I learned a simple lesson while growing up in rural New Zealand. Strong demand for anything comes from a source of money.

Back then, it was the oil companies creating a high-margin industry beyond farming and dairy. Today, those oil companies are scaling back as a climate-woke government closes the curtains on new licences.

Of course, the years of success has left the region with plenty of cash. And now there is a new source. Couples from the metropolises to the North and South targeting it for affordable housing.

Today, when I look at the financial markets, I apply the same rule:

  • Where are we in the cycle?
  • Where is the source of cash?
  • What is worth buying now to catch the upstream?
  • What ‘streets’ — locations, industries, and companies — could provide the best opportunity?

During the initial bout of Covid lockdowns, a lot of institutional and fund investors went to cash. Then ultra-low interest rates further swelled their coffers with new funds from fixed-interest refugee investors. And the ability to lever cheaply.

Today, such larger investors are sitting on roughly $2 trillion of cash in the US alone. Cash on the sidelines waiting to be deployed into the financial markets.

They are looking for yield in stocks, particularly from companies with risk profiles supported by robust assets. We predict this will become more and more attractive for cash-rich investors.

This is why we’re starting monitoring on a new Australian property business today…

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