Share Market Crash will bring up or down on housing Market

[TheAnalyst]

I have read twice the book called 1929 share market crash. It clearly says how the market was brought up by madness rather than value.

Few of you said buy on value. Let me ask you the question (I have said before): I bought $19 a share ANZ two years ago (I tought it was too expenesive although), now it is about $29 a share. Do you think ANZ is worth about 50% more than 2 years ago [100 * (29-19)/19]. It purely demostrates one guy said that was people's hope, NOT a value at all.

Regarding property, I have never seen (read) one country or city having a crash (I am not saying the tall buildings in Sydney or Melbourne) ---- It may silightly flat. 1987 share market crash, drop 15% in ONE day in Wall St.

 

[TheAnalyst]

I'm sorry but this is not what I see. (I will only take a little offence at being called an idiot. ) You are taking a simplistic contrarian view to a dangerous extreme.

Seriously, if you are not short the market you don't really believe what you type. If you don't know how to go short, what else don't you know?

Addendum:
It's cool to be a contrarian. Easy! But it takes cojones to back your judgement, and if you haven't put your money where your mouth is I wont take you seriously. I have a significant amount at risk and want to talk to people who understand.

Hi Sunfish. I did not mean you I think you understand. A book regarding 29 Oct 1929 book is worth a read --- how the people crazy about shares -- then crash. People used a word: FREE fall.

If everyone has the confidence, the Reseve Bank of many countries would not have injested many billions into it. It may just throw into the water.

 

[Mofra]

Regarding property, I have never seen (read) one country or city having a crash (I am not saying the tall buildings in Sydney or Melbourne) ---- It may silightly flat. 1987 share market crash, drop 15% in ONE day in Wall St.

With all due respect, I'd suggest a little more research then.

 

[Mofra]

I believe the share market is heading a crash. In other words, we will be having a long bear market in shares.

Which one? A crash is generally accepted as a 20% retrace in a short period of time. A Long Bear market is a gradual decline over a substantial period of time.
The criteria from profiting for both are different.

If you are looking at profiting from downside, would will need to look at either derivatives (long or short term depending on your view) or counter-cyclicals. There is an element of risk in both (as there is in any position).

I donot feel in any property market in Australia or in the world. It will have a crash. It may stablise for few years.

Property can be just a volatile as equities. If people had a giant neon sign above their house that showed the daily closing price, shares & property would be viewed in a similar light.

Also importantly, negative gearing has a lot of benefits: expernses, taxes....

Gearing (negative, neutral or prositive) is based on borrowing to invest, it is not a taxation tool based on property alone. It covers any inestment.

 

[topcropper]

Hi, all

I believe the share market is heading a crash. In other words, we will be having a long bear market in shares.

What do you think: will these investors leave shares for properties?

You sound pretty confident a big crash is going to happen. Why not put your dollars on the line? Say short sell BHP, or CBA? I dare you!

If the share market crashes, it won't be because it was overvalued, it will be because of imminant recession. So housing would be hit just the same.

Past share crashes have been due to overvaluation for example 1987. At the peak in 1987, average dividends were 3%, and interest rates 10% plus. Now that is overvalued. I look at values about today, and it is very impressive. Lots of quality companies, that the dividend would almost cover interest costs. I will be buying up soon.

See ya's.

 

[Sunfish]

Anal is sounding like a football barracker: Giving heaps of advice from the safety of the sidelines with no chance of being hurt.

 

[alexlee]

Analyst, weren't you rather confident about the continued growth of China prolonging the boom in Perth? Are you now saying you don't see much growth, if any, in Perth property? What changed your mind?

Incidentally, I'm reading an old book (C 1989) that basically talks about how Japan is going to take over the world. Given what we know in hindsight, I think it's going to be instructive.

I noted that some biggie at Countrywide Financial, one of the largest banks in the US, said the credit market is currently going through unprecedented conditions or something. I wonder whether he said the same thing in the last 3 years when his bank made squillions.
Alex

 

[VYBerlinaV8]

Realistically I think that what we are probably seeing seeing is a cyclic behaviour, except that the market has run further than everyone thought. In the US, longer P/E ratios mean that Australia appears good value, and we have been swept along a bit (yay - my shares have done well).

My plan is to do what I always have done - buy a small amount of shares every month (through a growth fund), and try to buy an IP that I see as value about once per year. Over the long term, I believe this will be a solid 'get rich slow' plan, with an acceptable amount of risk. In keeping with my risk averse approach, I will typically have an average IP LVR of 80% or less, will maintain a solid cash reserve, and plan to never sell shares.

Markets will always cycle, the idea is to have faith and courage during the downward parts, knowing that long term this is just the sign of an emotion driven market.

 

[steveadl]

I have read twice the book called 1929 share market crash. It clearly says how the market was brought up by madness rather than value.

Few of you said buy on value. Let me ask you the question (I have said before): I bought $19 a share ANZ two years ago (I tought it was too expenesive although), now it is about $29 a share. Do you think ANZ is worth about 50% more than 2 years ago [100 * (29-19)/19]. It purely demostrates one guy said that was people's hope, NOT a value at all.

Regarding property, I have never seen (read) one country or city having a crash (I am not saying the tall buildings in Sydney or Melbourne) ---- It may silightly flat. 1987 share market crash, drop 15% in ONE day in Wall St.

Sorry Analyst, but I don't quite get you're ANZ example. You can't really look at the share price/mkt cap alone and decide it's over valued. Even at current prices, it's only just under a 5% yield (So obviously their profits/dividends have increased considerably as well last couple years and share price is just keeping pace) - whilst not great, I would'nt consider it over valued? They also have plans to expand through Asia, and are fairly safe blue chip - so therefore people don't mind the lower yield with future growth possibilites, same as in IP's.

