The three problems I had with 60 Minutes

I’ve had a lot of people ask me what I thought about the recent 60 Minutes segment, provocatively titled “Bricks and Slaughter”.

Things like this come around pretty regularly, but 60 Minutes is an institution. People trust it.

Which is why it’s so sad that they chose to put such a sensational spin on the whole story.

If you didn’t catch it, they interviewed a bunch of industry experts and struggling home owners, and made the case that a property apocalypse is practically upon us, and prices could fall up to 40%!

O.M.G!

Anyway, there’s three problems that I had with the whole thing that I want to highlight:

1. IRRELEVANT EXAMPLES
60 Minutes dug up three people who were struggling to make their mortgage repayments, as if they were somehow representative of the whole market. But they really weren’t.

One was having major health issues, and looked like he was on death’s door. One was unemployed, and the other had a portfolio of negatively-geared properties that he could no longer sustain.

But really? If you’re not working because you’re unemployed or you’ve got health issues going on, of course you’re going to struggle meeting your mortgage repayments. That’s got nothing to do with the market.

And if you’ve got negatively geared properties that were only affordable when you were paying interest only, well that’s a problem with your portfolio, not with the markets or the greedy banks.

Why not shine a light on all those hopeless accountants telling their clients to get into properties that deliberately lose money?!?

2. BIASED SOURCES
You have to wonder a bit about the experts they interviewed too.

One was a real estate agent – but in a slow market real estate agents will often use the “market is about to crash” line to encourage more people to sell.

One was a liquidator – who’s business actually booms when the market crashes!!!

And then there wasn’t one voice given to the opposite opinion. They could have called me up and I could have told them why I thought the market was going to remain strong. They could of called 100 people around Australia.

But they didn’t.

3. SHAMELESS SPIN
Finally, they put some shameless spin on the whole thing. For example, they interviewed Dr Martin North, who said in the worst case scenario, prices could fall by 40%.

But he then clarified that on his blog that it wasn’t his central scenario, and would actually require a GLOBAL FINANCIAL CRISIS to make it happen:

“I rate it 20%, and it is not my central scenario. My best call would be in the region of 15-20% from top, over 2-3 years, but with some risk of a worse outcome. Nine chose not to cover these alternatives, though I went through each in the recording…”

Yup.

FEAR SELLS
So it’s the same old story. Fear sells, and Chanel 9 and 60 Minutes sold it like a floozy.

That’s ok. The media is what it is (as long as you know that).

But if anything it does highlight that this is a very interesting market. People who have structured their deals badly, or bought too many negatively geared properties are going to struggle.

But if you’ve got the right vehicles, and you’ve got properties that are actually putting money in your pocket, then you’re going to have a major advantage.

And if things do get tight, you’ll be taking the uneducated to the cleaners.

So invest in yourself. Get the right skills and the right training for the market.

And don’ believe the hype.

Spiro Kladis
Managing Director, Cashflow Capital

Facebook Comments:

Leave A Reply (2 comments so far)


  1. Steve
    1 month ago

    I have been investing in the market since the early 80s about 1990 a big resection 11 unemployment interest at 16% real estate went down 30% now the economy is no where near as bad our market may fall up to 15% over 3 to5 years but we have micro markets that will even go up the moral is hold on or even be cash ready for bargains don’t over extended


    • admin
      1 month ago

      Correct!! Well said

2 hour Investor Workshops:

Sydney
SMC Sydney Masonic Centre
Sat, 10th November 2018
8.30AM-05.00PM

Parramatta
Novotel Parramatta
Sun, 11th November 2018
09.30AM-06.00PM

Brisbane
Novotel Brisbane
Thu, 15th November 2018
8.30AM-05.00PM

Glen Waverley
Novotel Glen Waverley
Fri, 16th November
8.30AM-05.00PM

Melbourne
Pullman Melbourne
Sat, 17th November 2018
8.30AM-5.00PM