asset — strawberry plants — and other people pay you to pick and eat them.

Energy is a surprising opportunity to make a real investment. Solar panels and solar hot water systems prove their value by saving you money. In Europe, wood is the number 1 source of renewable energy. In Germany, 38% of non-fossil fuel consumption comes from burning it.

To be clear, power stations in Europe burn wood pellets and saw dust to generate electricity. Power companies just plant as many trees as they burn to offset the pollution. Because of technology, the process of generating power can actually reduce the amount of carbon in the air! All you have to do is plant more trees than you burn.

Why not use the remarkable technological breakthrough of burning wood to your advantage and install a fireplace? It could cut your heating bill in half.

All these investments in your life are inflation and deflation proof because they are real. They can’t be ruined by central bankers or stolen by bankrupt financial institutions. If you definancialise part of your wealth, you can watch the tightrope act safely from the ground below.

Nickolai Hubble
The Daily Reckoning Weekend Edition via +Daily Reckoning Australia

REAL ESTATE

Australian Property Trusts Overbought: Morgan Stanley

Australian real estate investment trusts, known as A-REITs, have run hard so far this month, outperforming the broader S&P/ASX200 index by more than 8% on average.

That performance has led Morgan Stanley MS +0.09% analyst Lou Pirenc to question whether their premium is justified.

“In the absence of a pick-up in growth, we believe they ...continue reading

Reuters

250 Australian suburbs tipped to double in value

Real estate data firm RP Data says there will be a doubling in property values in over 250 Australian suburbs in the next decade. At the same time, renters in almost 800 suburbs are likely to see weekly rent prices double. RP Data believes Australia’s top property investment prospects include 263 suburbs or towns with the potential to see 100 per cent growth in the next ...continue reading

How property-hungry Aussies see the global economy

Three hundred and fifty people cram into Brisbane Sofitel's Ballroom Le Grand on a stormy Friday afternoon.

I ask ex-journalist Kathy Mac Dermott, the Queensland executive director of the Property Council of Australia, if it's a barometer of improving fortunes that so many people are attending its $A135-a-head lunch.

The drawcard isn't a boozy Friday lunch, she says, but rather the insights of today's speaker, ...continue reading

SME

Australian SMEs lose out from failure to participate in report on small business finance

Australia has once again failed to participate in an international report on small business finance and this omission will cost small business.

The Organisation for Economic Development and Co-operation conducts a yearly report, Financing SMEs and Entrepreneurs 2013: An OECD Scoreboard, which looks at access to finance for small and medium-sized enterprises.

The report was published on Friday and found access to finance remains a key challenge for small and medium-sized enterprises and a stumbling block to recovery in most countries.

The report found SMEs requesting loans in 2011 generally faced ...continue reading

Social media use by Australian small businesses set to rise

Econsultancy, the Sydney based specialist publishers of independent research, analysis and advice on digital marketing, social media, ecommerce, SEO, mobile and tech for businesses has said time spent on social media in business is likely to grow even further.

Following the publication of Bibby Financial Services Australia’s bi-annual study of over 200 small businesses in February, Econsultancy said it ...continue reading

Startups could contribute $109bn to economy by 2033: PwC

Summary: Backing the startup sector's claim that it could help save the Australian economy once the mining boom goes bust, PwC has released its report showing that entrepreneurs could provide an injection of $109 billion and 540,000 jobs to Australia.

Recent claims about how the Australian economy will flounder unless the country invests in startups has left critics questioning what impact entrepreneurs could possibly have. According to Pricewaterhouse Coopers (PwC), it's AU$109 billion and 540,000 jobs.

The report, "The Startup Economy: How to support tech startups and accelerate Australian innovation", estimates that ...continue reading

I passionately agree with Pricewaterhouse Coopers. Though capital expenditure in mining has come to an end, mining will still generate massive amounts of profit to the economy for years to come. It has however lost its flavour, along with capital expenditure decreasing, so the number of jobs associated are decreasing. The Startup Scene in Australia is still young and is definitely undergoing massive growth, we can expect great things from Australian Startups!

Until the next time dear readers, have a great weekend and keep your eyes on Generation Y Investor for some exciting posts coming during the week!

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Thursday, 20 June 2013

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Tuesday, 28 May 2013

MARKETS, REAL ESTATE & SME

Tuesday, 21 May 2013

MARKETS, REAL ESTATE & SME

Saturday, 27 April 2013

MARKETS, REAL ESTATE & SME