Some of the team from Australian Diamond Portfolio, myself included, have just completed three days on the Gold Coast, where we attended this year’s Australian Investors’ Association National Conference.
Aptly titled; “Investing Beyond the Boom”, the theme of the conference and the data presented very much reinforced why investors needs to look at alternative solutions in an age where property markets are still jittery, cash rates are at all-time lows and falling, whilst equity and bond markets are at all-time highs, with risks everywhere.
Given this background, we were delighted, though not surprised to witness first-hand the interest from would be investors in alternative assets like rare coloured diamonds, with our booth swamped with inquiries over the three days.
One talk in particular, titled “Is Australia About to Run out of Luck”, delivered by highly respected independent economist Gerard Minack shone a spotlight on the risks in the economy right now.
What did this talk highlight?
Minack’s talk, and other material he has published this year essentially covered the downside risks to the economy, looking at falls in house prices, and the negative wealth effect this has as consumers close their wallets and try to save more. This was something we covered in last week’s “In the Loupe” where we included four charts which combined, give us great concerns regarding the ongoing risk in the housing market.
Other factors included the fall in building approvals, which by definition means less work for those in construction, with all the negative implications that has for income growth and consumer spending etc.
Most importantly, it will negatively impact employment, where leading indicators are weakening, which means unemployment and/or underemployment may well rise in the months and year ahead.
Add it all up, and Australia is a facing tough road in the next 10 years economically, with a real chance of recession. None of us can control that, but we can make sure our portfolios are positioned to protect and grow wealth as these economic forces play out.
Australian Diamond Portfolio at the 2019 AIA Conference