The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Friday, August 12, 2011

Shares vs. Government Bonds vs. Housing over the last 11 years (chart + table)

Of course, Aussie housing smashes all other asset-classes (assuming you could invest in a national portfolio). But it turns out you basically did as well investing in 10 year government bonds as you would have the extremely volatile sharemarket over the last 11 years, with a fraction of the risk (no monthly losses of 5% or more with bonds but nine (9) months of losses greater than 5% with shares). And your worst monthly loss in Aussie shares (with dividends) was a huge 13.9%, which was more than three times the worst return in government bonds. I have used the All Ordinaries Accumulation Index for Aussie shares (so dividends reinvested), a total return index for 10 year Government bonds and bills, and capital growth plus 50% (or half) gross measured rents for Australian housing. This is all pre-tax and transaction costs.