Why Kogan admires but bagged Gerry

Looking at the greatest business books of all-time to understand the power of influence took me on a trip down memory lane that reminded me of important, success-generating stuff I should never have forgotten! And it’s insightful stuff you should know for yourself and for those you lead and care about.

In recent times, I’ve switched my Switzer Show podcast to be a rerun of one my favourite media activities of all time — Talking Business — which I pioneered for a decade with my friends at Stellar Inflight, who produced this for Qantas.

Ten years is a long time to do anything and my exit from something I loved coincided with my Switzer TV programme that went for over a decade, until Rupert and News Corp decided to close down the Sky Business channel.

What I’m doing on The Switzer Show is tracking down legends, both new and old, to deliver on what so many people are and should be interested in — the secrets of their success. As I wrote in my article last week, legends leave clues but someone often has to pry them out of them.

Over 30 years of talking, analysing and listening to business legends make speeches, these people who have been great at business are not gifted when it comes to teaching what others have to do to emulate them. A lot of these high achievers do things innately and never think that others don’t see or think something that is so obvious to them.

It’s like natural born leaders, who are a lot less on the ground than those who learn to lead. John Maxwell, the author of the book 21 Irrefutable Laws of Leadership, argues convincingly that leadership can be learnt. I think becoming a business builder is a skill that can be taught and learnt.

For three decades I’ve tried to do business education via all my media, my books and websites and nowadays we have the Grow Your Business website, which has an online business coaching product that we’re developing.

I believe coaching and mentoring are critical game changers to anyone wanting any kind of success. When I want to lose weight, I go to my dietician expert. If Gerry Harvey asks me to play tennis with ex-pros who I’m not good enough to play with, I get some coaching so I don’t look hopeless.

It’s the big lesson I’ve taken as an educator and business builder myself — if you want to progress, you have to tap into good influences.

This week I interview Ruslan Kogan for The Switzer Show podcast and two big take-outs came from the interview.

First, Ruslan, who I’ve known and interviewed for over a decade, is a better bloke than I took him for and this was shown in his revelation about what he really thinks about Gerry Harvey.

Second, his view on his parents and how their courageous decision to become immigrants and then encourage Ruslan and his sister to work hard to become successful, is something that was quite unforgettable. At the time I told him that I’d recently written about how Aussie Home Loans’ John Symond and Wizard/Yellow Brick Road’s Mark Bouris both singled out their parents as critical influences in their success story.

These people were lucky, and I guess I was too because my parents were hardworking small business owners who sacrificed to give their kids opportunities. But what does someone do if they don’t have these close relations who are good at inspiring and influencing?

I’ve said this before that Jim Collins, author of the best-selling book Good to Great, admitted he didn’t have life-changing influences in his life so he pretended he had an advisory board of mentors by reading books. This meant he counted the great Peter Drucker as a ‘mentor’ along with others, just how Jim has become the same for others, and especially entrepreneurs who knew they needed help, inspiration and direction.

That’s why most of us trying to go from ordinary to extraordinary or from say ‘good to great’, need a hand from a coach, a mentor or in the absence of these — a book or a website.

The key message from me is not only that you need a coach or a mentor but more importantly you have to be, as Cat Stevens once sang: “On the road to find out.”

And the poet Robert Frost gave us a huge clue when he wrote: “Two roads diverged in a yellow wood. I took the one less travelled by, And that has made all the difference.”

Ruslan Kogan and Gerry Harvey have been inspired travellers down the scary road of business. Ruslan compared this unknown, spooky world of business (as demonstrated by what’s happened this year) to the kind of challenging environment that immigrants, like his parents, encountered in coming to Australia from Communist Eastern Europe.

And it is clear that someone like Ruslan, who used Gerry’s fame to get attention for himself when he started out as a disruptor business, respects his rival’s achievements in building the biggest retail business in the country.

This is the kind of maturity that can only come when someone has learnt from the lessons on the road or at the coalface of achieving something substantial and from business greats that have gone before him.

This five-year Kogan share price chart shows a lot has been learnt by Ruslan and it shows the power of great influences.

Note how his business has roared out of the Coronavirus crash, which says it all.

By the way, Forbes says the greatest business books of all-time, which look like they have been largely based on sales were:

1. “Think and Grow Rich,” by Napolean Hill

2. “Rich Dad, Poor Dad,” by Robert Kiyosaki

3. “The E-Myth,” by Michael Gerber

4. “The 22 Immutable Laws of Marketing,” by Al Ries and Jack Trout

5. “How to Win Friends & Influence People,” by Dale Carnegie

6. “The Hard Thing About Hard Things,” by Ben Horowitz

7. “Blue Ocean Strategy,” by W. Chan Kim and Renée Mauborgne

8. “Shoe Dog,” by Phil Knight

And they are all about insights from the very people who have seen what others miss and that’s because the majority don’t go looking for what the minority of successful people have to know.

If you can’t get a coach or a mentor, start hanging out with books and videos that give you a sneaky way of getting winning clues from legends.

Success leaves clues but why doesn’t everyone look for them?

