Michael’s Musings Facebook Posts – Latest Financial Insights & Musings

The latest Musings posts from Facebook.

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Michael's Musings

Musings on money and finance, from a Financial Planner based in East Perth, Western Australia. Nothing on this Facebook account is to be considered personal financial advice.

Michael’s Musings

2 weeks ago

If you wrote the Federal Budget, what would your Top 7 priorities be? If Australia voted you Benevolent Dictator and it was your task to set the Budget straight, what would you do?One of the lessons my philosophy studies taught me is that anyone can throw a criticism but few can put forward a coherent alternative. Here’s your chance.If you hated this Budget, don’t start from what you dislike – write down your Top 7 priorities. What would you want the Budget to focus on? Maybe you’re a more pedantic or informed individual? If that’s the case then write down your 7 specific actions you’d take if you were Benevolent Dictator for the day.I’m not sure I would even get to 7 priorities, but let’s have a go.. Remember – feel free to mock me and to correct or criticise me… but also be prepared to put forward your own fully written-out alternatives. Not just sound-bytes.. something you’ve actually spent some time to think about and work through.Here’s my off-the-cuff seven priorities for the next budget:1. Income tax thresholds are indexed to inflation. If inflation is negative (which rarely happens) then thresholds stay the same until inflation is positive again). Allowing normal inflation-covering pay rises to be eaten up by higher tax rates demolishes incentive and is patently unfair. It also gives whoever is in government a ‘free-kick’ to increase their spending every year with zero need to explain that to the public.2. Gambling laws – the gambling industry might be ‘fun’ to a large chunk of citizenry – but it is debilitating to segments of society. States will have to find some other way of meeting their revenue targets. All of the recommendations of the gambling industry investigations should be implemented, in full.3. Make changes to the Petroleum Resource Tax regime. The regime was put together when Australia was broke for investment funds. The process created incentive and worked. Good stuff. It now needs to be renegotiated. The current regime has strong up-front deductions but higher ‘project maturity’ taxes. There’s room to balance this more appropriately. The changes do not have to be punitive, but there must be an acceptance of some form of balance of a nation’s need for capital for the future and its need for national income now.4. Means-test FBT-free electric vehicles, home batteries and other taxpayer subsidies. As Carl Sagan suggested (and I’ll misquote) – grand claims require grand evidence. For any government subsidy to be free of means testing, a very high level of ‘public interest’ must be satisfied. This is the same for industry and business as it is for households. Grand claims of ‘national interest’ need to meet the pub test and ongoing tests for validity and coherence in an ever-changing world.5. Cap NDIS funding at its current level for 3 years. No government can afford a system as out-of-control as the NDIS. The system itself is world-class, but there are clearly rorts and inefficiencies. The cap will very quickly help everyone identify just where they may lay. 6. Everybody pays tax. I don’t care if it’s $1. A person who exists in this country benefits from the work and efforts and genius and silliness of every single person who came before them. There’s a cost to that society fabric and everyone has to contribute. The idea that the country ‘owes’ anyone a tax-free life is provably false. There’s lots of room for balances and trade-offs, but the idea needs to get back into the core of society that there is a need to contribute to the society we are all part of.7. Everybody gets a lifetime threshold of tax-free capital gains. They can choose how to use it. They can use it for their home or for a business or for both – but the threshold is set at a multiple of the national home price. Maybe 2x. I’m open to discussion on that, but a person who chooses to start a business should have at least some of the same tax-free advantages as those who decide to put all their money into their home. Such a process will remove some of the lurks sitting in the property market, but it will also encourage people who want to invest outside of property. And it will automatically encourage productive endeavours for regions, where local home prices are usually less than the national average. There’s my 7. They are what I would consider low-hanging-fruit. They’re not impossible and it is possible for all sides of politics to agree with at least some part of each proposal.You wouldn’t want to know what my numbers 8 to 10 are. In the meanwhile, I’ll share a link to an interesting perspective on all the hullaballoo currently beating our eardrums every time we tune into a news headline on the Budget..The Great DisclaimerRemember the Great Disclaimer – nothing in this post or on this Page is to be taken as personal financial advice. It is my musings and thoughts on money and finance. At the most, it is advice on general and factual material. Do not make financial decisions based on any social media content without lots of cross-checks and research. Ideally get a professional recommendation or opinion, because we all need someone looking over our shoulder when making financial decisions! … See MoreSee Less

There’s a legitimate debate around startups and CGT, but it needs to be had honestly

www.livewiremarkets.com

Much of the opposition against the proposed CGT changes have been co-opted and the facts misrepresented and this time is no different.

