Welcome to the end of the week! I’ve been busy working on some personal coding projects which explain the light postings.

 

A $25,000 robot barista serves 120 cups of coffee an hour — and it is part of a growing ‘robot revolution’ that could kill millions of jobs (Business Insider)

Ok, you have to forgive the doomsday-esque headline but automation and robotization is probably what will drive the next industrial revolution. Just like the last one, lots of jobs will be lost and lots of new ones will be created.

If a $25,000 robot can serve 120 cups of coffee in an hour, that investment will easily pay off in something like 6 months? The human reaction will of course be to come up with something that this robot won’t be able to do and charge it for twice or three times the price. The losers will of course be the generic baristas working for minimum wage and producing a standardised product.

This situation is probably applicable across many other industries where there are larger chains who have the financial capability to be the first adopter of such technology.

 

The relationship between financial or real assets is at extremes – It can be exploited (Disciplined Systematic Global Macro Views)

I’m not so sure it can be exploited but it’s worth noting the chart in the post about how the price of financial assets (large-cap stocks and long-term government bonds) are much more expensive today relative to real assets (commodities, real estate, collectibles).

Main takeaway from the post:

Financial assets are at all time highs versus what is considered real assets; commodities, real estates and collectibles. Real assets usually exploded in relative value during periods of inflation and war when more resources are needed or when commodities are scarce relative to money. The flow of money has moved to financial assets especially those that are related to technologies that do not need capital. The flow of excess money to financial assets and their expected future cash flows exceed demand for real assets that do not immediately generate return but have to be transformed for consumption or usage.

I completely agree about how money has been flowing to tech and so Facebook’s massive drop this week shouldn’t have come as a surprise to anyone. Could I have predicted when it would happen? No. But no one should have been surprised that it happened.

 

How a Falling Australian Property Market is Creating Many Negative Equity Property Owners (Investment Moats)

Kyith over at Investment Moats posted his thoughts on an article about the Australian property market. The funny thing is I also read an article (I think it was shared on Facebook) about how regulators in Australia tightened lending and how that has lead to the poorer borrowers being unable to refinance at lower rates as their loan-to-valuation ratios have now dropped.

Basically, poorer borrowers in Australia are finding it difficult to refinance as banks can now only lend them less on the value of their home. Since poorer borrowers would have taken a higher proportion of the home value as a mortgage, they can’t switch banks or mortgages despite the lower rates because of the now lower loan-to-valuation ratio imposed by the government.

If we add the situation described in Kyith’s article, then the Australian housing market is in for some trouble. The funny thing is how this article comes after our own regulators have tightened the reins on the Singapore property market. So much for Singaporeans who believe in the myth that investing in property is a one-way street. Very often, they forget that in the short run, cycles matter and over the long run, property prices increase at the rate of inflation. Furthermore, the cost of maintenance and property taxes mean that investing in property takes some work.

Property investors have to remember that the lure of property as an investment class is in the leverage one can take. Without leverage, it only gives shitty returns.

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