State of Play: It’s All Relative

Hi there and welcome to our state of play. Well, it felt like we’d come through the storm and we’d hit calm waters and everything was going to be okay and suddenly there’s upheaval again.

So in the press, you’re probably sick of hearing of a talk about a second wave and then we’re suddenly seeing the stock market [inaudible] again, so that all that volatility of huge spikes and then low lows. And again, it’s our fear.

So we’ve heard other countries in the world. America just never flattened the curve. So the biggest economy in the world is going off the charts with spikes in the infection of Coronavirus and it seems to be mutating. They’re saying it’s younger people now. So a lot of people under 50. And the next thing, India, big economy. Again, massive country gone into its fifth lockdown.

And the virus just isn’t under control. More recently, we tend to think, Oh well, look. It won’t affect Australia because we’re an island, but we’ve had breakouts, not from overseas. We seem to have the borders under control, but Melbourne has had hotspots. And they’ve now declared 10 postcodes in total lockdown with police patrolling the streets, questioning people, on-the-spot fines, all that sort of thing.

So not ideal and again, a time of uncertainty. What they seem to be saying now that there’s about 50,000 genomes in this virus, but 70% of the cases carry a different… So they upload it all to a database and 70%, when studied under a microscope, have what they’re referring to as the G genome.

So it’s a different mutation of the virus and that’s what it’s dominating, what they’re seeing now and that’s the strain that hit Europe and America.

And what they’re thinking is there’s no final studies on this. All of this has to be peer reviewed and report published. But what the talk track is from the scientists who have studied it is that, and this is from laboratory experiments, that the mutation, this G mutation makes the virus more infectious.

It hasn’t been proven, but it does seem to show that once it gets into someone’s body, the infection grows faster and it spreads to other people faster.

It doesn’t really change anything. At the end of the day, they still don’t have a vaccine, they still don’t have a cure. But studying this different strain, and it was always expected because that’s what viruses do, is mutate. If they understand how it’s spreading, it will impact what they do in response.

So is it lockdown? Is it spread in different ways? And how do we attack it in a holding pattern? Because to date, we’ve just relied on flattening the curve.

So what they’re saying with this new mark two mutation is that it affects the spikes on the outside. It’s like picking a lock apparently. It’s like a burglar. When this virus gets into the system, it gets in through the spikes on the outside and it’s able to penetrate quicker. It’s more effective or efficient, I suppose, as a burglar. And then when it gets inside, it copies itself, it attacks the cells of the body, a bit like DNA. They call it RNA. And it copies itself a whole lot faster and spreads faster and is more contagious. Because of the spike, the G spike, it’s more effective in penetrating.

So what they’ve realized is that the G genome can copy itself in three different strains of the virus. So it attaches to three different proteins and then that makes it spread faster and makes it more contagious.

So it started off, the light pink, apparently, was where it started back in January in China and we can now see the darker pink areas are what they’re seeing. So the light pink one got under control, but it’s the dark pink one, the more contagious version, that is now setting things off.

More bad news, too. Overnight, the Council of Small Business put out their study and their latest survey. So there’s three and a half million small businesses in Australia. 75% of these businesses have reported decreased revenue because of Coronavirus and economic impacts and aftermath. One-third of sole traders have said they’ve had an 80% plunge or more in their turnover.

And a similar proportion of these small businesses have either cut back staff, cut back wages and in receipt of JobKeeper allowance. So 80% of businesses impacted and drawing on the government and on life support there.

So again, and we’ve talked about this before in previous sessions, we are going to see problems flow through our system and at the moment they’re invisible because they’re patched up with chewing gum and string because of government stimulus packages and monetary policy and the other things coming to the forefront to hide what’s the problem.

Scott Morrison did say yesterday that they’re going to look at another version of JobKeeper come September. So the 27th of September, when that runs out, so that we all don’t fall off a cliff, especially in this time of uncertainty, they’ll look at some other way to prop up the economy and to keep people in jobs as much as they can.

But on the flip side of that, employers are saying that they’re finding it hard to find staff. And that could be because of the JobSeeker package, which effectively doubles Centrelink benefits or the Dole is more attractive in some circumstances than what’s being offered.

