Economic reporting is all about perception. So while many commentators thought the main news of the week – low inflation and no interest rate hikes – were bad news, we ordinary souls in the real world thought it sounded rather good.
So prices won’t be skyrocketing. And interest rates will remain low. Sound like bad news to you? Thought not.
The consumer price index climbed by just 0.2 per cent in the June quarter – half the consensus forecast of 0.4 per cent. The annual increase was 1.9 per cent, well down on the average forecast of 2.2 per cent.
The result pushes the annual rate back down below the bottom of the Reserve Bank’s 2 to 3 per cent target range, after it briefly popped above it, to 2.1 per cent, in March.
‘‘Overall the June quarter again highlighted the lack of any broad inflationary pressures in the Australian economy,” said Westpac senior economist Justin Smirk (no, really!).
UBS economist George Tharenou predicted: “We expect rates on hold until the second half of next year.”
Australian Bureau of Statistics reckons oranges, mandarins and apples are a drag on prices. But Cyclone Debbie is still pushing up staples like tomatoes , beans, cucumbers, melons, berries and bananas up.
Over the past year, vegetable and fruit prices are up 11 per cent, partly due to bad weather.
Equality. It’s the topic of the hour, if you listen to Canberra’s finest.
Apparently, Labour is going out of its way to show that Australia is a country full of have notes with very few haves (doh!).
The Coalition, on the other hand, says our social welfare system means everyone has access to the same benefits and amenities as James Packer. So what’s the problem?
Treasurer Scott Morrison insists: “The poorest 20 per cent of households, on average, receive welfare payments and social services worth more than eight times what they pay in taxes.”
Apparently, this is the highest ratio in the OECD and about 50 per cent more than the next most-targeted country, New Zealand.
Mr Morrison cites Productivity Commission findings that 40 per cent of families pay no net tax, after taking account of their transfer payments, such as family benefits.
“The reality is the top 10 per cent of income earners in this country pay almost 50 per cent of the personal income tax received by the government,” he says. “The top 1 per cent of income earners pay a staggering 17 per cent of all tax received. I’d say that was paying a pretty fair share.
To then say that their tax rates should be increased even further is nothing more than a lazy, cynical envy tax.”
Marcus Padley, the author of the daily stock market newsletter Marcus Today, posed a question that has been bothering us for a while: Can you turn $10,000 into $1 million?
Writing in The Sydney Morning Herald, he made this important point: “First thing to do is to accept that you will not achieve this goal without being prepared to lose all your money. You will not achieve it in the bank, in cash, in property or in managed funds. There is no “average” return in any asset class that will suit you. You need to win Tatts Lotto or place and win some long odds bet at the bookies.”
Not too promising so far.
He suggests two options: build a business or play the share market.
We’re guessing building Google is not for most people. So what about the share market option (remember, this guy runs a stock market newsletter!).
“If you try to achieve this goal in the sharemarket you will not do it through diversification . A ‘portfolio’ is not for you. You will only achieve it through two techniques. The first is to find one stock, one fantastic ‘Rocket under a Rock’ and ride it to a million. Or two, get a lot of stocks right consistently over a long period.
In other words, you need to develop a system for investing and build the capital by consistently successful trading over a long, long time.”
Too hard? Wait…Marcus had done the numbers.
“To turn $10,000 into $1 million you need a stock that goes up 100 fold. That’s a 10,000 per cent return…”
And he has some examples:
Fortescue Metals turned $10,000 into $73,166,166 between September 1990 and June 2008; 17.8 years. This is the biggest single return of any stock over any period in the All Ordinaries.
UXC Limited was the fastest of all, turning $10,000 into $6 million between June 1998 and March 2000 in the tech boom.
Paladin turned $10,000 into $13.5 million between April 2003 and April 2007; four years. Third biggest return and the third fastest.
“Bottom line, it is possible. But it will not be easy and it could take 42 years.”
Marcus points out: “And how on earth are you going to stop yourself selling when you have doubled your money to $20,000? And what are you going to do when it falls on day one? And the big one, which stock do I start with?”