I read a quote during the week from Vladimir Lenin “There are decades where nothing happens, and there are weeks where decades happen”. It is extremely relevant to the current times, where upheaval has taken place in so many areas in so many ways. 

While we in Australia have been fortunate enough to avoid the drastic medical impact of COVID-19 that has affected countries like America, Italy and the UK, given the medical impact was the first in a row of dominos, there is much uncertainty all around us. 

And make no mistake, uncertainty = risk. 

As per the tagline, uncertain times call for certain measures. 

If you are a risk lover, have a high “sleep at night” threshold, or just enjoy playing when chaos reigns, then now is your time to shine. It is your chance to have a couple of big bets and let it ride. 

BUT, if you are like most people out there, and are more risk averse, and enjoy sleeping at night, then these uncertain (i.e. risky) times call for the following: 

• No fast moves, unless you absolutely need to 
• Cut any and all costs that are “superfluous to your requirements” – personal and business 
• Build whatever war chest you possibly can just in case you need it – hopefully you won’t, but especially at times like these, cash is king 
• Avoid taking on new staff unless it is absolutely necessary, it is a cost and a distraction you do not need at the moment 
• Avoid kicking off a new project, this uncertainty is affecting everyone, and your projections around viability may be materially different to when you were initially considering the project 
• Avoid large capital expenditure until the air clears

The Federal Government has stepped in and given employers the benefit of JobKeeper and individuals the benefit of JobSeeker, and this has had a significant positive impact on the overall health of the economy. 

However, we are not out of the woods by any stretch of the imagination, and the true fallout from an economic and financial perspective may not be felt until toward the end of the 2020 calendar year. This is going to be heavily impacted by employment, the depth of the recession, consumer confidence, the fate of our fluctuating Aussie Dollar, and how much the various Federal Government stimuli have affected its balance sheet, and just how much more they need to dig in order to get this out of the current economic and financial predicament. Not that the Federal Government can save the economy on their own, there are so many factors at play here given the global economy, and the fact that we are mere flotsam getting tossed around on the waves caused by the US, China, the UK and Europe. 

Big questions remain around what the ultimate effect on employment will be once the JobKeeper stops, and I have a feeling that the JobKeeper payments, along with the Cash Boost payments are propping up a number of already struggling businesses. And not just micro-businesses, the payments are so generous they have positively impacted some larger organisations. 

Another big question remains around property and where it is headed. Currently, there are a number of residential and commercial tenants who have taken the option to defer rent. Too many tenants think of this as “free”, while in actual fact in a lot of cases the rent is to be added to the end of the lease. What will residential tenants do if they get to the end of their lease and realise they owe 6 months rent? What if this is the case and to go with that, they have just lost their job? What will happen to the commercial tenants who have taken rent deferrals, and get to the end of JobKeeper and the Cash Boost payments, to find the coffers are empty? They will firstly need to consider laying off staff, and then consider if they can get themselves out of the mess, or walk away from it all. 

Flowing on from that, what happens to the landlords of these residential and commercial tenants who have put their bank loan repayments on hold (the interest is compounding daily)? They may get to the end of the 6 months, and the tenant cannot pay. They could have trouble replacing the tenant, or may have to reduce the rent, and struggle to make the loan repayments. 

While it is not all necessarily doom and gloom, these are material possibilities, and must be taken into account when considering the landscape. Again, all the above illustrates is that there is major uncertainty at this point in time. 

So, work out which camp you are in, risk taker, or risk avoider. Once you have worked that out, this will tell you if it is time to bet big, or sit tight. 

While I am just a poor simple bean counter from the Shire (and cannot provide financial advice), my feeling is that sitting tight means reducing your risk significantly, and you are not likely to miss out on some magical uplift in the overall property/share/business market in the next few months. 

By Christmas we will have a much clearer picture of where we are heading. Is Santa coming, or Scrooge? Only time will tell.