So one person surveyed said, “Well, look, I want someone to work in a BP service station, but the hours and the pay rate and once you take into tax, it’s about $1,200 and they’re getting 550 a week on JobSeeker. So no one’s applying for the job.” So the government’s looking at tweaking and adjusting what they’re doing in response.

The other news out and again, so we’ve talked about businesses being in trouble. We already knew that there’s going to be a whole wave of distressed businesses, but the other thing that’s come out of the ANZ, Adelaide Timbrell, who’s an economist with ANZ has put out a report. And the research shows that for every 1% increase in the unemployment rate, there’s a corresponding 0.8% increase in mortgage arrears.

So that’s RBA data. But ANZ have then fed that through the debt in the system, especially with residential mortgages. And they’ve said, “This is a little bit different now because we’ve got no buttons to press or levers to pull.” Normally, the Reserve Bank would lower interest rates when there was an economic crisis and they can’t really go any further.

Although there are calls on the Reserve Bank to drop the interest rate to zero, but there’s really nothing else they can do. They’ve got no more tricks up their sleeve.

We’ve got high unemployment, it’s going to get worse. And the other thing that’s happening is that we’ve got very, very weak wages at the moment.

So coming into all of this, we already had low wages. We’d had no wage growth in real terms for 20 years. So what that meant was that a lot of people were carrying a lot of debt. So households coming into this have already run out of their savings or their buffers.

So they were up to the eyeballs in debt anyway. Low interest rates over the last couple of years haven’t made a difference and 43% of mortgages in Australia, they’re unable to survive beyond the next three months.

So come September, and we’ve always said this, there’s going to be a cliff. Everyone’s going to fall off a cliff. And the ANZ study shows that we spend, household debt, coming into the Coronavirus was 195% of what we earn. So we got money from borrowing and that’s going to stop now.

So we’re going to see an economic contraction because of high unemployment. People just won’t have money and once the stimulus packages, and they’ll be other packages or other support, but it’ll be more niche, more laser focused.

A lot of people are going to fall off a cliff basically. We’re going to hit critical mass because we’ve been surviving on too much debt and debt has to be repaid and that day of reckoning is now.

So we are going to see businesses fail because if people don’t have money, if they’re all unemployed, if they’re carrying high household debt, they’re not going to go out and spend.

So the business world will contract, and like with any recession, and this one’s more along the lines of a depression, any business that’s inefficient or ineffective is going to be [inaudible] no doubt.

And we’re seeing it across the world. We’re seeing it in retail like Seafolly, the swimwear range that was owned by private equity in Singapore that’s gone bust, Victoria’s Secret. All of the labels and the Rag trade and anything that really is a discretionary spend in this environment probably was doing it tough before Coronavirus, but now, just unable to survive. So massive problems in the system.

At the end of the day, though, and if you’ve been following our series where we’ve had Robert Kiyosaki and last weekend, we had Gary V, the experts and those who have a formula for success or a mindset for success have said that it’s not the first time. Things have happened in history. And history often repeats itself. If we expected plain sailing for our whole lives, then this is our wake up call. That was just naive thinking.

And we’ve been lucky in Australia, 30 years without anything bad happening. So bad times don’t necessarily mean the end of you. In fact, it’s a test of our resilience. So they don’t destroy your character. They actually reveal it.

And I say it’s all relative because if you heard the interview with Gary V on the weekend, I said to him, “How do you cope when you have a bad day? Nothing’s ever good forever. When the bad stuff happens, how do you cope?” And he actually said something that resonated with me. He said, “I just keep it in perspective. It’s all relative. So perspective is, yeah, this is one bad day. Problems can be fixed. I’ll fix it tomorrow. It’s another day. And in the biggest scheme of things, am I happy?”

When we look back and Gary V cited history. People went through world wars. I went through the Spanish flu. We’ve seen all this before. And don’t forget where the offspring of those who survived. So our ancestors were all survivors.

Robert Kiyosaki said the same thing. He said, “You just got to go out there and get on with it and start doing. Just shut out all the noise of other people, focus on your goal and just take action steps.”

Got me thinking about history and you always hear the war stories and you must hear them from the previous generations. “Oh, when I was young, you would have no idea the hardships and you guys have it easy.” We are kind of trust fund children. We’ve been a bit spoiled not seeing bad times for literally 30 years.