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Michael’s Musings

4 weeks ago

May 2026 budget – watch the battle for narrative control…It’s only the Friday after Tuesday’s budget, and I’m already deleting newsletters and commentary and so-called ‘interpretations’.. All budgets are fiction – we are all aware of this fact. Financial planners will habitually add 10-15% to any budget estimate because we have to account for ‘leakage’ and overly enthusiastic guesstimates for savings that ‘might’ occur.There have been a few articles where some authority or celebrity has come forward to say the budget changes will kill innovation or entrepreneurship. I’m highly dubious of such claims. Yes, ANY increase in tax of ANY kind can be seen as a killer of innovation or investment capital. But were the budget changes really that big?It’s easy to make any figure look big, if you just approach it a particular way, and stress an extreme position or change from a dollar figure to a percentage figure – or vice versa. I’ll include images of two such grand claims so you have some idea of what I am talking about. Here’s one from a very successful business founder (much more successful than myself and our small business, so who am I to negate this commentary?). Boost Juice founder Janine Allis says the changes are unfair and will break the core of Australia. Are these taxes really so unfair?Does anyone really understand the various small business tax breaks available in Australia? There has been no change to the tax break available to anyone who holds a business for 15 years and eventually sells out. The tax breaks for that person remain incredibly generous. The taxes will mainly hit someone who makes a very large capital gain in a fairly short period of time. Should that person pay tax? Should that person pay full tax on their gains, much like a worker does on their income? I’m mixing capital and income here but that’s what many people are doing in this debate – they are mixing all sorts of narratives.To be clear – i dislike Labor as much as I dislike the Liberals as I dislike any entrenched government bodies that are able to ignore vast swathes of the community. I dislike political parties that peddle impossible economics or seek to manipulate the public on race or gender or cultural issues. I’m a grumpy old man, and that’s my starting point for most interrogations of economics and societal positions.Back to my note on narratives..The next commenter is from my own financial world. Christopher Joye is a brilliant wizard in the world of fixed income investments. He has brought together a large group of genius-level folk who share his demanding approach to maximising every dollar for their clients. But a recent comparison of Labor’s budget proposals was about as extreme an example as one could ask for.The chart shows Australia taxing Assets and Business valuations at double the next worst country (Germany). Is this true? To make it true, you have to stretch and twist and shout until you end up with a position that is so rare, it has hen’s teeth. To start with, Australia has four (4!) business tax concessions, and all are materially large. The example used is a person who has turned $250,000 of business value into $5,000,000 of business value in 10 years. That’s a massive return, and the person who achieves it has done a great job. But the case study suggests the person is not entitled to any small business tax concessions. Just who is this person?They are someone who has either a business with a turnover greater than $2m or has personal assets over $6m and they are a top marginal tax rate payer. Is this person really a struggler? My guess is that most Australians would say this person is not a small business any more. There are a number of ways of dealing with tax at this level, and this person would be in a position to take advantage of them. The real question that such a person should be asking – and that these commenters should be asking – when looking at the Federal Budget changes is… Why do I have to pay full tax on my gains, when my neighbour never tried to build a business and she just sold her home for $5m more than she paid for it just a few years ago?Now that’s a line of questioning that would go somewhere towards addressing Australia’s "intergenerational fairness"… … See MoreSee Less

