Our investment benchmarks paint a telling picture of the dramatic September quarter we had. These benchmarks measure total return, being growth (or diminution) in value where applicable and income (or notional income). The performance of the Australian share indices highlight the market's reaction to the reality of the end of the China growth /commodity cycle and the apparent lack of prospects or productivity to replace it. The broader property index has been strong since its disastrous reaction to the GFC up to June 09 and could be ready to lag. The September quarter residential performance, particularly in Sydney and Melbourne could be akin to the out of control revving of a lawnmower about to run out of fuel.
Being an investor in these times has been difficult. Sticking with old economy miners and banks has been a losing strategy. Australia is at a turning point in its economic life with its productivity drained by poor tax and IR policy and lack of political vision; going with the flow may not be a winning investment strategy. One way to counter this is to look to direct investments, at least to some extent, towards "megatrends". To that end a worthy read is “Global Megatrends” by Stefan Hajkowicz of CSIRO.