Yes I know I am a worry wart but there are some insidious things happening that are causing me concern. And investors are being led into a false sense of financial security.

Only a few months ago, the Reserve Bank was increasing interest rates and brought them back down by 1.75% in the past few weeks. Is there anyone out there who knows what is happening? Where is our leader?

Or maybe it says only one thing. The ‘powers that be’ know something we don’t or we have not been told. That is – ‘things are crook in Tallarook’. Or am I just an ol’ cynic?

It confirms for me that the outlook is not good at all. Governments the world over have been throwing money, using any old solution that springs to mind as a means toward solving the global credit crisis. And as one government tops the other’s remedies, the applause for brave action grows louder.

But I am not sure governments know what they are doing and many of the prescriptions have been thought up in a seeming hurry – without any financial modeling. Well, I have not seen any.

I am also worried by buyers pushing this share market higher. This could end in tears.

A few months ago in this column – where I am allowed to rant – I talked about whether the banks can maintain their dividend ratio. I am becoming increasingly worried (and losing sleep) as again many investors are going to get hurt.

Months ago I asked the question: were bank bad debt provisions adequate? And in very recent weeks I have seen banks CEOs publicly state – bravely – that they have very adequate provisions. And yet all of the big four have exposures to ABC. There will be other companies where the undertakers will move in. I just don’t accept what our highly paid banking leaders are saying.

Be careful what you read and who you believe right now.

Enjoy the ride

Tom Scollon
Chief Analyst
Trading Tutors Team