One thing I’ve never seen politicians do is try to elevate a country, its people and the resultant economy by trying to encourage every individual, or at least as many as possible, to become better people, more productive workers, more positive human beings and committed to being successful. It’s no coincidence that success is more about contributing to happiness and it can even be pretty good for your eventual wealth.

I’ve always told audiences that “anything worth doing is worth doing for money!”

But more sincerely, my lucky life hanging out with some of the country’s and even the world’s highest achievers, has convinced me that success leave clues. That has been a message that I’ve never forgotten after 30 years of interviewing and reading about some of the most business-successful Australians ever.

That includes sportspeople like the ex-Wallaby captain John Eales, swimmer Kieran Perkins, footballer Ricky Stuart and one time, the greatest ever world champion surfer, Laine Beachley. These great athletes actually treated their sporting life like a business by being committed to a plan, always processing risks, looking for opportunities and being committed to continual self-improvement.

They knew that they needed help to go to higher levels, so they sought out coaches, mentors and advisers to lift their performances.

Great business leaders do this too, and they are always trying to do the same to their business. Why? a normal person might ask. Well, it’s my observation that really successful people are trying to grow and improve something and they realise if they haven’t got themselves right, it’s pretty well certain what they produce, what they influence and who they lead won’t work out to deliver the right result.

In these challenging times when businesses are coping with lower sales profits and opportunities, the best strategy any business leader or owner can embrace is to ask their team to get real about themselves.

One of the scariest initiatives you can do is to do a SWOT on yourself. This is where you look at your Strengths, Weaknesses, Opportunities and Threats. Businesses do it to work out the strategies for growth and improvement going forward, but I insist individuals need to do this as well.

You can make it even more productive and scary by asking someone who knows you well or who might even work with you, to do a SWOT on you. That can be really confronting but if you are given insights that you have refused to see or simply can’t see them, then it’s unbelievably valuable.

The best use of a ‘SWOT on yourself’ story I’ve come across was in the early 1990s when I interviewed an up and coming chef/restauranteur, Neil Perry of the then Rockpool restaurant in The Rocks in Sydney. I’d interviewed Neil before and his growth had been spectacular, so I asked the obvious question: how did you do it?

Neil talked about his mentor who told him to do a SWOT, not on his business but on himself, to see if he was using his time effectively. On looking at his life objectively for a couple of weeks, he and his mentor saw that the was working in areas of the business where he had little skill and neglecting the areas where he was world class.

The bold steps he took was to hand over the admin and business-like stuff, as well as half of his business to his cousin, Trish Richards, who actually was the accountant at Triple M when I first started broadcasting there in the 1980s. That action got him out of his weak zone and meant he could work in his strength zone. And along came more restaurants, a catering business, the Qantas contract, the books that had never been written, the TV shows he had not starred in and so on.

It’s a real-life story of that old footie coach line: “No guts, no glory!”

Over the long weekend, I did some weeding, which is like looking at the stuff in your life that is growing out of control that might even look okay, but will eventually take over the garden and be a threat to THE health of truly beautiful plants and flowers.

It’s boring work but has to be done, so I listened to the audio book of the famous US business speaker, the late Zig Ziglar. I interviewed him when I was the editor of Australian Small Business magazine and can recall the interview on 1994 as if it was yesterday.

His Mississippi drawl was unforgettable. I remember him giving me lessons on how to sell. He explained an “honest John type” from Texas needs the salesperson to slow it down because he would never feel comfortable with a fast-talking Yank. However, a high-flyer from “New York city” hasn’t got time for a slow talker.

He told me how he spent years doing free speeches everywhere he could to learn his craft, and eventually he had a business empire, out of which he did countless speeches for huge money, sought-after coaching programmes, which hundreds of thousands of people signed up for. That drove millions of sales for his most famous book — See You at the Top.

Over the weekend, my wife and I, would’ve listened to over 10 hours of Zig while gardening. And I thank Seth Godin, one of the most followed marketing gurus in the Internet-age, who wrote that classic book, Purple Cow, and who, in an interview with Tim Ferris, referred to and reminded me of the greatness of Zig.

Sure, he’s not totally PC, as he lived in another age, but he was a good man, with honest values. And he committed his life to inspiring others to be better people first ahead of being better sellers, business builders, parents or leaders.

One of his unforgettable lines was: “You can’t do a good deal with a bad man.” And isn’t that true. But it was his efforts to raise normal, going-nowhere people to make the changes that would enrich their lives and the lives of their loved ones, that remains his legacy.

Here’s some more Zig:

Okay, they are catchy lines of a great salesman but think about what he’s selling.

At his core, he wanted people to believe in themselves and the people they led. He worked on our attitude that has often been determined by uninspiring people, tragic events and fairly ordinary role models.

In many ways, we have all needed someone like Zig in our lives, our workplaces and our schools. When you get to hang out live, or via audio book, or by simply reading an inspirational writer, you get powered up by things such as the following words, which were authored by George Bernard Shaw and then were made famous by US President, John F. Kennedy who delivered this to the Irish Parliament in 1963: “You see things; and you say ‘Why?’ But I dream things that never were; and I say ‘Why not?’”

