There’s a record quantity of cash sitting in NABtrade accounts, with balances up 100% since October 2020, writes Emma Rapaport in the Editor’s note: “Gemma says she's seeing the highest levels of cash on record in individual accounts, recording a 100% increase between October 2020 and the end of last month. She says investors have held onto the massive payouts from reporting season and then added even more cash to the pile. ‘We have seen really aggressive buying but cash levels aren’t falling, which means people are bringing in money from other sources as well,’ she says.”


Asset bubbles are hard to pick, with Bitcoin increasing 20x to US$20,000 a year after it was first declared a bubble, writes Graham Hand: “There is danger in labelling anything a 'bubble', other than if it's a film of soap enclosing air. One person's asset bubble is another's growth story. When Bitcoin went from US$1 in 2011 to US$1,000 in 2017, that was clearly a bubble. It was nearly US$20,000 within a year, another bubble, and peaked over US$60,000 in early 2021. All blowing bubbles.”


House price growth since the 1980s has been driven by a surge in debt, thanks to mortgage rates tumbling from 18% to 2%, writes Ashley Owens: “In the late 1980s, I had a $240,000, 25 year ‘principal and interest’ mortgage. In 1989 the rate was hiked up to 18% (inflation was 8%). This increased repayments to $3,640 per month, which was more than half of my net income. This year, my daughter bought her first house, borrowing $475,000 from ANZ at 2.0% ‘interest-only’ with repayments of $791 per month, which is a small fraction of her net income. At the same age as I was, she borrowed twice the amount of my loan, but her repayments are one fifth of mine.”


Households own the largest chunk of the US share market but are mostly silent partners, with just 32% voting on their shares, writes Lauren Solberg: “Proxy voting allows investors to have a say in executive compensation, board director approval, and a wide variety of environmental, social, and governance concerns. Despite the growing interest in ESG, few individual investors are putting their votes to use. On average, individual shareholders vote on just 32% of their shares, compared with the 80% rate of participation among the entire shareholder base, according to a Harvard study.”

Charts from last week

Outflows tipped to continue at Magellan Financial Group (here)

Rising debt has pushed house prices ahead of wages since the 1980s (here)


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