Pete Wargent blogspot

Co-founder & CEO of AllenWargent property advisory, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds, & private investors.

4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the better property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete Wargent is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.

"Pete's daily analysis is unputdownable" - Dr. Chris Caton, Chief Economist, BT Financial.

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Saturday, 14 January 2017

What's around the corner?

The greatest

I once saw an interview with the legendary television commentator Murray Walker, veteran of more than half a century in motorsport, in which he was asked his opinion on the greatest Formula 1 driver of all time. 

With drivers like Ayrton Senna and Michael Schumacher on the scene, if there was one thing I was certain of it was that Walker wouldn't give a straight or definitive answer.

Yet he did exactly that: "Juan Manuel Fangio".

Maturing with age

Recently Max Verstappen, son of the Dutch Formula 1 driver Jos Verstappen, won his first Grand Prix at the age of 18, having begun karting at the age of four.

The Argentine racer 'El Maestro' Fangio, on the other hand, did not even commence his Formula 1 career until he was a mature age, winning his first title in his forties (there's hope for me yet!), in an era with very little driver protection when a crash often meant an untimely death. 

At the Monaco Grand Prix in 1950, there was a huge pile up of cars around the famous Tabac corner, completely hidden from El Maestro's view. 

As he tore along the track's Monaco harbourside it seemed certain that he would crash at an enormous speed into the wreckage, yet as he approached the blind bend, Fangio instinctively slowed, and managed to avoid a possibly fatal collision. 

Naturally, he went on to win the race. 

Intuition, or a sixth sense?

Being involved in motorsport in such a lethally dangerous era, it's no surprise that drivers could become deeply philosophical about such moments.

Had God spoken to him warning him to ease off the accelerator, Fangio wondered?

Upon much thought, Fangio realised that he intuitively knew that something was different; something was not right as he approached Tabac. But what?

What was different was the colour of the crowd in the grandstand.

Nearly a decade-and-a-half earlier, there had a been a similarly dramatic crash, and Fangio had seen a photograph of the incident in which the fans in the crowd had turned their heads to look at the carnage.

As Fangio flew down the straight towards Tabac in 1950, in his peripheral vision he somehow clocked that the crowd was not looking down the straight at him, but instead had turned as one to survey the carnage.

He was seeing the backs of their heads, his instinct told him to slam on the brakes, a potentially life-saving course of action. 

What's around the corner?

Obviously, mine is a blog about finance, not motorsport (which is just as well, for it would be a very short-lived blog otherwise). 

Most of us will never achieve these abilities or this level of intuition, and we can't easily know what's around the corner. 

The cycle, however, is approaching an advanced stage, and most assets are priced expensively.

In the US the Federal Reserve is now tightening interest rates, and globally inflation seems set to rise. 

And after a dramatic rebound in bulk commodity prices this year, there is a very real chance of substantial correction in these markets too, which is relevant to the outlook for Australia. 

I don't know if there's a crash around the corner. You don't know if there's a crash around the corner!

Even El Maestro didn't know for sure what was around that wretched corner.

But the heads in the crowd have turned in a different direction - after years of looking straight down the barrel at falling interest rates and fears of a deflationary spiral, they are now looking ahead for something different. 

It's not a time to panic, but it is a time to be aware of the risks.