Want to learn how to see the future?

Though I am a skeptic, and do not believe in fortune tellers, clairvoiants or any other paranormal stuff, I do believe that one can get insights into the future just by making certain observations and learning to draw the correct conclusions. Let me explain....

In Australia, the taxation system allows negative gearing on investment properties. This is where losses in an investment property (due to interest charges on mortgages) can be offset against one's income tax payments.

This is NOT a great way to invest because the investor "bleeds" cash and gets back 25c to 45c for every dollar they lose.... but

they still lose!!! Anyhow, this idea is a popular investment platform for the masses, and has been for a long time.

In 1985, the Hawke Labor Government abolished negative gearing. Now every smart investor could see the outcome of this decision, but the Labor Government could not.

In effect, the masses decided that investing in property was no longer an effective way to minimise their income tax. So the investors stopped buying property, and many sold their "cash losing" properties.

The result was that there was no longer investor demand, which, in turn, meant builders were now out of work, and in no time at all, we had a rental housing shortage. Rents started to climb because demand outstripped supply. Soon we had masses of people with nowhere to live and no new housing coming into the market. At the same time, investors who would have normally invested in property then chose to divert their investment funds into shares - the result was that between 1984 and 1987 the ASX All Ords index rose 223%!

The Government reversed it's decision on negative gearing in 1987, but not until much damage was done to the housing market. The damage took time to repair and normalise.

No matter what you read on this matter, what searches you do, the fact that the government reversed it's decision, is enough to indicate that the abolishment of negative gearing was the wrong move! Governments are toying with this idea again. Governments learn nothing from history and, as such, history is doomed to repeat itself.

In the past, whenever the masses complain about the cost and affordability of buying a home, and their voice becomes loud enogh, and votes are on the line, the government of the day will make housing "more affordable" by decreasing the deposit buyers need to have, or by reducing the tax (called "stamp duty" in Australia) to buy a home, or offering thousands of dollars in grants. Remember.... the aim of the government is to make housing "more affordable".

However, again, any smart investor knows that when the government incetivises the buying of homes, they are in effect driving up the price of residential property!

It has happened every time I can remember, where a government "helps" people to buy homes. If the government offers a $25,000 "grant" for first home buyers - I know that prices will increase by the same amount or more. Yet it happens time after time in one form or another. The governments have learned nothing and history just repeats itself!

As such, the government is currently looking to reduce the amount that a new home buyer needs to put down as a deposit. This is to make housing "more affordable". Of course, then we will have a surge in demand. What do you think will happen to property prices?

The South Australian Government, in its crazy "green" agenda, shut down all their coal fired power generation plants a number of years ago. So, where have they been getting their electricity supply? From NSW and Victorian power generation systems. Where's the logic? Apparently, you are considered to be "green" if you use electricity from coal fired sources - as long as you are not the one burning the coal.

Now, NSW has just shut down the Liddel Power Generation Plant. What do you think this will lead to in the next few months or years?

• Power shortages?

• Increased cost of electricity?

• Will NSW use whatever resources they have to power their own state, which will leave South Australia with a shortfall?

• Will the masses then scream loud enough for the government to restart the burning of coal for electricity?

• Will the masses scream loud enough for the government to spend more on "renewable" energy sources - which will cost a fortune, causing the masses to scream further?

• Will the government incentivise "renewable energy" thus creating more investment opportunities?

Pick one of the possible outcomes above, or create your own.

You see, governments are notorious for making poor decisions, and when the decisions are illogical or seem to lack common sense, and you can draw correct prediction outcomes based on their decisions, then investment opportunities will become apparent.

Always consider the decisions that the government makes.

Ask yourself, "Why did they do that?" "Why will it work?" Why would it fail?" "What are the possible repercussions and why?" "Who or what else could this decision affect and why?" "Who benefits?" "Who loses?" "Has this been done before, and if so, what was the outcome?"

Try to predict the outcomes in the short, medium and longer term. If an opportunity presents itself to you, then weigh up the pros and cons as you see them and decide if this is an opportunity in which you wish to partake.