There's an old joke about populist television investment programs.
Essentially, there are only four stories that are repeated ad nauseam. I won't destroy the mystery and list them in order but if you watch them often enough you'll get the drift.
The thing is, within those four stories - including the ones about insurance, your house, buying shares and superannuation - there are only two bits of advice which are adapted to each of the themes.
Handy Tip No. 1 is: Always shop around and get the best advice. That's quickly followed by Handy Tip No. 2: Don't put all your eggs in one basket.
As far as investment advice goes, it's reasonably sound. But you have to admit, it transforms the concept of stating the bleeding obvious into an art form.
I mean, unless you were incredibly lazy and didn't care how much you paid, why wouldn't you shop around? And why on earth would you stake everything you had on a single bet? That is being simply reckless.
The fact some small screen celebrities don't merely eke out a living out from dishing up this cold, stale dollop of tinned tripe, but become incredibly rich on the proceeds, has been a source of mirth, wonderment and, ultimately, envy for those of us who toil away trying to add something more meaningful to the debate.
Every now and again, though, it is worth dipping your head in an icy cold bucket of water and taking a fresh look at what should have hit you right between the eyes, what should have been the bleeding obvious.
For if you take a step back and examine what we are doing as a nation right now, it becomes pretty clear that our economy is in the throes of a major transformation.
It is the sort of upheaval that inspired military invasions in bygone eras. While that is unlikely in our case, it is impossible to escape the fact that as a nation we are rapidly returning to our roots as a vast quarry and a primary producer.
It hasn't been a conscious decision on our part, or on the part of our elected leaders. In fact the former prime minister Paul Keating actively attempted to promote technical innovation during the '90s when it was deemed that we should be a little more clever than simply digging holes in the ground and shearing sheep.
He also championed the free market. And as a relatively open market economy, we've developed a kind of zen-like attitude to global economic forces, bending with the breeze, ensuring we maximise global opportunities as they arise.
Right now, the economic winds are blowing us towards becoming a specialist resource exporting nation hugely dependent on just one market, China.
It is the sort of scenario - too many eggs in one basket - that is ringing alarm bells, that Australia, having abandoned manufacturing and industrial diversity, may become hostage to increasingly volatile global forces.
This week the International Monetary Fund took aim, warning that we were leaving ourselves vulnerable to a shock fall in commodity prices or a sudden downturn in the Chinese economy.
For most of the past decade, we have embraced the changes, lapping up the new-found inflow of cash. Only now, since the Australian dollar has steamrolled the US dollar, have questions begun to be asked about how far the trend will go and what long term impact this could have on the economy.
Within the next fortnight, that impact will be brought into sharp focus as a string of blue chip corporations downgrade earnings and warn of lower profits.
After 18 months of listless trading, that is likely to drag the sharemarket lower as the stronger dollar strips earnings from any company with foreign operations and revenue.
It's an odd conundrum, that the riches bestowed upon us by natural bounty and good fortune could cause so much pain. Commonly referred to as Dutch Disease, it was a phenomenon first highlighted by an Australian academic, Bob Gregory, at the Australian National University in the early 1970s.
The world, particularly the world's fastest growing economic superpower, wants what we have. Technically, it is showering stupendous wealth on all of us.
In reality, the growth pains being experienced within the economy - where resource companies are soaking up financial and human capital at the expense of other sectors - are squeezing life out of other sectors.
The question then is how best do we cope with the challenges presented by this huge windfall.
Already the federal government is coming under pressure to ''do something'', to push the dollar lower, to artificially manipulate the exchange rate to protect our manufacturing base.
The cries began late last year just before the currency punched through parity with the greenback. They stepped up a notch this week after it breached $US1.10 and will reach fever pitch if the dollar continues its seemingly relentless climb.
But artificially constraining the runaway dollar would be a recipe for disaster and would ensure that, once again, we squandered the fruits of yet another resources boom.
We've done it before. In fact, we've done it every time; extended protection to other industries by manipulating the currency, keeping it artificially low and keeping interest rates low. The end result has been runaway inflation followed by mass unemployment and a range of industries believing they are entitled to protection.
In the past few months, there have been calls for the establishment of a sovereign wealth fund, to save the proceeds of the boom for future generations.
If we had one in operation right now, running along the lines of Norway's scheme, our dollar wouldn't be soaring into the stratosphere. Such a scheme would invest offshore, to geographically diversify our earnings base (there's the eggs and the basket argument again). And that money going offshore would counteract the huge cash inflows and keep our dollar in check.
Unfortunately, many of those now championing the sovereign fund idea let the nation down badly right at the starting post. They stood meekly by when the mining giants rode roughshod over the federal government's plans for a resources rent tax. Many of them openly opposed the tax and then ridiculed the watered down version.
In doing so, they compromised our future, economically and politically, helping shift the power dynamic from elected officials to a triumvirate of hugely powerful but publicly unaccountable corporations.
A sovereign wealth fund is a terrific idea. It would spread the fruits of the bonanza from the current boom across the economy and across generations. But you need to have the cash to stick in the fund. Maybe next time.
