Update-Interest Rates
Most of you should remember the bond market crash of 1994 because like me you were working. It's been 20 years and quite strangely the current market conditions are very similar.
The RBA Cash rate had bottomed to a low of 4.75% in July 1993 after having already dropped to 12.0% in February 1991.
The All Ordinaries Index had risen 45.4% in 1993 and international shares, property and fixed interest had also posted double digit returns for the year ending 31 December 1993.
Things were looking good and then the US began increasing interest rates in early 1994 and everything went negative expect for cash.
Investors lost money across the board, the capital losses where not as big as 2008 but 1994 reminds us that raising interest rates is bad news for asset prices (see attached).
There is no doubt that the US will increase interest rates which will lift rates around the world but what we still do not know is when and by how much.
It's a waiting game at present and when it does eventually happen it will present investors with the opportunity to buy more quality assets at reasonable or better still discounted price.
At Newealth we are always looking to support and promote our clients wherever possible and if you have any ideas or comments, please feel free to email me via Contact Us or to call me on +61 2 9267 2322.
2nd-October-2014 | 