 

[topcropper]

You can't really look at the share price/mkt cap alone and decide it's over valued. .

Very true Steve.

The Analyst has a unique method of share valuation. If a share is overvalued because it has gone up so much, does that work in reverse? If so, it means ERG and Davnet were great value in April 2000 after they had halved in price.

See ya's.

 

[alexlee]

I have read twice the book called 1929 share market crash. It clearly says how the market was brought up by madness rather than value.

Few of you said buy on value. Let me ask you the question (I have said before): I bought $19 a share ANZ two years ago (I tought it was too expenesive although), now it is about $29 a share. Do you think ANZ is worth about 50% more than 2 years ago [100 * (29-19)/19]. It purely demostrates one guy said that was people's hope, NOT a value at all.

Regarding property, I have never seen (read) one country or city having a crash (I am not saying the tall buildings in Sydney or Melbourne) ---- It may silightly flat. 1987 share market crash, drop 15% in ONE day in Wall St.

And what has ANZ's earnings done over the 2 years? Why did you think it was too expensive back then, and if you thought it was expensive why did you buy it? Do I think ANZ is worth 50% more than 2 years ago? Maybe. Depends on earnings and future potential.

I'd find more information about Japan, then. It DID crash, and it still hasn't recovered.
Alex

 

[steveadl]

Very true Steve.

The Analyst has a unique method of share valuation. If a share is overvalued because it has gone up so much, does that work in reverse? If so, it means ERG and Davnet were great value in April 2000 after they had halved in price.

See ya's.

LOL I had Davnet way back when!

 

[TheAnalyst]

Sorry can not answer questions on by one. So I answer it together.

1. If everyone is so confident, why the Reserves of many countries poured so many billions of dallars in to the market? It may have just thrown into the water. It probably leads to the crash a bit later ONLY.

Why the politicians come out to say everything is fine, because they are worried, they worrry the public may worry more than they do.

2. Recommend to read a book: The Wall St Crash - 29th Oct 1929 by Woolf
. The cover has a picutre says "$100 Will Buy this car. Must have cash Lost all on the Stock Market" It is a nice car. Now it probably worth $1m.

3. The book will answer you all questions. About earnings whatever, I believe they are over bought.

4. DOW in September leading to the crash...
Sep 1912 - 94.15
Sep 1913 - 80.27
Sep 1914 - 60?
Sep 1915 - 80.7
Sep 1916 - 91.19
Sep 1917 - 81.20
Sep 1918 - 83.84
1919 - 108.55
1920 - 88.33
1921 -71.92
1922-99.1
1923-92
1924-100.7
1925-137.22
1926-166.64
1927-197.75
1928-238.82
1929 - Oct 25 306, Oct 29 - 212
1930 - 242
1931 -104
1932 - 81
1933 - 97
1934 - 85

 

[Sunfish]

LOL I had Davnet way back when!

And I had the other dog! It took nearly a year to make up my loss and I could tell Mrs T I was back in the market.

 

[alexlee]

I'll repeat TC's question then, Analyst. If you are so sure the market WILL crash, are you shorting shares?
Alex

 

[TheAnalyst]

I'll repeat TC's question then, Analyst. If you are so sure the market WILL crash, are you shorting shares?
Alex

I am selling one of the IPs to get money to wait for the crash. Honesty!

 

[alexlee]

I am selling one of the IPs to get money to wait for the crash. Honesty!

Yeah, but according to your previous posts, you own a lot more than that, no? I agree that there probably is a crash coming (I haven't bought anything in 3 years), but I'm not as gloomy as you are. If you are THAT gloomy, would you sell everything and wait to scoop up the bargains?

You were VERY bullish on Perth prices only a few months ago when you suggested in a post that Perth median should be higher than it is (I disagreed, as you may remember). What changed your mind?
Alex

 

[steveadl]

Analyser, I would still like to hear your reasoning behind your ANZ example specifically as it doesn't make sense. An impending market crash is'nt a reason that it's over valued. It may take a hit like every other listed stock might if there is a crash - herd mentality - but that doesn't mean at a current yield of 5% it's overvalued?

 

[TheAnalyst]

Yeah, but according to your previous posts, you own a lot more than that, no? I agree that there probably is a crash coming (I haven't bought anything in 3 years), but I'm not as gloomy as you are. If you are THAT gloomy, would you sell everything and wait to scoop up the bargains?

You were VERY bullish on Perth prices only a few months ago when you suggested in a post that Perth median should be higher than it is (I disagreed, as you may remember). What changed your mind?
Alex

I am saying it stablises and 10-15% is still possible if you buy wise. My majority is in property. I want to keep few for my kids when they grow up. I do not want to sell all of them. If you have $200k cash + 70% margin lending in shares, you should have enough money to play I believe.

 

[Beef_Hooked]

Regarding property, I have never seen (read) one country or city having a crash (I am not saying the tall buildings in Sydney or Melbourne) ---- It may silightly flat. 1987 share market crash, drop 15% in ONE day in Wall St.

What about property prices in Japan? crashed over 40%:

To quote:

"The average price of a 750-square-foot condominium in Tokyo rose to more than 70 million yen, or about $625,000 at current exchange rates, in 1991 from about 25 million yen in the early 1980s. After crashing in the early 1990s, the average house price has hovered around 40 million yen, or about $360,000,"

I'm quietly confident hanging onto quality shares that have a healthy P/E, the sorts of yields that property couldn't match without the recent massive capital gains.

Cheers,
Beef