Possible Future Scenarios-

[Garry K]

Thanks dee..... that's the longest "exerpt" I have ever read

Summary at end:\

"Dent gives us all something to look forward to, including:

The Dow hitting 40,000 by the end of the decade
The Nasdaq advancing at least ten times from its October 2001 lows to around 13,500, and potentially as high as 20,000 by 2009
Another strong advance in stocks in 2005, with a significant correction into around September/October 2006
The Great Boom resurging into its final and strongest stage in 2007, and even more fully in 2008, lasting until late 2009 to early 2010 "


If you visit his web page he also covers off property as well, talking about where baby boomers will want to live.
He likes places with good medical facilities (for all us oldies and our aches and pains), safe and secure ( ie low crime rates)

GarryK

 

[iookpa]

Peter, how would you handle a recession/depression?

 

[yadreamin]

This Bump is certainly worth a read again.
Its long and late so l will read more tomorrow.
BillL
Its interesting to read that you thought in 04 that one should pay down investment loans, do you still believe in this stratergy?
Each time l have thought or spoken about doing this l get convinced other wise.
cheers yadreamin

 

[kissfan]

BillL
Its interesting to read that you thought in 04 that one should pay down investment loans, do you still believe in this stratergy?
Each time l have thought or spoken about doing this l get convinced other wise.

Would also be interested in this answer, as it's something I also ponder.

My point being that it takes a 'lot' of rent or share distributions to live comfortably if still paying loans.

I realize there is then the tax to be paid issue, but somehow I think (at this point anyway) I feel better doing this than living totally on equity.

Just me, and I'm sure everyone has their view on what's right for themselves.

Regards
Marty

 

[perky29]

This thread reminds me of some of the good stuff Steve used to write.
Its a shame he left.

 

[sailor]

This is a great thread and I've leaned much from reading the varied opinions. I do however have a question:

Much of the debate has focussed on the self-funded retirees. I'm just wondering where the non-self-funded retirees fit into the equation? What impact they will have on the baby boomers IP's in the years to come? There are so many unemployed people in Oz, and low income earners who will never be able to obtain a PPOR.

Sharon

 

[Bill.L]

Hi all,

I'm quoting myself here from the first post in this thread.

With apologies to Jan, the quick summary goes as follows.
1/ Save deposit, buy PPOR.
2/ Accelerate payments to pay off loan in short period of time.
3/ Buy IP (when you can afford it!!)while continuing to pay same % of wage off loans.
HINT HINT HINT "If you have paid off your PPOR, guess which loan now gets paid off!!!"
4/ Buy further IP (when you can afford it!!!). Keep putting in % of your wage to reduce debt.

If prices go nowhere for 5 years, your equity has still increased by reducing your loans. Eventually even with stagnant prices, due to inflation, rents will rise and so will your wage. The property/ies will become/go even further cashflow positive. You will then be able to purchase further property as you can afford it.

The questions being, Do I still believe in this?

Answer YES.








Ohh, I suppose I need to offer an explanation.

Money is easy to fritter away.

When we first purchased the Mulgrave house in 1981, being a young couple who did not like debt, we paid off our mortgage in the first 6 years of ownership. The principal and interest loan we originally took out had payments of about $4,500 pa, on a 25 year term. We added lump sum principal payments of $4,000 pa, and payed out the loan.

Because we made the extra payments, we didn't miss the money. Possibly luckily for us, there was not the option of offset accounts etc. As the years start to pass, peoples thinking/attitudes/circumstances change. Couples have children, change their jobs, change their locations etc.

On pure economic grounds, the theory of having interest only loans, with savings in an associated offset account that can be withdrawn at any time for further investment makes sense. Realities of life, do not necessarily agree with economic rationality.

Paying down loans, does a couple of things.
1/ It will always be reducing your leverage, and therefore giving a better sleep at night factor for when interest rates suddenly rise, a high paying job suddenly gets lost, a two income household suddenly goes to one, etc.

