104 NUMBERS BUSINESS
. .. ” s r e k a m e g n a h C “
NEED MORE THAN VISION, By Ted Fitzgerald Sunshine Coast Numbers Expert
COURAGE AND LUCK!
Effective business changemakers will have: (1) a clear idea where they want to go; (2) an accurate 'roadmap' showing how to get there; and (3) a good sense of timing.
Three 'trend signals' can help guide (2) and (3) above. They are called Leading, Lagging, and Coincident Indicators. The first signals a rise in market activity BEFORE the general economy improves. This is where the BIG profits are! The second FOLLOWS moves in the overall economy, giving useful risk alerts. The third reports changes in the overall economy and is more ambient noise than a predictive signal. Here is a brief overview of their role and what information can to be used to inform (2) and (3) above.
• GDP movements (by state) quarterly (source RBA).
LEADING INDICATORS Leading Indicators are short-term economic predictors. For example, stock market trends are a good Leading Indicator, as the market usually improves before the general economy. Others include consumer sentiment and building trends. For Sunshine Coast businesses, here are five sources that are easy to find and interpret: • Unemployment trends, job vacancy trends (monthly — source ABS Cat 6202, Cat 6354). • Consumer and Business Sentiment Indices (RBA H3/Westpac/NAB). • Building approvals/commencements (source ABS Cat 8731). • ASX 300 (updated monthly and looking back 20 years, source ASX/ RBA F7). • Local tourism data (go to www. http://teq.queensland.com/researchand-insights). LAGGING INDICATORS Lagging Indicators typically appear a few quarters behind a change in the market. I suggest following two easy indicators: • Movements in the Consumer Price Index (CPI), quarterly (source RBA). • Job vacancy, unemployment trends, monthly (source ABS).
Coincident indicators change roughly at the same time as the whole economy, and it can be useful to monitor two indicators: • Retail and new motor sales trends, quarterly (source RBA).
SUMMARY Want some good news? Check the chart I prepared to guide personal investment activities. With it I correlate trends for the ASX All Ords (higher risk, higher rewards), the gold price (lower risk, lower rewards), and the base rate interest rate as set by the Reserve Bank (a pointer to inflation and higher costs). What these six years’ trends, plus others I monitor, are telling me, is that the future is looking good, and it is a GOOD time to be a ‘Changemaker’ on the Sunshine Coast. So go on, have some fun. Put a little time aside each month to monitor trends to guide progress in the changes you have set. Not only is it fun, you’ll also be surprised how it can impress your bank manager. ca
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