The leaders of our country, our businesses, our schools and our families need to embrace these kinds of views of what the world might be. We need to tell everyone in Australia that you can have a lot more. You can be more successful and you can be happier but you have to commit to positive change and we, the leaders, need to encourage it.

That said, normal people who want to strive to be abnormal need to know what someone like Chris Evert did to have the best winning rate in professional tennis of all-time. I know I’ve written it many times before but this one really drives me: “There were times deep down I wanted to win so badly, I could actually will it to happen. I think most of my career was based on desire.”

Crosby, Stills, Nash and Young once told us to “teach your children well” and the code they can live by that you should teach them about, was captured by the famous US disc jockey Casey Kasem, who used to finish his American Top 40 radio programme with the unforgettable sign-off of: “Keep your feet on the ground and keep reaching for the stars.”

Give the people you lead heroes they can learn from and make the effort to be one of those heroes.

You know, when I interviewed two of the great rivals of mortgages — John Symond of Aussie Home Loans and Mark Bouris of Wizard and Yellow Brick Road — I asked them who were their greatest inspirations on their roads to success?

Their answers were the same: “My parents.”

Investing in four wheels

Not all cars are made equal, some are faster, some are lemons and some actually increase in value!

The majority of us probably own a car that is constantly depreciating in value, but there are some that are actually worth investing in, maybe because they are rare, historic or making a comeback in popularity.

The most important thing to note is that investing in cars requires a certain amount of research and ideally an existing interest in cars.

I spoke to Max, a young beginner in the car investing game. He believes in investing in the car market due to it being a finite market in terms of the quantity of old cars that exist.

“…for any model that is no longer being manufactured, the supply cannot go up. This creates a sense of safety within the market to invest in high demand models since their value is sure to increase. I also like to think that the supply of older cars actually decreases overtime slowly due to being unfit to drive from accidents or abandonment, further increasing the demand and value of a car.”

When investing in any cars long term, the most important thing to consider is the condition that the car is in. You don’t want to be spending lots of money on repairs and extra maintenance as it will take a large cut of your profit.

“Aside from physical features; knowing the ‘status’ or reputation of a car can help decide on which models will remain popular. Some cars are considered cult classics which usually have a dedicated but small fan base, where prices tend to steadily increase,” Max says.

Maintenance is an important factor in the car investing game. Upkeep is crucial to ensure value is maintained. Rego, repairs and insurance are all quite inexpensive when purchasing a car that isn’t going to be driven regularly.

“For example, comprehensive car insurance is 10% of the cost on an old beetle, than a 2007 BMW. This goes for repairs as well, as there’s less chance something will break if it is not being used often,” Max adds. 

It is also a good idea to have a trusted mechanic, who perhaps shares the same passion for the same type of vehicle.  As a result, you can limit expenditure because of that shared passion.

On the other hand, if you get unlucky or don’t do your research properly you can be hit with expensive mechanical repair bills. The best way to avoid these mishaps is by knowing the history of faulty parts/systems that could cause issues in the future on the specific model of car that you are looking to buy.

In terms of profit, Max expects a return of at least 150% of the buying price, but that’s being conservative: “The market for classic cars has recently grown quite significantly, for example, a car that was worth $10,000 ten years ago, could now easily be upwards of $80,000-100,000. Your expectation for growth has to be based on your research and knowledge of the car and the market to determine which cars are going to be in high demand in the future.”

Timing for a sale is dependent on the market and even the season. A weekend drive on a glorious blue-sky day is a whole lot better than on a wet, wintery afternoon. So you have to pick your time. Usually, a selling price and time can be determined If you keep accurate records of what you have spent on the car and keep an eye on the local market for the trends.

Recently Max and his father Simon jointly purchased a 1966 VW Beetle. The decision was mainly driven by Volkswagen stopping the production of the beetle in July 2019.

For Simon, it was a lifelong dream, “Having attempted to restore a 1965 Beetle in the early 90s I have always been a fan of the VW Beetle. That car ended up being an unfinished project and work and family demands meant I didn't have the time to finish the restoration. When Volkswagen announced it was ceasing production of the famous "Beetle" this year, it got me once again thinking about this iconic car. Further inquiries led me to a beautifully restored 1966 model. Considering they are no longer in production I felt this car would be a good investment.”

Max expects to keep the beetle for at least 10-15 years. “I think the price could easily double in that time, just as it has over the recent decade due to people falling back in love with the simplicity as a machine and timeless design.”

Simon considers the investment in the 1966 VW to be modest and believes that in the short time they have owned it, it has already gone up in value. “I also believe the value of a classic investment, such as this, is in the eyes of the beholder. It is often an emotional decision. If the buyer wants the vehicle, price becomes of little concern.”

On what advice they would give to someone who wants to start investing in cars, Max says, “Don’t spend too much money on your first car and do your research. The more you know about the car and the market, the more chance you will have a successful investment.”

If you are interested in buying an investment car, you should check out car clubs and local car meet ups, where current owners show off their pride and joy. You will learn a lot just from listening to the passionate owners who have years of insights into their particular car model.