2/ There is not the same temptation to splurge "because you deserve it", with a great stack of money sitting in the offset that you can just write out a cheque for. If you have to reborrow the money, it makes you think a lot harder about what you will spend the money on.

Now having said all this, I can still say that we use interest only loans. But we have one loan that is principal and interest, with an offset account. This is the loan that we would continue to pay down. There are some people on this forum that only have P+I loans, as this gives them the greatest feeling of increasing wealth, and turns their properties into cashflow positive in the shortest period of time, even if there is not much growth or yield increase happening.

As an interesting side point, our P+I loan, on an IP that has reduced in size faster than necessary (due to the offset component), has had fortnightly changes in the payments due to the IR rises. These changes have been from $379... To $377..... To $382. Not the sort of stuff that puts much pressure on.

Hope this helps explain some of my thinking.

bye

 

[Bill.L]

Hi all,

I've dragged this thread up from 4 years ago because the title was trying to look at what might happen.

Interestingly, there are not many posters about changes in the future from that time, despite the heading of the thread.
There were no predictions of the Perth boom, none of the sub-prime crisis, none of a relatively major stockmarket meltdown this financial year.

For those posters that have come over from GHPC, I hope you note that I was/are considered a Doom and Gloomer by some.

The whole truth that can be garnered from this 2004 thread, and others that discussed similar topics, is that the future is almost impossible to predict. We can all guess, and sometimes the guesses will be correct, but still they are only guesses.

To me the important aspect is not to be 'married' to a position against all evidence. Evidence is not a newspaper article by some expert. It is what is happening in the market. With property, we have had sub-prime D&G for almost a year now, but all the market has done is go a little softer, not collapse.

What I gathered from earlier in this thread is that Thommo was on track with his guesses/probabilities, I miss thefirstbruces posts, and both Navra and Spann got it wrong, (I haven't invested in either of their funds)

bye

 

[Andrew_A]

There's a lot of gold in the old threads, thanks for digging this one up again Bill.

I read it once more but don't see where SN and PS got it wrong, I also would guess they have both done very nicely financially from the last few years.

Was reviewing Harry Dent's forecasts a few hours ago, hard to take him seriously with his ridiculous numbers though he does like all good dart throwers score some excellent hits, and at 100k a speaking engagement (last time I checked) there's money to be made in crystall ball interpreting even if if the crystal isn't working that well.

 

[Sunfish]

It's like sailing a yacht, maybe. You can keep your eyes on the set of the sails and the wind over the deck and sail fast! or you can keep your eyes on the horizon and pick windshifts, avoid shoals etc and maybe win the race.

Of course you are allowed more than one set of eyes on a boat and by writing here we can call wind shifts and squalls to each other. Beats the heck out of doing it alone!

Thommo

Thommo was a bit naive and/or the board was a friendlier place then.

More like a dog fight now so I don't post near as often.

 

[alexgsz]

Hi all,

I've dragged this thread up from 4 years ago because the title was trying to look at what might happen.

Interestingly, there are not many posters about changes in the future from that time, despite the heading of the thread.
There were no predictions of the Perth boom, none of the sub-prime crisis, none of a relatively major stockmarket meltdown this financial year.

For those posters that have come over from GHPC, I hope you note that I was/are considered a Doom and Gloomer by some.

The whole truth that can be garnered from this 2004 thread, and others that discussed similar topics, is that the future is almost impossible to predict. We can all guess, and sometimes the guesses will be correct, but still they are only guesses.

To me the important aspect is not to be 'married' to a position against all evidence. Evidence is not a newspaper article by some expert. It is what is happening in the market. With property, we have had sub-prime D&G for almost a year now, but all the market has done is go a little softer, not collapse.

