What an awful acronym: PIGS – standing for Portugal, Italy, Greece and Spain – the ‘Club Med’ countries that have been at the centre of a month’s chaos and volatility in global share markets, and that dragged Australian shares down with it.

What’s really been happening is that after national reserve banks around the world pumped money into their economies to save troubled companies and banks to keep their economies flowing, the debt problem surfaced at a country level.

Greece has been the first to stick its hand up as a government owning up to the fact that their budget deficit was greater than their ability to meet it. There are many other countries standing in line as well.

The negative events that have pummelled the stock markets were recently summarised by CommSec as follows:

• The Greek debt crisis and worries about other Euro countries
• Rating downgrades for Portugal
• The volcanic ash cloud across Europe and disruption and losses as a result
• A major oil spill in the Gulf of Mexico
• Criminal proceedings against Goldman Sachs
• Political uncertainty in the UK
• Social unrest in Thailand
• A resource super profits tax (RSPT) in Australia
• Fears of a property crash in China
• The Blues losing State of Origin 1 (Joke! – this was probably expected!)

The sell-off has hit Australia, despite our strong economy, due to worries about China, and of course the now famous Resources Super Profits Tax proposal, which couldn’t have come at a worse time for the Rudd government. This has led to the worst May performance in the Australian sharemarket since 1984, with the S&P / ASX 200 Index losing almost 8% in value. Ouch!

So what do you make of it all? Should you stay in the sharemarket? Or get back into it after this latest pull back?

I wouldn’t like to advise you in this regard. All that I can say is that with exactly the same set of events going on around the world, I haven’t seen any sign of damage to the Australian property market. I expect property prices to remain stable, and continue to increase slowly but surely over time. This is where I will personally be looking to invest, as I don’t have the stomach for the sharemarket roller-coaster ride that I see out there.

After all, it’s only the smallest of the ‘PIGS’ that has caused such mayhem and investor losses. I’d hate to think of what happens when a Porky Pig breaks out!
I am not in a position to know what’s hiding under the covers in Euroland, or the US or Japan for that matter – so I’ll simply stick to what I know, and what’s served us well through good times and bad. Property.

At least I know that property investments are based on something tangible and scarce – developed land – and that they have tangible structures built on them, made of bricks and mortar.

Finally, I know that there aren’t enough properties to satisfy demand, which is the major reason why the market has a stable base, and why we don’t see such volatility in the property market.

Where do you plan to invest for your future? In the sharemarket? Or property?

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