-=> Quoting Paul Zagoridis to Bob Muirhead <=-

Hi Paul
 

 BM> the AOI will struggle to get to 2150 by calendar YE.  Its a race now

 PZ> I think struggle is the operative word. I'd be amazed to see it that
 PZ> high unless something miraclulous happens. I'm a bit of a bear at the
 PZ> moment ...

Agree.  We may see 2100 this year if the Dec/Jan rally happens.
 

 PZ> True its tied - but I look at how closely our currency moves with the
 PZ> USD and that makes me worry more about the US outlook. When Asia
 PZ> sneezed we catch cold, but when the US sneezes we get pneumonia

Right.  About 60% of the AOI variance is explained by variance in the
DJI, according to Were.  The US is definitely toppy.
 

 PZ> And how long will we continue to face high real interest rates? The
 PZ> Reserve Bank fears a breakout of inflation. Housing loan figures have
 PZ> recently helped on that front. But employment and profits aren't
 PZ> going to do great shakes for a while.

I reckon we might see a softening of interest rates in mid-95 ahead of
the final run up for this cycle.  The softening, plus good earnings
reports in Feb 95 might spark the market up a bit.

 PZ> Having said all that, I must say that I have some hope (I must be an
 PZ> optimist!). Low inflation and affordable interest rates encourage me
 PZ> to park most spare cash in stocks. Well managed companies should see
 PZ> nice profits for the next 5 years. I'd avoid Index weighted protfolios
 PZ> and try to invest in good businesses. Plus keep a small reserve to
 PZ> speculate on the next round of craziness.

I agree.  I am now slowly building liquidity, but will keep 80% plus of
the portfolio.  History shows that over time shares do better than
property.

Each year I do an analysis of successes/failures.  Failures mostly arise
from not cutting losses early enough. How do you handle this?

 PZ> Another thing to watch out for is the property market. Interest rates
 PZ> are on the way up - and incomes are not headed that way. I expect to
 PZ> see some distressed sales in about 2 years time.

Yes.  Residential property is not so great now that inflation looks like
being low for quite a few years and the demographics of our population
will slow down household formation.  Unless you go to Queensland, that
is.   Commercial is still good, but you need big whacks of money to get
set.  Forget about partnerships and strata title offices/shops.

Rgds

Bob


--- Blue Wave/Max v2.12 [NR]