However, a lot of it comes down to the love of cars or the lifelong obsession of one particular model. As Simon puts it, “There are no doubt more secure blue-chip investments - but you can’t drive them!”

Investing in a car should bring you enjoyment because it’s something you love!

Property Punch-Up of the Century

Could these penny dreadfuls become dollar dazzlers?

As a rule of thumb, sub 1 cent stocks are usually mired in debt or running out of cash, with little or no ability to raise fresh equity. They usually have hundreds of millions if not billions of shares on issue, the result of highly dilutive capital raisings.

In the case of the resources sector – where most of the sub 1 cent ultra nano caps reside – they’ve usually been unlucky with the drill bit as well. But while stocks are almost usually cheap for a reason, there can still be money to be made from companies that have a decent yarn to tell.

For instance, shares in drug developer Actinogen Medical (ACW) soared 466% – from 0.9c to 5.1c after the company reported success with its cognitive diseases program after an earlier clinical setback.

The eclectic Authorised Investments (AIY, 2.6c) slumped to a low of 0.7c in September 2017, but by April 2018 were trading at 14.5c on the back of some digital media deals.

Persistence is yet to pay off at YPB Group (YPB, 0.6c), which has presented a consistent story to the market with its smart phone based anticounterfeiting measures. The stock traded as high as 40c, in October 2015.

In the gold sector, Lazarus is hard at work at “advanced gold developer” Alice Queen (AQX, 3.7c), which has the Horn Island joint venture with St Barbara Mines.

Alice Queen traded at 0.9c in mid June. The stock is in trading halt pending a capital raising, which will be the second bite of the cherry given the company in August raised $516,000 at 1.2c apiece.

Shares in Valor Resources (VAL, 0.6c) plumbed a low of 0.2c in March, but in August hit 0.9c on plans to buy a half-stake in the Radio Gold Mine in WA.

In the energy sector, investors endorsed plans by ADX Energy (ADX, 1.2c) to acquire a small producing oil field in the Vienna basin for €4m ($6.5m). In doing so,

ADX claims its own slice of history as being the first foreign publicly listed oil and gas company to operate in Austria.

ADX shares traded at half a cent in late May.

Shares in labour hire company RBR Group (RBR, 1.3c) traded at 0.4c in May 2017, but have got as high as 2.6c on the promise of the company’s plans in Mozambique (where the company is mandated with rustling up workers for the country’s three new and proposed LNG projects).

RBR recently bolstered its coffers with a $1m placement, struck at 1.4c apiece.

Of course, there are plenty of one-cent wonders that look to going nowhere after years of trying.

Take the Gina Rinehart-backed Victorian onshore oil and gas explorer Lakes Oil (LKO, 0.1c), which has been stymied by a statewide drilling ban. Legal attempts to overturn the moratorium so far have been in vain.

Other fallen soufflés that could rise again include:

Boart Longyear (BLY) 0.7c

The global driller reported July (first) half, the company grew ebitda by 90% to $US54m ($80m), despite revenue slipping 2 per cent to $US388m.

The Utah based entity even recorded a net profit of $US2 million – its first surplus in seven years – with second quarter performance strengthening over the first.

The catch is that Boart is groaning under an $US731m debt burden, the legacy of a rescue deal in the aftermath of the global financial crisis.

Still, investors who rode this one up from a share nadir of 0.2c in November last year to 0.9c post results more than quadrupled their dough.

With 26 billion shares on issue – and that’s not a misprint – Boart Longyear is doing the sensible thing and proposing a 300 to one share consolidation.

Yep –a $2.10 share price sounds much more respectable, but the group will still bear a lowly market cap of $180m.

Latrobe Magnesium (LMG) 1.3c

Highlighting the potential of the sub-1c laggards, Latrobe Magnesium shares have more doubled since mid August on the company’s plans to produce fly ash material from Victoria’s power generators.

Given it’s taken close to two decades to get this far, the investor reticence to date has been understandable.

A feasibility study has costed the plant at $54 million, based on initial output of 3000 tonnes a year and ramping up to 40,000 tonnes within 12 months.

Put in context, the world produces about one million tonnes annually.

While magnesium isn’t a battery metal as such, it ticks all the ‘green’ boxes as a lightweight material to reduce motor vehicle fuel use and thus carbon dioxide emissions.

Latrobe’s process is CO2 neutral, especially as it produces a by-product of cement substitute material (concrete making is one of the most carbon-emitting activities).

Latrobe has a compact with Energy Australia – operator of the Yallourn generator – to supply the fly ash, which is hanging around in vast storage dams.

The company also has offtake agreements for 70,000 tonnes from Japanese and US parties.

Funding? Glad you asked. The company is confident of a $28m grant from Ausindustry, as well as $12m from additional state and federal funding.

The $16m gap would be filled partly from raising additional parties from shareholders that include engineer and former army colonel Jock Murray (brother of David) and Kevin Torpey, the former head of Denison Mines and Devex Kevin Torpey.

The company expects a final investment decision by December and will turn the first sod at its 14,000 square metre site, in the heart of the Latrobe Valley, shortly thereafter.