So it’s not a matter of just going under and panicking. It’s a matter of realizing that, yeah, we’ve had a lucky run and no, luck doesn’t last forever. And you’ve got to take the good with the bad. And you may not see the silver lining now, but it’s part of a holistic journey. And life’s not about the destination or the goal. It’s about the journey and what you learn along the way.

When I looked back saying it’s all relative, I remembered stories about my grandfather. Get this. My grandfather came to Australia from Sicily on his own when he was 14 years old. 14 years old on a boat. So younger than my children are now and they can’t even make a sandwich on their own. And this 14 year old sets off from Sicily on his own. His mum packed him lunch and kissed him goodbye and that was it. He got on a ship and came to Australia.

I’m sure he had cousins or relatives or someone who knew someone here who gave him an introduction and he got a job in a fruit shop. So just running errands in a fruit store. Knew no language, couldn’t speak English, arrived on a boat as a teenager from Italy, and then was here a few years and then World War I broke out.

So he went off to war. He got naturalized as an Australian and went off to war and he came back from war and the ship that he was on coming back to Australia had an outbreak of the Spanish flu.

So he was quarantined because of that, infected with Spanish flu, nearly died, still a teenager mind you, got back on with it, went on to ultimately go back to working in the fruit stores, bought a fruit store, actually got married. That’s him here in the middle and that’s my grandma. I know. They looked like a big mafioso family, don’t they? They weren’t.

But he got married in Sydney at St. Mary’s Cathedral. Life started to look good. And after the war was over, roaring twenties, my grandfather owned a fruit store.

And then he started, like all migrants do, love affair with property, he started buying properties. So he bought some little semis at Lilyfield in Sydney. So it was a working class area that’s now actually quite trendy and gentrified. But at the time, he bought a few semis and started to build a little empire.

They had six children over the years. Like the Brady Bunch, they had three girls, one of which was my mother, and three boys. And then the Great Depression hit. They hadn’t had their six children by then.

But in the Great Depression, because there were so many evictions. These little shanty towns started up all over Australia. But in Sydney, it was in the domain and also in La Perouse. And they called it, the one at La Perouse, they called it Happy Valley.

So families just literally got whatever they called calico and bits of tin and they lived out of these shanty towns because they were literally homeless.

And then in 1931, at least in New South Wales, the government said, Oh, we can’t have this anymore, these evictions. We can’t have homeless people everywhere. So they changed the laws, but it wasn’t a neat balancing act. When they changed the laws, they said, well, no more evictions.

Here’s a picture of a family, nothing to do with me and my grandfather, but a family being evicted from a house in Leichhardt, back in the Great Depression.

What they said was, well, no more evictions. We’ll keep people in their houses. So landlords don’t get rent. And it’s illegal now to evict tenants.

My grandfather who was just building up his little houses, he couldn’t pay mortgages. He had no money coming in. No one was buying fruit from fruit shops in Great Depression. They couldn’t get their hands on anything to eat. No one had any money, high unemployment. So he lost absolutely everything.

And then, on top of that, his wife got cancer. So my grandmother died and he was left at the time with six children. There’s only four of them in that photo. But just got on with it, that work ethic of do whatever you have to do.

That really helps me put things in perspective because here’s this man working hard. He used to go out and with the migrant population, he had a boat. He’d get up at 3:00 AM and go fishing and catch squid and sell it off his back doorstep to the Yugoslav community and people who ate calamari and squid back in those days. And then went out, worked at a fruit store all day. He brought two sets of grandparents. So his wife’s parents, as well as his own parents out. So six children and, two sets of parents and grandparents, all living under the one roof in a three-bedroom semi.

So that really puts things in perspective when we look at tough times and I think of him and I think, well, he was happy when I knew him. He lived to a ripe old age of 92 and he had a full rich life.

And that’s the takeaway that I’m getting from all of our series of experts. The lowest common denominator they talk about is seizing happiness now. You’d not going to want to waste two years or three years and have these as the dark years where they didn’t find a vaccine and they didn’t find a cure for Coronavirus and we were all in lockdown and you lost your job and it was the end of the world.

We don’t want these to be the years that didn’t count. We want these to be the years where life goes on and we make the most of whatever we have because change has a flip side. Yes, it is a time of change. We haven’t seen a recession, but the flip side of it is there will always be opportunity and you just have to keep moving forward, okay? Bad stuff happens, next.