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Michael’s Musings

4 weeks ago

If you think inflation is headed lower…One major fear of Central Banks is "embedded inflation expectations" because the outcome is often a spiral of higher prices leading to higher wage demands leading to higher prices. Repeat ad nauseum. This is a horror event, because it leads to interest rate rises struggling to bring an economy into ‘balance’.Which makes any reading of today’s Financial Review headlines a bit uncomfortable.Balancing the needs and wants of a nation is a borderline impossible task. Someone is always going to be upset. The wage claim of 6pc is arguably fair, because those on fixed wage incomes are behind in after-inflation terms. Some sort of catchup is reasonable. But physics tells us every action triggers a reaction (or something akin to that simplistic notion). I do think there is room for better communications of what inflation impacts and what impacts inflation. In this case, wouldn’t it be handy if a Government spokesperson said something like "yes, we’re lifting incomes of the lowest paid people but it will lift inflation and some of those lower paid people will lose their jobs. That’s Economics 101 – and here is what the Government will do to try and balance that impact"..But I’ll age a lot of decades before hearing that sort of logic.. … See MoreSee Less

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Michael’s Musings

2 months ago

Q: How do you know a property is expensive? A: You don’t. But there are hints and a thinking person can use them to gain some perspective. And the same logic applied to investments more generally. In amongst the turmoil of an investment decision are markets and indicators that the wide-eyed can use for better decision-making.In this post, I’m going to share a slice of Howard Marks’ latest quarterly memo. This legend of Wall Street writes about prices, and trends and the way people always see "this time is different" but eventually, it’s see that this is just the same as before but wrapped differently.Right now, there are arguments that "markets" are expensive. We won’t know whether that is true until quite some time from now, when we can all look back with smug faces and point to how obvious it must have been at the time.Is Perth residential property ‘expensive’? Are the companies listed on the ASX ‘expensive’?Is the current price of gold, ‘expensive’?Are Australian Government bonds, ‘expensive’?These are all excellent questions. And much like any reasonably informed financial person, I can provide you with material that ‘proves’ these areas are expensive. And I can provide you with material that ‘proves’ these areas are prices exactly as they should be. It’s no wonder a non-financial person finds all of this confusing and confronting. Back to Howard Marks. His latest memo includes observations on times when prices look to be, and eventually turn out to be, ‘expensive’. Here’s the text.. when reading it, I’d ask that you think of people you know, and their attitudes to money and to how they see their financial position versus how they see that of their neighbours, their friends, their work colleagues and their heroes. And think about how you see, and talk about money, markets, and the price of any investment today.[from Howard Mark’s quarterly newsletter : 9 April 2026]___________________________"Extreme upsurges in the popularity of novel forms of investment invariably share certain features:🔹 The Essential Element is NewnessWhen something is new, it’s easy for proponents to tout merits while the flaws remain hidden. Untested assets allow fads to grow into bubbles.🔹 The "Grain of Truth"The Nifty Fifty were great companies. The internet did change the world. These truths provide the foundation for what eventually becomes a destructive bubble.🔹 The Reward of Early EntryEarly investors succeed because they buy before popularity elevates the price.🔥 The Power of EnvyAs Kindleberger wrote: “There is nothing so disturbing to one’s well-being and judgment as to see a friend get rich.” Envy is often the strongest force in the market.📈 Hype vs. RealityPossibility is confused with probability, then morphs into certainty. Skepticism and risk aversion go out the window.❓ The Critical QuestionRarely asked in the heat of the moment: "What price is safe to pay to participate?" FOMO and excitement are the mortal enemies of caution.🤡 The Three StagesLatecomers swallow promises and push prices to the extreme. As Warren Buffett puts it: “First the innovator, then the imitator, then the idiot.”⚠️ The Inevitable DisillusionmentFlaws and unfulfillable promises lead to loss when optimism turns out to be excessive or prices simply too high."History does not repeat itself, but it does rhyme." — Mark Twain___________________________There have been so many ‘novel’ forms of investment or investment trends, in the last decade or so. All have looked amazing, and early adopters have often made a lot of money, while late-arrivers have lost a lot of money. Dinosaurs like myself must be careful of assuming every new trend is going to result in disaster. Most probably will, but some might not, and some might represent a genuine opportunity where things really are "different". But who has the crystal ball for that future certainty? Not I. And nobody I’ve ever encountered. Is "artificial intelligence" a genuine opportunity? Is it a trend that will follow the stages outlined by Howard Marks? Is Perth residential property a genuine opportunity? As in, are current prices indicating a great opportunity? Even we Financial Planners are inundated with messages telling us of the great opportunities to be had in residential property right now or in private credit and lending into residential property in one form or another.If you go back to Howard Mark’s notes on these investment trends and cycles, you’ll notice that he’s not saying some people won’t make a lot of money. And he’s not saying a lot of people will lose money. But he is saying that there’s a bit of a cycle going on here, and stepping back to try and work out what cycles we might be looking at, and where we might be on each of those different cycles, can at least give us some idea of whether we are closer to one ‘end’ of the cycle than another. What do you think?How do you see the price of Perth residential property today? How do you look at the prices of shares listed on the Australian Stock Exchange today? Do you see artificial intelligence as an opportunity – or as a threat? How do you measure threat versus opportunity?In our office, Simon Tomkinson keeps a crystal ball that he offers to anyone who is uncertain about the future. I think there’s a good chance the crystal ball is as accurate as many of the definitive declarations of threat or opportunity that cross my desk on any given day. The weekend is coming up. Anyone spotting glaring opportunities or threats is welcome to list them in the comments. I’ll see if my weekend allows me time to add a few as well._______________________Please remember the Great DisclaimerNothing in this post is to be interpreted as ‘personal financial advice’. It is general and factual advice only, and does not take into account your personal circumstances, expectations or preferences. LInk to Howard Marks’ memo : www.oaktreecapital.com/insights/memo/whats-going-on-in-private-credit … See MoreSee Less