Company estimates a 3000tp plant would generate $30.9m of revenue and ebitda of $5.6m annually. This is based on the magnesium market price of $US2650 a tonne, which compared with $US500/t two years ago.

Shareroot (SRO) 0.1c

The liberating thing about trading at one-tenth of a cent is that the ASX won’t allow your shares to trade at a lesser amount.

The only way is up!

Shareroot listed in late 2015 on the back of a Silicon Valley business that had something to do with social media influencers.

Needless not say, success was elusive but along the way the company acquired a useful business called The Social Science, founded by former Telstra Businesswoman of The Year Michelle Gallaher.

Now led by Gallaher, Shareroot revolves around harnessing informal patient data, such as blog entries from cancer patients, to enhance healthcare products. In regulatory circles such data is known as ‘real world evidence’.

In the June quarter Shareroot recorded revenue of $194,000 and a loss of $218,000. The company also had a mere $100,000 of cash, since supplemented with a $1.2 million rights issue.

Shareroots's $2.85m market valuation would struggle to buy even a modest pile in some parts of Sydney.

Battery Minerals (BAT) 0.9c

Chaired by former Atlas Iron supremo David Flanagan, the graphite hopeful is not being given much credit for its two projects in Mozambique: Monepuez and Balama Central.

Given Battery’s $11.9m market cap and cash of $5.7m, there’s a hefty Africa Discount being applied. It doesn’t help that sector heavyweight Syrah Resources has slashed output at its Balama mine, also in Mozambique, by two thirds.

There’s a long way to go with both of Battery’s projects, but Flanagan’s dual role as Murdoch University chancellor at least means he’s sure to put a lot of thought into it.

tim@independentresearch.com.au

Disclaimer: Under no circumstances have there been any inducements or like made by the company mentioned to either IIR or the author. The views here are independent and have no nexus to IIR’s core research offering. The views here are not recommendations and should not be considered as general advice in terms of stock recommendations in the ordinary sense.

Australia: Consumer and business surveys in focus

On Monday

The week kicks-off on Monday when AiGroup provides an update on construction activity.

On Tuesday

On Tuesday, weekly consumer sentiment data is issued by ANZ and Roy Morgan. Tax relief, the revival in property prices and positive superannuation returns are likely to support consumer spending. But tepid wages growth, elevated mortgage debt and rising unemployment are keeping consumer cautious. Also, on Tuesday, NAB provides an update on Aussie business confidence and conditions while ANZ issues its job advertisements series. Momentum in the business sector continues to weaken. Sluggish domestic demand, global trade uncertainty, rising input costs and subdued selling prices are weighing on business profitability and expansion plans. Job ads are important given the labour market focus of the RBA.

On Wednesday

On Wednesday, monthly consumer confidence data is scheduled from Westpac and the Melbourne Institute. Sentiment has been choppy, down by 1.7% in September after a 3.6% increase in August. Consumer views on unemployment and property expectations will be closely monitored. Also, on Wednesday, the Bureau of Statistics (ABS) issues building data for the June quarter. The slowdown in home building continues. And the amount of work entering the pipeline is declining, having peaked a year ago. The number of homes currently being built across Australia is the lowest level since December 2015.

On Thursday

On Thursday, lending finance data is released by the ABS for August. Housing finance approvals rebounded in July as lending conditions continued to improve. The total value of owner-occupier and investor loans rose by 5.1% and another 4% lift is expected in August. The size of home loans is lifting – presenting some challenges for Reserve Bank policymakers in the medium term with still-elevated household mortgage debt.

Overseas: US Federal Reserve and inflation data take centre stage

China returns from its National Day Golden week holiday period, but little data is scheduled. In the US, Federal Reserve Chair Jerome Powell speaks and the minutes of the Federal Open Market Committee (FOMC) September meeting are issued. And proposed US-China trade talks will be closely watched.

On Monday

The week begins on Monday in China when Caixin releases its private sector services activity gauge. Credit growth and money supply data are also scheduled for release during the week. On Monday in the US, consumer credit data is due. Total credit rose by US$23.3 billion in July, but most attention in the month was focused on the jump in credit card balances – which rose the most since 2017.

On Tuesday

On Tuesday, the regular weekly reading on US chain store sales is due together with producer prices data for September and the release of the NFIB small business activity gauge. Despite US-China trade uncertainty the NFIB index remains at elevated levels with activity still robust. Also, on Tuesday, US Federal Reserve Chair Jerome Powell is scheduled to speak at the annual meeting of the National Association for Business Economists in Denver.

On Wednesday

On Wednesday, the weekly reading on mortgage applications is issued as well as job openings and inventories data. The Job Openings and Labor Turnover (JOLTS) survey in July pointed to a loss of momentum in the US jobs market. Job vacancies eased to 5-month lows with the number of positions waiting to be filled falling by 31,000 to 7.22 million. The quits rate rose to 2.4% – the highest since April 2001 – suggesting that workers still remain confident about finding work with prospective employers.