Source: www.smh.com.au
Essentially, there are only four stories that are repeated ad nauseam. I won't destroy the mystery and list them in order but if you watch them often enough you'll get the drift.
The thing is, within those four stories - including the ones about insurance, your house, buying shares and superannuation - there are only two bits of advice which are adapted to each of the themes.
Handy Tip No. 1 is: Always shop around and get the best advice. That's quickly followed by Handy Tip No. 2: Don't put all your eggs in one basket.
As far as investment advice goes, it's reasonably sound. But you have to admit, it transforms the concept of stating the bleeding obvious into an art form.
I mean, unless you were incredibly lazy and didn't care how much you paid, why wouldn't you shop around? And why on earth would you stake everything you had on a single bet? That is being simply reckless.
The fact some small screen celebrities don't merely eke out a living out from dishing up this cold, stale dollop of tinned tripe, but become incredibly rich on the proceeds, has been a source of mirth, wonderment and, ultimately, envy for those of us who toil away trying to add something more meaningful to the debate.
Every now and again, though, it is worth dipping your head in an icy cold bucket of water and taking a fresh look at what should have hit you right between the eyes, what should have been the bleeding obvious.
For if you take a step back and examine what we are doing as a nation right now, it becomes pretty clear that our economy is in the throes of a major transformation.
It is the sort of upheaval that inspired military invasions in bygone eras. While that is unlikely in our case, it is impossible to escape the fact that as a nation we are rapidly returning to our roots as a vast quarry and a primary producer.
It hasn't been a conscious decision on our part, or on the part of our elected leaders. In fact the former prime minister Paul Keating actively attempted to promote technical innovation during the '90s when it was deemed that we should be a little more clever than simply digging holes in the ground and shearing sheep.
He also championed the free market. And as a relatively open market economy, we've developed a kind of zen-like attitude to global economic forces, bending with the breeze, ensuring we maximise global opportunities as they arise.
Right now, the economic winds are blowing us towards becoming a specialist resource exporting nation hugely dependent on just one market, China.
It is the sort of scenario - too many eggs in one basket - that is ringing alarm bells, that Australia, having abandoned manufacturing and industrial diversity, may become hostage to increasingly volatile global forces.
This week the International Monetary Fund took aim, warning that we were leaving ourselves vulnerable to a shock fall in commodity prices or a sudden downturn in the Chinese economy.
For most of the past decade, we have embraced the changes, lapping up the new-found inflow of cash. Only now, since the Australian dollar has steamrolled the US dollar, have questions begun to be asked about how far the trend will go and what long term impact this could have on the economy.
Within the next fortnight, that impact will be brought into sharp focus as a string of blue chip corporations downgrade earnings and warn of lower profits.
After 18 months of listless trading, that is likely to drag the sharemarket lower as the stronger dollar strips earnings from any company with foreign operations and revenue.
It's an odd conundrum, that the riches bestowed upon us by natural bounty and good fortune could cause so much pain. Commonly referred to as Dutch Disease, it was a phenomenon first highlighted by an Australian academic, Bob Gregory, at the Australian National University in the early 1970s.
The world, particularly the world's fastest growing economic superpower, wants what we have. Technically, it is showering stupendous wealth on all of us.
In reality, the growth pains being experienced within the economy - where resource companies are soaking up financial and human capital at the expense of other sectors - are squeezing life out of other sectors.
The question then is how best do we cope with the challenges presented by this huge windfall.
Already the federal government is coming under pressure to ''do something'', to push the dollar lower, to artificially manipulate the exchange rate to protect our manufacturing base.
The cries began late last year just before the currency punched through parity with the greenback. They stepped up a notch this week after it breached $US1.10 and will reach fever pitch if the dollar continues its seemingly relentless climb.
But artificially constraining the runaway dollar would be a recipe for disaster and would ensure that, once again, we squandered the fruits of yet another resources boom.
We've done it before. In fact, we've done it every time; extended protection to other industries by manipulating the currency, keeping it artificially low and keeping interest rates low. The end result has been runaway inflation followed by mass unemployment and a range of industries believing they are entitled to protection.
In the past few months, there have been calls for the establishment of a sovereign wealth fund, to save the proceeds of the boom for future generations.
If we had one in operation right now, running along the lines of Norway's scheme, our dollar wouldn't be soaring into the stratosphere. Such a scheme would invest offshore, to geographically diversify our earnings base (there's the eggs and the basket argument again). And that money going offshore would counteract the huge cash inflows and keep our dollar in check.
Unfortunately, many of those now championing the sovereign fund idea let the nation down badly right at the starting post. They stood meekly by when the mining giants rode roughshod over the federal government's plans for a resources rent tax. Many of them openly opposed the tax and then ridiculed the watered down version.
In doing so, they compromised our future, economically and politically, helping shift the power dynamic from elected officials to a triumvirate of hugely powerful but publicly unaccountable corporations.
A sovereign wealth fund is a terrific idea. It would spread the fruits of the bonanza from the current boom across the economy and across generations. But you need to have the cash to stick in the fund. Maybe next time.
Source: www.smh.com.au
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