We can’t just crumble in a heap and wait for the government or someone to give us a handout or someone else to save us. We have to start where we are with whatever it is we have and move forward.

And this is not the first time this has happened. As I said, Spanish flu a hundred years ago, pandemic that hit my grandfather. Again, this sort of thing happens. And the world is more evolved. Governments are more efficient and effective. Economies are more advanced in the world of economics and as our science is more evolved, there’s a lot more that can happen.

We’ve actually, by comparison, got luckier than previous generations, but we still just have to get on with it. And that’s what Robert Kiyosaki told us. It’s what Gary V’s message was to us. For those of you who joined us when we had Ryan Holiday on, same message, which is accept the hand of cards that you’re dealt, focus on where you want to go, use whatever tools you have at your disposal and move forward. And then more opportunities will come to you. More tools will come to you that you could use.

There’s a famous speech. And some of you may have heard of it. Theodore Roosevelt gave it as a speech in 1910 at the Sorbonne University in Paris. So he was the youngest president of the United States ever. He took presidency at age 42, but he had a really difficult childhood.

So suffered, were very sickly child, suffered from extreme asthma, nearly died. And his father just said, “Pull yourself up. Be a man.” And he started doing exercises to expand his lungs. He was from a wealthy family. They built him a gym at home. He would get up at 5:00 AM.

Another lesson of successful people, start early to get on with it. He’d get up. And he just work out and he’d do exercises. And he became like a man’s man, very rugged man, very athletic in the end.

And very, very focused, went to Harvard university, focused on his studies, focused on leadership. Just whatever he wanted, he’d set his scope, set his eyes on it and move forward.

But in this famous speech, he speaks about daring greatly and that’s what we have to do right now because we can either curl up and die, we can defend the status quo and fight the winds of change that are blowing, or we can just adjust our sales, lean in to change an opportunity, take whatever we can get and move forward.

This is what he had to say in his speech, the extract I’ve got. It’s not the critic who counts. Remember that Gary V said to us, he said lots of people will have an opinion. They’ll have an opinion on this and an opinion on that. And Robert Kiyosaki said, there’s a lot of noise out there and people talking about stuff, but not doing. Gary V said, execute, execute, execute. Robert Kiyosaki said just get on with it and take action. And that’s what Teddy Roosevelt was saying in this speech.

It’s not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better.

The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again.

Because there’s no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause;

Who at the best knows in the end, the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly.

That can be us right now. We may fail and there’s going to be hardships ahead, but we need to dare greatly right now. And we do that by taking action, by adjusting the paradigm in our head and moving forward.

For those who dare greatly right now, those who just suck it up and get on with it, they’re the ones who prevail in the new normal.

We’ve got more of that series. This is the time where we need to dig deep and get the mindset from experts. So don’t forget. Not this Saturday, but next Saturday, 11th of July, we’ve got Brian Tracy, and we’ve also got Dr. John Demartini. So they’re going to talk to us about how to cope in this COVID environment we find ourselves in and exactly what to do in a business from a strategy point of view in terms of opportunities and protecting against the downside.

So I’ll put a link in the comments section there, and I’ll also put a link as well in the description. So you can go ahead and register for that because we’ll need all our courage and we’ve got to calibrate our brains to set our goals and move forward in this time of new opportunity and change.

Don’t forget. Follow us on Facebook to get regular updates. Share this with all your friends. Tag them in the comment section.

And if you’re watching on YouTube, don’t forget to like us, subscribe. Hit the bell if you want to be notified every time we release new content.

And I’ll be back on Thursday. Don’t forget. We’ve got our [inaudible 00:23:28]. We’ve also got ask Dom at one o’clock on Thursday. So send your questions in there. Write them below and I’ll answer them live at one o’clock on Thursday, or you can join in and post questions live and I’ll be there for some Q and A and updates at one o’clock on Thursday.

Until then, stay safe, take care, and we’ll talk soon.

  • DGI Lawyers
  • DGI Accounting
  • DGI Finance
  • DGI Wealth
  • DGI Asset
  • DGI Debt

Get In Touch

DG Institute

Level 22, 31 Market St, Sydney NSW 2000

PO Box Q1868 QVB NSW 1230

P: 1300 658 653