Market dislocations occur when financial markets, operating under stressful conditions, experience large widespread asset mispricing.
Welcome to this week’s edition of “World Out Of Whackâ€Â where every Wednesday we take time out of our day to laugh, poke fun at and present to you absurdity in global financial markets in all its glorious insanity.
While we enjoy a good laugh, the truth is that the first step to protecting ourselves from losses is to protect ourselves from ignorance. Think of the “World Out Of Whackâ€Â as your double-thick armor-plated side impact protection system in a financial world littered with drunk drivers.
Selfishly we also know that the biggest (and often the fastest) returns come from asymmetric market moves. But, in order to identify these moves we must first identify where they live.
Occasionally we find opportunities where we can buy (or sell) assets for mere cents on the dollar – because, after all, we are capitalists.
In this week’s edition of the WOW we’re covering Australian bank funding costs
My sister-in-law just bought a new cupboard apartment in Sydney. AU$1.4 million, the going price for an inmate of the city’s digs, gets you enough room for a cat, its litter tray, and a wine rack, which you’ll be emptying regularly in order to keep your sanity, living in confinement.
Sydney and indeed Australian real estate isn’t new to us. It wasn’t that long ago (6 months, actually) that I took a swipe at overvalued real estate around the globe. I suggested Vancouver was due for a good spanking and then discussed how Australia looked rather ugly, despite it’s pretty beaches, sunshine, and Kylie Minogue.
In order for any market to reach dizzying levels we need only look to the debt markets, because it is debt which provides the leverage behind most modern day bubbles. Aussie real estate is no different.
