I also remember those times too
It is interesting to observe how the "advise" changes in order to fit the interest of the person providing it
Bill Zheng article
- Thread starter wobbycarly
- Start date
I also remember those times too
It is interesting to observe how the "advise" changes in order to fit the interest of the person providing it
I also remember those times too
It is interesting to observe how the "advise" changes in order to fit the interest of the person providing it
Yep. And the problem is that if you followed the advice of the time you'd be chopping and changing too much. The performance of your investment would need to be way above average to compensate for your transaction costs not to mention the value of your time.
Eg buying too much too fast, over-leveraging and then deciding to deleverage (ie sell) when everyone else is. My crystal ball isn't that good so that game's not for me.
A less volatile and more moderate approach of avoiding very high or very low LVRs might work out better long-term. The avoidance of rash buying and panic selling may even lead to above average results even if the growth performance of your properties is no better than anyone else's.
The economic/financial environment today is very different to 20 years ago. Yes, if you'd leveraged to the max and bought as many properties as you could at various times over the last 20 years and managed to hold them all you've probably done very well, but there's no guarantee that something that has worked over the last 20 will work over the next 20.
If you have a look at the graphs provided by Shads on the last page you will see that relative to incomes prices have risen roughly 60% higher (over the past 20 years) and have been sitting at this peak for sometime now. It's unlikely that house prices will rise over the next 20 like they have risen over the last 20.
Steve Keen suggests that we will see a debt deflation environment over the next couple of decades which will be similar to that seen in Japan. If inflation is good for debt then I'm sure you can workout how deflation works out for debt
Deflation is no good for anyone, and govt will fight tooth and nail to stop it. Of course, that may not be enough, but right now there's plenty of money in the kitty and room to move on economic policy if need be.
Which data is supporting above assertion?
Like in Japan our population is declining too?
Shads? Reverting back to tech_support speak?
Steve Keen has a dreadful track record for predictions. Pretty much every prediction he has ever made regarding Australia has turned out to be wrong...
01 - In 2006, Keen said we may already be in a recession
02 - In 2006, Keen said the Australian Debt/GDP ratio would exceed 160% by 2007
03 - In 2006, Keen said Australia will be in recession long before our Debt/GDP ratio falls
04 - In 2008, Keen said interest rates would be at 2% by 2009, and ZIRP by 2010
05 - In 2008, Keen said we would have double digit unemployment (up to 20%)
06 - In 2008, Keen said we would have a severe recession, possibly a depression
07 - In 2008, Keen said house prices would be down 40% within 'a few years'
08 - In 2008, Keen admitted he was hopelessly wrong on house prices after losing a bet with Rory Robertson
09 - in 2008, Keen sold his Sydney home at a cyclical low point, just before prices rose 20%
10 - In 2010, Keen predicted an accelerating rate of decline in Australian house prices
11 - Between 2008 and 2011, Keen claimed the Australian property bubble began in 1964, 1983, and 1988
12 - In 2008, Keen said his biggest regret was not buying property at the start of the property bubble in the 1970s
Every one of Steve Keen's calls and predictions listed above has been way off the mark. And also very inconsistent, such as claiming on various occasions that the Australian property 'bubble' began in 1964, 1983, and 1988, and that his biggest regret was not buying property when the 'bubble' began in the 1970s. He seems to just make it up as he goes along.
Google 'Steve Keen did not predict the GFC' for more details, and links to the source for all those failed Steve Keen predictions/calls.
What is tech support speech?
So about as accurate as your predictions then?
I don't really agree with Bill Zheng here.
He says we should hold growth property with a neutral cash flow, say 50% geared. That's a lot of capital to tie up for a neutral cash flow.
On a 500k property, you may have an initial negative CF of 10 k per year after tax if fully geared upfront. If 50% geared, you would be CF+ by 3k per year.
Is it worth tying up 250k of capital for 13k of CF per year? That's a 5% return. You could do better putting your capital on bank shares for example.
He says we should hold growth property with a neutral cash flow, say 50% geared. That's a lot of capital to tie up for a neutral cash flow.
On a 500k property, you may have an initial negative CF of 10 k per year after tax if fully geared upfront. If 50% geared, you would be CF+ by 3k per year.
Is it worth tying up 250k of capital for 13k of CF per year? That's a 5% return. You could do better putting your capital on bank shares for example.
points taken, but bank shares are probably the last place you should be looking for security. With the property option, at least there is a much larger debt deflating than just an unleveraged share portfolio. not to say you cant gear up the shares a bit.
I agree. I have to say in the past I've found what Bill has said to be very interesting, effective and have used them personally. The fact that he has changed tact really isn't a bad thing, if anything, he's doing better than those that still promote investment strategies that 'used to' work well.
I myself am moving forward with more of a focus on cashflow - it's got to be neutral or better for me.
If anyone has more information on the current strategy he advises in his Wealth Acceleration Workshop I'd really like to hear about it.
I emailed them and got this reply:
Surely LVRs in the above would have to be 80%+?
I'll admit that my predictions only have an 80-90% success rate, but that's still a lot better than Steve Keen's zero percent success rate.
The "system" revolves around selling part of your properties and buying the house and land packages they are selling. e.g you sell 4 of your 6 properties then, you purchase 3 house and land packages from them. So, you end up with 5 properties and some cash. Then, a few years down the track you sell another 3 properties and purchase 2 house and land packages from them again. So, you end up with some spare cash again. The idea is to use the spare cash to pay down remaining mortgages. The idea is to end up with a LVR of around 20%-30%. So, in a very raw way, that's the "secret"
development margin? offset against interest cost during construction, offset against stamp duty savings
what specifically is his misunderstanding?
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