The Motley Fool

I’ve been thinking about investment bubbles…

I’ve been thinking about investment bubbles in the last few days.

If you read most of my articles you’ll know that I recently admitted I have been going back and watching all of Berkshire Hathaway’s AGM videos on YouTube. It is fascinating to hear Warren Buffett and Charlie Munger’s thoughts from the past about events that have since transpired.

A fair few of the questions in the 2005 and 2004 meetings related to the financial shenanigans that were going on and the potential of a bubble.

Warren Buffett wasn’t forecasting Armageddon, but he did point out the residential real estate bubble and that it can take a long time for problems to come to the surface. And even if a bubble doesn’t pop, the symptoms of a bubble aren’t resolved such as debt.

This is not a piece suggesting that Australian house prices are in an utter bubble and that Commonwealth Bank of Australia (ASX: CBA) & Westpac Banking Corp (ASX: WBC) need to watch out because Australia is doomed.  

But I do think it’s worth thinking about how much of a household budget is going towards paying off a very large loan just for the median house price with a 20% deposit, which seems hard for the median household to afford. No wonder retail sales, wages and inflation are so low if the average Australian has little money to spend.

There’s nothing to suggest that Australian house prices will fall further than the 10% reduction that has already occurred. But there’s still a fair chance that good growth isn’t coming back any time soon, which is why I question whether investing in shares like National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking Group (ASX: ANZ) and Nick Scali Limited (ASX: NCK) is a good idea. Even if there isn’t a crash on the way, the high debt is still a problem. 

Foolish takeaway

Very low interest rates make investing difficult, but I’d much rather invest in businesses like MFF Capital Investments Ltd (ASX: MFF) and Rural Funds Group (ASX: RFF) instead of ones heavily linked to Australia’s economic strength or weakness.

Some of the other ideas I’d want to consider are these ASX growth shares.

Five ASX Growth Shares That Could Be Too Good To Miss…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

Stock #1 is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Stock #2 is another high-growth business trading near a 52-week low all while offering a 4.7% grossed-up yield...

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!

Motley Fool contributor Tristan Harrison owns shares of Magellan Flagship Fund Ltd and RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!