Is the End of the World Near?

Black Swan Events
With Australia having weathered the global financial crisis, we are now having to cope with the potential after-effects of:

  • The European sovereign debt crisis;
  • The earthquake & tsunami in Japan, with the subsequent nuclear fallout;
  • The Libyan crisis; and locally …
  • Extensive flooding in Queensland and Victoria.

Given all of these so-called “Black Swan” events occurring so close together, certain pundits appear to be jumping to the wrong conclusions.

They are ignoring the fundamentals; and simply encouraging a knee-jerk reaction — driven more by sentiment and (supposedly) an attempt to avoid risk.

Right now, many investment decisions are being based upon incomplete, and often incorrect, information. And this is also being inflamed by sensational headlines in the media.

The Tragedies are Real

Without question, the human pain and suffering in these disasters is beyond a full comprehension — whether it be in Japan, NZ, Libya, Queensland or Victoria.

However, history would suggest the adverse economic effects will be comparatively small and temporary.

In all these circumstances, there may be some short-term decline. But the subsequent rebuilding efforts tend to provide an economic boost, well beyond what would have otherwise occurred.

You only have to look at the Victorian bushfire tragedy of several years ago. As truly devastating as that was … the Victorian economy now leads the rest of Australia in so many areas — both economically and in its relative population growth, compared with other states.

With Japan, its $200 billion rebuilding program will consume an enormous volume of steel — and therefore, create huge demand for Australian iron ore and coking coal. Not to mention, the design and construction opportunities for Australian firms.

Bottom Line: Just step back, and view the fundamentals clearly.

While China remains an important influence, the recent disasters in New Zealand and Japan will also actually impact very favourably upon the Australian economy AND the Commercial property market.

Your competitive advantage will be found in buying Commercial property … while others seem to be frozen to the spot.