What I gathered from earlier in this thread is that Thommo was on track with his guesses/probabilities, I miss thefirstbruces posts, and both Navra and Spann got it wrong, (I haven't invested in either of their funds)

bye

Thanks for bumping this one up Bill, was an excellent read. Going through it in hindsight makes you realise how little anyone knew what would happen in what I call the near future (4 years)

Here a prediction for you..... I predict the next 4 will be just as unpredictable as the previous 4 year we had

 

[Bill.L]

Hi Andrew,

I read it once more but don't see where SN and PS got it wrong

The bit I was referring to was how I had not invested in their funds, both predicted I would. They were tongue in cheek, so was I.

I agree about Dent and dart throwing, however he does strike a few good bullseyes even if the wrong years. Absolutely nothing you could ever trade off.

Alex, I agree with your prediction.

bye

 

[willair]

Anyone have any idea's on where the darts will land over the next few years..willair..

 

[Greenfields]

Be careful of your choice of example....

Evidently the air is breathable in that city for if you could not breathe the air then no-one would live or work there and it would not be a city would it?

MB

Having interviewed many hundreds of wanna be immigrants from China, one of the main reasons for immigration was due to the pollution in China. Clean air has a price.

Bill, any bus shelters for sale?

 

[topcropper]

There were no predictions of the Perth boom, none of the sub-prime crisis, none of a relatively major stockmarket meltdown this financial year.

What I gathered from earlier in this thread is that Thommo was on track with his guesses/probabilities, I miss thefirstbruces posts, and both Navra and Spann got it wrong, (I haven't invested in either of their funds)

bye

I love these old threads.

See ya's.

 

[chilliaa]

Bill - I think you do ask some very pertinent questions, and now that you've started your own topic, I don't have an excuse for closing the thread

I'm not going to attempt to answer any of your questions - sorry (mostly because I simply don't know, not being old enough to have the experience, and my crystal ball isn't working very well either)

However, there's a couple points I'd like to make to nobody in particular.

1. I consider myself to be a pretty conservative investor - the only reason I can get away with doing what some people would consider to be high risk (eg high LVR, or investing in risky asset classes) is that I am young (and hence have time to get over mistakes), and I currently have a high level of surplus income.

2. I don't think there's terribly much value in getting caught up with "what might be" - you don't know what will happen, significant world events tend to change people's attitudes quickly, and even things like a change of government can have an impact (good or bad) on the economy that may impact on you investments, as can many other factors.

3. I think it's a better idea to A) invest in fundamentals (as opposed to "promises"), and B) invest in the here-and-now (as opposed to the "what-might-be").

Too many people will look at what has happened in the immediate past and use that as the basis for what will happen in the immediate future - that's a very foolish approach in my opinion.

Some people will look at historical trends and try and apply that to what will happen in the future - that to me is a foolish strategy too.

Some people will come up with analysis models based on a variety of indicators and try and use that to predict market sentiment and work out what will happen in the future - to me, this is also foolish.

Why is all this foolish ? Because they all try to predict the future. Let me tell you a fact. You cannot predict the future. If you could, you wouldn't be here would you ? You'd already be sunbaking on one of your tropical islands. Nobody can predict the future, and in my opinion it is foolish to try.

What you should do is understand the fundamentals, invest in fundamentals, make sure you have an exit strategy, make sure you have a safety net, only take gambles that you can afford to lose, don't bet it all on "red", and most importantly, make decisions based on what IS happening, not on what MIGHT happen.

I liken my strategy to the way Steve Navra's managed fund works - he doesn't use any type of analysis to work out what will go up in value ... he trades on what has happened, not on what might happen. That's the only way you can be sure.

Just my opinions.

Except for the last paragraph (who is steve Navra, and sounds suspiciously like momentum based trading), this post should be pinned up somewhere in the top 100 posts.

Actually thats an idea mods, how about setting up a topic thread only for moderators and putting the best of the best posts in there.
It would be a great asset to this forum. This forum tends to get diluted over time with numerous threads some good and some not so good, most serve a usueful purpose in discussing issues relevant to the time, but every now and then a post appears that is timeless.

Another one for the top 100 would be the post that Ian made a week or so ago (hehe maybe i am suffering from recent data bias).

Just a suggestion.