Also, on Wednesday, the FOMC releases the minutes of its September 18 meeting where the federal funds rate was cut by 25 basis points to a target of 1.75 to 2.00%. The FOMC cited “the implications of global developments for the economic outlook as well as muted inflation pressures” as the primary reason for the cut. Commonwealth Bank Group economists still expect the FOMC to cut interest rates again in December.

On Thursday

Over Thursday and Friday high-level trade talks are due to be held between the US and China. The outlook for the global economy is dependent on a deal being secured. On Thursday, attention shifts to the release of consumer price data for August.  The annual growth rate of US core inflation rose to 2.4% in August. Tariffs drove goods prices higher, while medical care, shelter, apparel and used car prices all rose.

On Friday

On Friday, trade prices data is issued, completing the trifecta of inflation releases for September. The preliminary October update on consumer confidence from the University of Michigan is the other highlight to conclude the week.

Why gold is losing its glitter

If a trade deal is coming, what stocks should you buy?

Where are property prices growing the most?

Sydney, Melbourne and Brisbane were still in a downturn for the first half of 2019, but you wouldn’t have known it in some suburbs where house prices actually grew strongly while the cities as a whole were in decline.

Buyers and home owners in Box Hill, in Sydney’s west; and Vaucluse, in the east, were seeing prices rise by more than 20% over FY19, while Sydney’s overall median declined by -10.8%.

It just goes to show how important local factors can be in market movements and in fact, there are many markets across the country. And not every suburb will move in line with citywide trends.

Here are the top 10 growth suburbs for house prices in the East Coast’s capital cities and regional areas in FY19, according to new data from CoreLogic.

Canberra (Median up 2.4% in FY19) 

  1. Holder up 16.4% to a median house price of $698,500
  2. Calwell up 14.4% to $629,000
  3. Latham up 12.2% to $595,000
  4. Theodore up 12% to $580,000
  5. Yarralumla up 11.9% to $1,570,000
  6. Conder up 11% to $605,000
  7. Duffy up 11% to $729,000
  8. Crace up 10.9% to $815,000
  9. Farrer up 10.2% to $907,500
  10. Spence up 9.1% to $625,000

Brisbane (Median down -2.5% in FY19)

  1. Chelmer up 21.8% to a median house price of $1,217,500
  2. Auchenflower up 19.4% to $1,277,500
  3. Wilston up 16.8% to $1,010,000
  4. Northgate up 16.2% to $732,000
  5. Balmoral up 15.8% to $1,100,000
  6. Karana Downs up 11.6% to $505,000
  7. Corinda up 10.7% to $825,000
  8. Deagon up 10.2% to $512,500
  9. Durack up 9.4% to $448,500
  10. Toowong up 9.0% to $890,500

Melbourne (Median down -11.8% in FY19)

  1. Clyde up 36.8% to a median house price of $526,500
  2. Koo Wee Rup up 14.6% to $530,250
  3. Whittlesea up 10.8% to $587,500
  4. Clyde North up 9.9% to $582,500
  5. Cairnlea up 6.7% to $760,000
  6. Middle Park up 4.3% to $2,705,000
  7. Pearcedale up 3.8% to $680,000
  8. Ascot Vale up 3.8% to $1,175,000
  9. The Basin up 3.1% to $670,000
  10. Officer up 3.0% to $550,000

Sydney (Median down -10.8% in FY19) 

  1. Box Hill up 26.6% to a median house price of $795,000
  2. Vaucluse up 22.7% to $6,225,000
  3. Collaroy up 14.6% to $2,750,000
  4. Cabramatta up 12.8% to $905,000
  5. Sans Souci up 10.1% to $1,560,000
  6. Summer Hill up 9.7% to $1,701,000
  7. Palm Beach up 7.9% to $3,183,500
  8. Rose Bay up 7.4% to $4,190,000
  9. Seaforth up 3.0% to $2,575,000
  10. Burwood up 2.9% to $845,000

Regional QLD (Median down -2.0% in FY19) 

  1. Blackwater up 73.5% to $147,500
  2. Wandal up 28.2% to $282,000
  3. Biggera Waters up 20.6% to $780,000
  4. Emerald up 18.5% to $320,000
  5. Jacobs Well up 18.1% to $568,500
  6. Moranbah up 17.6% to $220,000
  7. New Auckland up 15.7% to $320,000
  8. Mount Pleasant up 15.3% to $410,000
  9. Parrearra up 15.3% to $775,000
  10. Dayboro up 14.1% to $585,000

Regional VIC (Median down -0.8% in FY19)

  1. Mount Pleasant up 30.1% to a median house price of $370,000
  2. Terang up 26.9% to $219,500
  3. Brown Hill up 23.5% to $425,000
  4. Golden Point up 19% to $375,000
  5. Warburton up 17.5% to $517,500
  6. Wendouree up 16.8% to $327,000
  7. Irymple up 16.4% to $340,000
  8. St Leonards up 15.9% to $565,000
  9. Lake Wendouree up 15.8% to $741,000
  10. Drysdale up 15.8% to $529,000

Regional NSW (Median down -4.9% in FY19)

  1. Teralba up 30.3% to $430,000
  2. Temora up 22.8% to $275,000
  3. Cootamundra up 21.7% to $255,500
  4. Mulwala up 19% to $364,000
  5. Aberdare up 18.6% to $393,750
  6. Urunga up 17.4% to $540,000
  7. Holbrook up 17.4% to $192,500
  8. Tatton up 16.5% to $565,000
  9. Surf Beach up 16.4% to $501,250
  10. Coolamon up 14.8% to $298,500

Source: CoreLogic 12 months to June 30, 2019

Does alcohol cause dementia?

