Do not listen to what people say, look at what they do (revisited)

I have always found it interesting how often people's actions differ from what they say or "preach". there are "smokescreens" all around us, and it is up to us to determine what is real and what is fake or misleading.

In an earlier lesson I discussed how you should look at people's actions rather than listen to their words. People can, and will lie to you. However, their actions will most often speak the truth about their intentions/feelings etc.

This scenario is not just about looking at individuals, but also politicians, policy makers, various institutions etc. If you watch or listen to any news related items, I'm sure you will have come across some of the following:

• In our current economic environment, we have politicians and policy makers telling us that our economy is in great shape, inflation is tapering and getting under control.

• We are told that oil prices are dropping due to lack of demand.

• We have investment advisors telling us that the market may now have hit bottom and that we should be considering buying back in.

• We have been told that bank cash rate would peak around 3.75 to 4%.

• We are being told by officials that Australia (and the rest of the western world) will be moving to renewable energy sources relatively quickly to address"climate change" issues.

• The Russia/Ukraine war is constantly in the news.

So what is real and what isn't?

Are there hidden agendas that we are unaware of?

What is really going on?

We need to look beyond the rhetoric, beyond the "BS" and "spin".

We need to make our own observations, perform our own due diligence and make up our own mind on matters of concern - and NOT all news matters are really a concern!

Let's look at some of the statements floating around currently, and see if the actions we see are contrary to what we are told, and if so, can we invest or design our business to take advantage of any real trends (rather than believing the "smoke screens" put in front of us)!

1. In early June 2022, the Australian treasurer announced that "inflation will hit 7% and last 2 years". Now, knowing that politicians understate such things, I then stated that inflation will hit 10-12% and last 3-4 years. Well, this week our central bank (the RBA) stated that inflation is still rising and has now hit 7.3%. Where will it go from here, who knows? It certainly is not slowing down. How will this inflation affect your business and your investments, is up to you to determine.

2. The barrel price of oil has certainly dropped in the last quarter, yet oil stocks are up in price? Why? It makes no sense.... or does it? There are always reasons for everything, it's just that the reasons are not always obvious!

   1. Let's address the barrel oil price first... Yes, it has dropped, but why? The USA has been dumping their "emergency strategic reserves" into the market to help keep oil prices under control. However, there is no emergency! So why is the current US government dumping the "emergency" reserves to the point it is now at a 40-year low? Well, there are mid-term elections on in November 2022. The current government wants to win the mid-terms and it would be an impossible task to do so if the bowser price of fuel is sky-high! Hence the dumping!

   2. After the mid-term elections are complete (9 Nov), the government will no longer care what the bowser prices will be. So what do you think will happen to the price of oil, and the share price of oil companies? I already invested accordingly in preparation for what I believe will happen in November.

3. Many investment advisors are telling investors to keep buying into the market (even as it is falling). The say that "you can never pick the top or bottom of a market". Yet, there are those that are stating we may have hit bottom already. Question.... how do these advisors make a living? By having their clients trade shares in the market. If their clients do not buy or sell shares, the advisors make no money - so of course they have an interest in telling you to "buy"! The reality is that nobody knows when the market will hit the bottom. Even when it does, how does anyone actually know for sure that it is the bottom??? The answer is you can't. So, you have to be financially literate enough to make your own decisions and judgement calls on such matters. It's your money, treat it with love!

4. Where will the Australian bank cash rate peak at? Well, it will depend on inflation levels, as well as other factors. However, those of you that have bothered to look at history, will know that the cash rate was 4.55 - 4.75% in 2010 and 2011. It was 6.25%- 7.25% between 2006 and 2008. It averaged around 5% in the early 2000's. However, in 1990 it was 17.5% and dropped to 6.5% by mid 1992. The current cash rate at the time of writing is 2.65% and increasing. This currently translates to a 5.5% home loan interest rate. The vast majority of people are worried about a 1-2% increase in interest rates. If they knew their history, they would know that rates have been much higher than they currently are now. Personally, I would not be surprised to see this rate closer to 8% in the future. Of course, those who borrowed way too much to buy overinflated properties during 2020 and 2021 are now extremely worried about their increased repayments and devaluation of their asset (home). Those that bothered to look at history, and heeded the lessons it provided, will have avoided this disaster. If you are looking to purchase a home/residential property, then apply what you have learned here to your existing knowledge base, and make an informed and profitable decision!

5. Renewable energy is the future. All western governments are pushing this agenda. Whether you believe we need to go down this path or not is irrelevant. It is inevitable. My personal views are inconsequential. Is the world actually capable of going full renewables? - My opinion (for what it is worth), is no. I have done my due diligence, I have done my research and believe we are a long way off. I think that this scenario is a full-on smoke-screen by western governments. However, a lot of taxpayer money will be spent to drive this agenda - which means we will need more solar panels, wind turbine generators, cabling, minerals for battery technologies etc. I am investing accordingly to capture this growth area. However, as I believe it is a long way off, I also invest in fossil fuels because I think they will be around for a long time yet, and their price will continue to increase! On a side note, there is a huge push int lithium stiocks. I have not followed this trend - as it reminds me of the dotcom boom of the early 2000's. Yes, there were a few big winners, but many more losers that went to zero value - so good luck picking a "winner"! Also, there are other battery technologies coming to the fore - if one of these become feasible, it could wipe out lithium as an investment. I don't know how it will go, so I'm steering clear - bu that is me. Make your own decisions based on your own due diligence.

6. Russian/Ukraine war affecting oil and gas prices? LNG prices have been dropping recently, and this is reflected in share pricing of relevant companies. However, we are in between seasons in Europe and the Northern Hemisphere. As such, when winter finally hits Europe, what do you think will happen to the price of LNG? Do you think that LNG prices are being manipulated at the moment - just like oil??? Who knows?! Do your own homework, and invest accordingly.

We are being told so much information, some is real, most is not. Some is a smoke-screen. There are just too many "hidden-agendas" to keep track of, or even try to uncover.

Usually, commonsense, a bit of digging, a healthy dose of skepticism and due diligence will uncover more that you think.

Remember, nobody is going to give you a free-ride and tell you what is actually going on behind closed doors, behind the smoke and mirrors etc. You need to do your homework.

Be skeptical of everything you hear.

Develop your commonsense (not so common).

Develop faith in yourself, and learn to back yourself and your decisions.

When something seems to good to be true, it usually is.

If something fails to make sense, then you haven't worked out the truth yet.

Question everything. Consider optional scenarios.

Remember to ask lots of "Why, What, When, Where" questions. Revisit Lesson #11 "Why why why".

Doing this will help your business, your relationships and your investing.