David French | 19/02/2010 11:04:31 AM

This article was first published in The Morning Bulletindated 16 January 2010.

With last year’s articles covering territory from holograms to mayors, the thought police just couldn’t help themselves. So, after reading Thomas Sowells “Economic Facts and Fallacies” over Christmas, let me reiterate the point of the most controversial articles:

The good things in our society are driven by those who explore, and ask questions. The bad, like the GFC, are often driven by popular mantras, closed mindedness and sloppy policy. Often, the important questions have already been asked – last generation, last century, an earlier millennium. And often the answers are known – sometimes widely. We focus on education with immediate financial outcomes, rather than searching for truth. There is a secular move from traditional organised religion, which for all its faults at least offers a structure. Instead of these embedded elements of society past, there is a belief in bureaucracy - widely criticised, but nevertheless expected to protect. Is that faith well founded? Type “Ackerman SEC CNBC” into Google. I’ll leave it with you.

But I don’t know everything. I’m the guy who attended Melbourne’s exclusive Savage Club for the horse’s birthday, expecting to meet a few connections. Imagine my surprise in finding it was just an excuse for beers – a celebration for all horses, regardless of build, colour or speed. Which brings me to today - our dog’s birthday. One year, five chooks, two fences and an expensive outdoor setting later, the original $500 investment has gone multi-thousand. What was once a golden ball of romping hair, is now an overcapitalised eating machine. Then there’s puppy school, where unrequited friendliness with other dogs not only got him demoted but earned him yet another visit to the vet.

The dog does offer some positives. Sad, reproachful, happy, the expressions are priceless. And the kids love him. Bounding after him playing chasey, tug of war, or throwing a ball – it really is enough to forgive him laying a cable on our friendly neighbour’s lawn.

So where does that leave us? The continued strong rise in asset values is dependent on the upcoming profit reporting season. Some sectors will likely post very strong results, while others will remain soft. The rain is unequivocally positive, but rising interest rates are double edged. Money will become more expensive, but monetary policy can remain expansionary even with rising interest rates. When official rates reach about 5 per cent, such policy becomes contractionary. It’s an interesting run from here.

The Investment Collective (AFSL 471728) is a non-aligned financial planning and investment firm specialising in providing tailored financial and investment advice for individuals and small business. Capricorn Investment Partners Limited's services include financial planning, share trading, portfolio management, insurance broking and self managed super fund administration. Additional information on services provided by The Investment Collective Limited can be found by following this link. Readers are reminded that this document has been prepared for general information purposes only, and any advice contained herein has been prepared without taking into account your financial objectives, situation or needs. Readers are advised to see their financial advisor prior to acting on any general advice.