If you ask most people without a medical background what is the major risk for consuming too much alcohol on a regular basis, most people will say it may damage the liver and too much will lead to cirrhosis.

Although this is true, many people do not realise that alcohol is a cellular poison, which, in toxic doses, can damage all the cells in our body. The liver, which is the first port of call for alcohol once it has been absorbed into the body, certainly cops the brunt of this effect but there is also a number of other diseases directly related to excess alcohol consumption.

I will not present an exhaustive list here as I’ve done this on prior occasions but suffice to say there is also a direct link between excessive alcohol consumption, many aspects of liver disease, different types of cardiac disease including atrial fibrillation and cardiomyopathy, many common cancers and also the topic of this article, a variety of different effects on the brain. 

Dementia has been long associated with excessive alcohol consumption. It is estimated that around 450,000 people in Australia suffer one of the various types of dementia and over 1.5 million people are involved with their care, either as relatives or health professionals. 

This study from the Journal, JAMA Network Open evaluated data from the Ginkgo Evaluation of Memory Study which was performed from 2000-2008. The study involved 3,021 people with an average age of 72. They looked at the amount of alcohol consumed, how often it is consumed and the type of beverage, whether it be wine, beer or spirits. Neuropsychological testing was performed looking at all aspects of cognitive function and these individuals were studied in six months. The ApoE4 variant, a gene associated with dementia, was also tested. They also looked at common parameters such as age, weight and height, blood pressure and a prior history of cardiovascular disease.

Of the 3,021 people, 2,548 did not have dementia or mild cognitive impairment and 473 were diagnosed with mild cognitive impairment based on the neuropsychological testing. After six years, a follow-up, 512 were diagnosed with dementia. In those who did not have any mild cognitive impairment, there was no association between any form of alcohol consumption and dementia. But for those individuals who were diagnosed with mild cognitive impairment, those who drank 14 drinks per week or more, compared with those who drank less than one per week were at a 72% higher risk for progression to dementia. It appears the binge drinkers had more risk than those who consumed only two drinks per day.

Interestingly, there was no association with the ApoE4 gene, but it is important to realise that the link with alcohol consumption, dementia and the ApoE4 gene appears to be more relevant to younger people.

The key point here is that this is a study of alcohol consumption in older people only followed for six years. This does not take into account many years of excessive intake of alcohol in middle age. The take home point from this study is that if you are already showing signs of early dementia as you move into older age and you don’t want to progress rapidly to dementia, cut back your alcohol intake close to zero. Otherwise, you’ll probably forget why you are drinking in the first place!

Do mobile phones cause brain cancer?

Over the past two decades there has been an ongoing debate as to the safety of mobile phones. All the evidence coming from studies supported by industry suggest that mobile phones are completely harmless. Many scientists in the area support this view, suggesting that there is no potential scientific link between the use of mobile phones and brain cancer.

There are, however, a variety of people in the scientific world who disagree. A prominent Australian neurosurgeon is very firm in his belief that there is a direct link between the amount of time spent on mobile phones and brain cancer. A study not sponsored by industry but rather the World Health Organisation released over 10 years ago suggested that the use of a mobile phone for more than 30 minutes a day over 10 years was associated with a 30% increased risk for all forms of brain tumour. These results, however, have not been replicated in any other studies.

A recent report released in the British Medical Journal-Open (published by the Australian Radiation Protection and Nuclear Safety Agency with the study being coordinated through the University of Auckland, Monash University and the University of Wollongong) reviewed brain cancer diagnoses between the years of 1982-2013 in people in the age group of 20-60 and found definitely no increase in tumours over this time, despite the widespread use of mobile phones having increased markedly over the past few decades.

The other comforting piece of information for all of us people over the age of 60 is the results were exactly the same. I often say there are only three advantages of being over the age of 50:

1. Wisdom

2. Grandchildren

3. You lose the cancer sensitivity to medical radiation

It is therefore logical to me that the potential risk of mobile phone exposure lessens with age. When you reach age 50 and the hormones go south, which they do in all people in this age group, your cells do not divide as rapidly and thus the less rapidly dividing DNA becomes less susceptible to radiation.

Therefore, when I read a report suggesting that mobile phones do not cause brain cancer in people over the age of 60, I am not surprised. My major concern is when I see young children and teenagers with phones plastered to their head. It is the growing tissue that seriously concerns me as being at most risk.

