Punting in the financial markets

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As the famous financial wizard, Warren Buffet once said. “It’s only after the tide goes out you see who is swimming naked.“ 

Recent developments in global equities including the crypto markets certainly solidify that quote. Equity markets in the US and Australia have been in free fall since the reserve banks of both countries increased interest rates in order to slow down a huge jump in inflation.

Many investors in these assets have had nothing but wins for a number of years, more recently some assets have shed up to (and in some cases more than) 50 percent of their market value.

BNPL offerings Zip and Afterpay have fallen as much as 90 percent. Several crypto offerings have completely collapsed.

Invariably when assets rise to the enormous levels that these stocks / assets did, fundamentals are out the window as FOMO (fear of missing out) and greed, takeover.

Assets with dubious earnings and no clear picture on future earnings crash at some point. Tech bubbles, asset bubbles and stock bubbles are nothing new, however this time could be more brutal than the previous corrections.

While all the above might be a message of doom and gloom, there could be some light at the end of the tunnel for potential investors.

Property 

Although not as rewarding in terms of yield, it’s possible that the market has a small correction this year and next, then begins to rebuild.

Unlike the “specky” assets like untried equities and crypto, property operates in a supply and demand environment. Demand has and will continue to outstrip the supply for the foreseeable future.

If more builders / developers do become insolvent that widens the gap further. At some point the issues with supply chain will rectify and the cost of materials will even out.

Being a high quality mortgage broker is more than writing millions in loans every year, it’s about developing a partnership with your clients, continually discussing needs and options.

For those investors that took advice from an online pitch that’s going to make you rich, the penalties are significant and for those that made educated, informed and rational decisions, it’s opportunity time.

Sure, stay on the sidelines, however as Warren Buffet alluded to make sure you are fully clothed and ready to invest when the market turns again.