Happy New Year!! (and brief 2018 reflections & 2019 forecasts)

Sitting here in the sun, by the pool in Bali, has been the rest & relaxation that I’ve really needed, after a big 2018 – I’m sure most of you are feeling quite the same!

And what a year 2018 has been. My bet is that 2019 has a fair bit in store too…

For us at STAC Capital

I’ll start by saying that 2018 for us included the major milestone of shooting past the 12 month marker (“x% of businesses fail in the first 12 months” – phew!). In 2018 we hired new people, widened the breadth of our services and, in the last working week of the year, we locked in a new strategic hire that will further deepen and strengthen our capabilities (more to come on that soon!).

As everyone in professional services (and many other industries) knows, people are a business’ most valuable asset. This will remain particularly front of mind for us as we continue to build STAC into being a leader in debt advice across business, property and home lending sectors.

Enough about us…

In the Australian Economy, the 2 Big Words in Finance in 2018 were:

Royal Commission.

This made 2018 an even bigger year than many may have yet appreciated. We’ve all seen the headlines – banks behaving badly, dodgy finance brokers – seems there’s a bunch of bad eggs in the industry, at all levels. To be honest, we haven’t really been surprised by much – take any big industry where there’s lots of money to be made and you’re always going to get some shonks trying to cream it.

The question now though is – “so what; what will come of it?”.

The concern is that we’ll get too strong a recoil – which we’ve already started seeing particularly with home lending, which in turn has been a major contributor to Sydney & Melbourne’s rapid housing price correction.

As much as the PR departments and CEOs of the major banks come out saying “we’re still here supporting families and businesses”, we all know that – for the most part – there’s a fair amount of BS in that rhetoric. The fact is that after getting a really big beating with the RC stick, they’re now cowering in the corner fearful of the barking APRA’s bite – most are now well aware of the fact that as much as they may say “we haven’t changed our credit policies”, the fact is that appetites and willingness to look at anything marginally outside the box have moved, materially.

What does this mean for Businesses in 2019?

There’s one little red flag I’ve seen of late – the Insolvency Practitioners around town are a lot more upbeat than they have been for years, they seem to have a bit more cash to splash! Which is not a good thing for most in business. So the unavoidable red flag is that there are some cracks appearing and a rise in businesses failing.

Am I calling gloom & doom, the sky is falling in?  No.

I’m not saying the economy is collapsing in 2019. But for argument’s sake, even if it did, if you do a little research into the Great Depression you’ll find that many people and companies made their riches then. This is equally true of the GFC (now a whole 10 years ago!).

The fact is that there are opportunities in all economic cycles – it’s just that it’s not necessarly quite as easy to identify and take advantage of them in the harder times, than in the roaring times (although some would argue otherwise).

So what I’m calling for – and what we’ll be paying particularly close attention to when working with our business clients on their strategies in 2019 – is for business owners / CEO/CFOs / Board members to pay particularly close attention to a 4 letter word:


Spending a solid amount of time on questioning all of the “what ifs” of the business, on a macro and micro basis, so that you can work on how to protect your business against a possible downturn. Whilst you’re doing that, it’s worth thinking about what opportunities may come in a deteriorating economy – could you target new customers with a new product/service, could you acquire a struggling competitor or vertically integrate to improve your efficiency and increase margins, or…?

Where to for Property in 2019?

As for SE Qld’s residential market, I see both positives and negatives: on the downside, housing finance is not location specific, however on the upside (and this is a big one), the fact that SE Qld never saw meteoric house price gains means that our house prices (and household debt levels) relative to household incomes are still at reasonable levels, which in turn gives us a much better buffer against pain that the southern cities are now experiencing.

Residential Investors are much harder to find now (also partly thanks to the Royal Commission) and, with it seeming pretty likely that Labor will takeover Federal Government in 2019, there’s plenty of speculation as to what will happen if and when negative gearing disappears. Even if that does happen, there’s argument that in the shorter-term it would be beneficial to the economy (on current proposal, you would still get negative gearing if you buy brand new, which is good for the construction industry), but the downside is that when you re-sell you’re only going to be able to sell to owner-occupiers (as investors will only buy second-hand property if it is positively geared). So in the resi space, the safe bet for developers will continue to be owner-occupied buyer-targeted product (and no, that doesn’t need to mean $1m+ luxury apartments).


  • Child Care and Servos had a bloody strong run, yields went very low (too low in my opinion, as well as many others’), in 2018 softening started but arguably just to more normalised levels.
  • Retail (discretionary, that is) is struggling. If you haven’t noticed, pay attention to how many vacant shops there are in many strip retail locations, even in locations that used to be near-prime. Consumer spending is intrinsically linked to housing price movements, so if we’re in for a few years of little to no growth, I wouldn’t expect retail to do any better. Oh, and that whole internet shopping thingy is really gathering pace now too.
  • Non-Discretionary commercial uses/users is where my bet is getting laid.

Wrapping this all up into my Words of Wisdom…

If you think that everything is going to get magically better in 2019, you’re in for a shock. To be brutally frank, I think it undoubtedly has hurdles in it. So with that likely reality in mind, my words of wisdom are:

Don’t be Complacent.

Einstein’s famous quote comes to mind – “Insanity is doing the same thing over and over again, expecting the same result” (or something like that).

2019 is a year to think strategically, consider your risks, but also consider your opportunities.

To finish on a positive note – in all honesty, I think there will be great opportunities in 2019 for the smart players; those who plan and prepare, who defend their own positions and outsmart their complacent competitors. Go forth and conquer, I say!

Happy New Year!!

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