On the weekend, a subscriber to my Switzer Report newsletter was outraged at some anti-Bill Shorten comments that I supposedly made, and as a consequence was not going to renew his subscription. I hope this subscriber doesn’t let political affiliations, love for leaders and any other emotional reason get in their way of making money and building wealth.
As a driver of a newsletter aimed at helping people invest wisely, I can’t do that. I can’t let the fact that while I might like Bill Shorten as a bloke, I can’t as a consequence like his policies if they’ll hurt investors. I can’t be conflicted when it comes to helping someone build their wealth. My subscriber shouldn’t be as well, if building wealth is more important than political preferences and ideals.
To be clear on this, I’ve met Bill Shorten in non-political moments and yep, he seems like a good guy, who I might have thought could be an OK Prime Minister. But lately there’s the tribal Bill Shorten, determined to win the next election. I reckon this could be a winning Bill Shorten persona, as he reaches out for the average Aussie over big business, employers, higher income earners, investors, self-funded retirees and more successful small-to-medium small businesses.
The problem is that I talk to this group with my Switzer Report and also a hell of a lot of my Switzer Daily readers are from this group and are joined by aspirational Australians, who want to be in the group I described above.
I can’t play favourites with certain politicians. Even though I taught Scott Morrison at the UNSW and have known Malcolm Turnbull since I captained him in out North Bondi Surf Club patrol days years ago, I’ve ripped into them when I think they’re wrong. Example? Try the $1.6 million cap on money in a super fund in pension mode. I’m always telling Malcolm to lift his leadership game. And if Bill didn’t have some worrying policies, I’d be more gentle on him than I am nowadays.
Remember, I do this to help people get richer, business smarter and to be more economically aware. I’m not here to get someone elected, like some political commentators.
The Switzer Report has some of the best stock pickers in the country writing for it and has been a strong advocate for staying long stocks, even when the market setting looked scary and heading for another crash. Fund managers like Charlie Aitken, of Aitken Asset Management put us into FAANG stocks — Facebook, Amazon, Apple, Netflix and Google — years ago and got us out a few months ago.
You see, this is what we do: help people invest better. So if Bill comes out with worrying economic and investing policies, I can’t let my liking for Bill, as a bloke, get in the way of my analysis.
Right now, Bill has some worrying policies that I’ll list:
• Stopping tax rebates for self-funded retirees who are in the zero tax bracket, which could see someone living on a total income of $50,000 reduced to $30,000.
• He wants to change negative gearing that would mean property investors wouldn’t be able to claim tax deductions from negative gearing on existing properties.
• The capital gains tax discount for holding a property or share or investible asset for over a year would be cut from 50% to 25%.
I can’t debate the social rights and wrongs of these policies in my writings because that’s not my gig. My job is to help people build their wealth within the laws. If Bill wants to change these laws and this hurts my constituency, I can’t hold my tongue just because I like him, as a bloke.
In a conference in Brisbane a couple of months ago, I was asked a question by a retired lady, who was worried that her annual income would be cut from $50,000 to $30,000 because of Bill’s proposed changes to tax rebates. She asked me what she could do. I said to tell her children that their inheritance will be shrunk, if Bill gets his way! And she could end up on the pension, so any gain to the government purse might only be short term. (A fiercely biased Lib-supporter mate of mine, actually always calls Bill — “Bill Short-term!”)
Silly hate sessions aside, apart from affecting self-funded retirees dependent on a tax rebate, which is entirely lawful, Bill is potentially undermining the housing sector with his negative gearing and capital gains tax changes, at a time when house prices are already falling. This coincides with the Royal Commission bashing banks into tougher lending criteria, which is slowing down potential lending. Economists are concerned it could slow an improving economy.
I’ve compared Bill’s hit on housing as the boom is petering out to Kevin Rudd’s mining tax, just as the mining boom was ending. All that didn’t end well for Labor, its leadership, its policy problems and the blowout of the budget deficit, which right now is shrinking at a rate of knots, primarily because the economy is hotting up and unbelievable job creation is happening.
I think an objective person would see why I might’ve amusingly written: “The impact of Bill will be that he will be remembered as the best bank basher or bank killer of all time. I worry his crusade against the banks will be like Kevin Rudd’s mining tax crusade, which hit miners when the boom was over! That brought no real tax revenue and helped seal his fate as a PM. Guess who was one of the masterminds of that knifing? Yep, ‘kill’ Bill Shorten.”
Bill pushed for the needed Royal Commission into banks, which was a good social and political move. But it really KO’d the banks’ share prices and a lot of investors/retirees lost money because of it. Clearly, they made money out of banks less than likeable behaviour as well, but my worry is that this bank burning might need to be hosed down, for the sake of the economy, jobs, wage rises and general prosperity.
You might not like them, but banks are really important. During the GFC, our big four banks were in the top 10 in the world and this helped us dodge a recession, huge business bankruptcies and 10% plus unemployment.