This latest study is very reassuring for the vast majority of us who do use mobile phones regularly but we are all well aware that over 50 years ago the medical profession used to advise people to smoke for stress relief. It was only after much greater than 20 years of exposure that we realised the toxicity of cigarettes. It may be that this is a ridiculous analogy and that mobile phones are completely safe. But until I have seen robust data in young people who have been exposed to phones for well over 20 years showing no linked to brain cancer, it would still be my strong suggestion that phone use in people with growing brains i.e. all children and teenagers, be restricted. I also believe that even people over the age of 50 should minimise the time they spend on mobile phones and use the speaker function as much as possible.

Do I have any significant evidence for this? No! But as a society we have been bitten before and it has only been the last decade or so when we realised the significant problems with long-term exposure to the vast majority of synthetic chemicals in widespread use in our society and also the potential dangers of low-level radiation from many sources, not just mobile phones.

Greta's 'I'm mad' speech got me thinking

Anyone who was not impressed by the communication skill and passion of climate-activist Greta Thunberg has a one-eye problem. That said there is a one-eyed infectious disease troubling the world that regularly shows up on Twitter and programs like Q&A where anyone who questions the much-loved, left-leaning paradigm gets booed.

I hate booing. I was once a victim of a heckler at a speech and it was really off-putting because I’d never dealt with a publicly rude person where I couldn’t, for large audience reasons, use my high male IQ and simply tell him to “f--k off!” It’s such a multi-useful comeback but at a business speech where I’m analysing the economy, business responses and government policy, I needed to look much more wise.

I have to say one of my favourite Seinfeld episodes focused in on Jerry being booed and heckled on stage. He got even by going to the workplace of the heckler, who he knew, and started to heckle and boo her for being a second-rate employee!

She regarded it as outrageous and that’s because heckling is seen as acceptable in comedy but it still is unfair. Similarly, dumb right-wingers and left-wingers should be spared booing, though I’m not prepared to cut Nazis and paedophiles the same tolerance!

The point is in an intelligent society we have to be tolerant of what we might see as silly views held by people who seriously think they’re thoughts are intelligent, no matter how crazy they might be.

Clearly, you can tear apart the arguments that they use to justify their ideas but we have to refrain from demonizing minority or even majority views.

For example, in a survey by British Social Attitudes — bsa.natcen.ac.uk — the conclusion was that most Britons “think climate change is at least partly caused by humans.” However, “the vast majority acknowledge a human component in climate change, but relatively few agree with the Intergovernmental Panel on Climate Change (IPCC) conclusion that it is mainly caused by humans.”

Here were the findings on what Britons thought about climate change:

For those looking for the factually correct answer on our role in climate change, let me assure you it’s not easy and what you think is a matter of faith in some critically important areas. Of course, faith is always important when the question is more complex than “what do I get if I mix two molecules of hydrogen with one molecule of oxygen?”

For those who have been thrown by me using the word “molecule”, I am just talking about making water.

Faith is critical when answering most really hard questions such as:

I understand how it’s fair to give late developers a chance to play economic catchup but we are talking about a climate perilously in danger, if we accept those who have educated Greta.

Meanwhile we are a small total polluter but per head we’re big and so it’s a philosophical issue that we should lead the way in reforming the world’s bad habits. However, any reforms we make will be of low real value to the climate’s repair but it could create job losses and bankruptcies in the process.

These are the many issues our politicians have to take on board and dealing with the competing interests have proved too hard, however, the political party that is least committed to aggressive policy changes to fight climate change just had a pretty good election win.

This Lowy Institute chart shows plenty of Aussies are worried about climate change. Rounding the numbers it looks like about 60% of us are in the “we should do something meaningful and fast” group while about 40% are either in the “let’s make changes gradually” or in the “not sure about it so go away!” cohort.

The problem with the climate change debate is that there isn’t a debate. Controversial scientific dissenters are not treated with academic respect and one guy, Peter Ridd, was got rid of by James Cook Uni for questioning the impact of climate change on the Great Barrier Reef.

 

The great poet, William Blake, in a more poetic way once told us that “without controversy there is no progress” but if dissenters are shouted down then a lot of people will take the Warren Buffett advice that “if you don’t understand it, don’t invest in it.”

There is a large group of people in the middle who might be cautiously sceptical about a subject like climate change and what needs to be done to fix it but if the aggressive tribalism of the climate activists prevails many of this large group will keep their views to themselves until they go into the polling booth.

Many modern voters are not playing ball with surveyors nowadays as if they fear being called a racists, a climate change denier and all of the other insults older, more conservative people get accused of being.

I wrote a book called The Carbon Crunch which former Prime Minister Kevin Rudd made unsellable after he backed down on his own policy putting the Carbon Pollution Reduction Scheme “on ice”. And one big realization that has become apparent to me since I did the research for that book was that no leader really believes in the cause and that’s because they’re scared of what the voters of Australia really think of a policy that could really be personally expensive.

It’s like that old saying that everyone would like to be known for their generosity but they don’t want to give anything away to actually earn it!

I’m on a unity ticket with Voltaire or whoever really said this: “I disapprove of what you say, but I will defend to the death your right to say it.”

Greta’s “I’m mad as hell” speech might lift the level of the climate debate. Let’s hope so.