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Michael’s Musings

2 months ago

Feeling confused by the rapid changes in news headlines? You are not alone. I’ve included below this morning’s 10-year Australian Government Bond Yield chart, and commentary. I’ve highlighted the single most important word in the commentary – "hope". It’s not a very strong basis for large economic decisions. This is a part of the many reasons you might be feeling a tad worried or concerned or confused right now. Possibly all emotions at the same time. You are not alone.At times such as these, a professional money manager will appear to ‘do an ostrich’, and stick their heads in the sand. But that’s not really what they are doing. A professional money manager will look at all this uncertainty, and markets trading on something as slippery as ‘hope’, and they will shake their heads then close their eyes and go back to basics. It is a factual statement to say you cannot predict financial markets. Professional money managers know that. But sometimes even professional money managers need to take a moment and pause so they remember that simple basic fact.What a professional money manager CAN DO, it so better understand what they can impact and what they cannot impact or change. You cannot change what Donald Trump chooses to do tomorrow. You cannot predict it. There’s every likelihood that Donald Trump doesn’t know what he is going to do tomorrow. He likes "a deal", which means acting and reacting according to circumstance, and being prepared to change anything in order to achieve whatever is today’s goals. If a USA President operates this way then their Administration is likely to operate in a similar way. So what CAN you change? A professional money manager – and you – can decide how much money to put in different areas. They can decide how much risk they are going to take with their money and their future outcomes. They can look at higher risks or higher uncertainty, and make a decision to either participate or not participate – or participate at a certain level, and under certain conditions. Sometimes, the ‘fear or missing out’ or FOMO, is so great that a person or even a professional money manager will stay invested into areas that they KNOW involve more risk. There’s nothing wrong with doing that – but there’s no point blaming everyone else if things go wrong with that money that has been put at risk. In times where ‘hope’ and ‘FOMO’ drive market changes, investors of all types need to make a conscious decision to either pay attention to where their money is – and do something about it – or close their eyes and just let things play out. Both are a conscious decision.Important notes on my note…As usual, please take note of the Great Disclaimer – nothing in this post is intended to be personal financial advice. It is general or factual advice only and may not be relevant or even appropriate to your personal situation. Do your research. Get professional advice and help if you are in any way uncertain.A quick note about my early point of not being able to predict the future… well, someone did overnight. Someone placed hundreds of millions of dollars of bets on the oil price suspiciously close (and definitely before) Trump’s announcement of a possible ceasefire with Iran. If you search the internet, you’ll find charts that make this little trade a pretty obvious target for investigation. But it’ll be fascinating whether that little coincidence gets appropriately investigated. So, my primary assertion holds true – aside from potential insider trading or just pot luck, it’s a generally accepted fact that it is impossible to accurately and consistently predict the future of financial markets. … See MoreSee Less

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