shares over property,now.

[Mr Turkey]

The lesson I have learnt is that there is more than one approach. And each approach works best at different times. Then is deep-value investing, growth investing, momentum investing, day-trading and whatever else works at the time.

Here is the approach extreme value investors use. This works best during a recession. They use fundamentals to the extreme. Looking for shares with high net tangible assets or high revenues. They may not be making any margins just crawling along. They sometimes buy shares that can go belly up. Often they are the only buyer (appart from the directors). But they may only put 5% of their portfolio in each share. The winners can go up 2x to 5x or more coming out of the recession. So the winners cover the losers and the approach is very stable (its hard to go broke).

Day-trading works (so they tell me) for a short period of time towards the very top of a crazy bull market. Occasional nasty shocks gradually wipe them out. And you dont hear of them for long time. Is there an element of day-trading in property investing currently? This approach is unstable (you might lose heaps).

Technical analysis tends to work best at the top of the market. So you can do well in the last half of the bull market. This approach requires trading skills. This approach is semi-stable.

Thing is most people make a religion out of their approach condemning all others. Just like the debate between property and shares. Fundamental investors think Im a chartist and most chartists think Im a value investor.

Now bringing things back to property. What would the signs of a top in investment property be? High volume with price going sideways would be the technical analysis sign. Ive heard so many times about the way property "plateaus" and then turns up. Thing is such a plateau would have decreasing volume making it a continuation pattern. A top occurs on increasing volume and then turning down trapping people at the top. The most famous plateau was observed by the economist Irving Fisher who said "Stocks appear to have reached a permanently high plateau.". He said that on 15 Oct 1929.

Mr Turkey

 

[Mr Turkey]

>my only real point was that shares can fall to zero... residential property cannot.

It can because it has. At the bottom of the great depression property became a liability because of property taxes. People couldnt give some of it away.

Lucky for property investors, we dont have a gold standard so the government will inflate the money supply before that happens. Thats why I keep saying at this point either property goes down or the dollar does.

I believe this is why gold has been in an uptrend for the last two years. The boomers have made a bubble out of everything else. Why not gold?

Mr Turkey

 

[Steve Navra]

Originally posted by Mr Turkey
What would the signs of a top in investment property be?

Seems you understand shares well, so use the 'property' P/E ratio.

So the top in IP's would be if their P/E was too high, relative to the norm. P = selling price and E = rental income.

At the moment, you will notice decreasing yields . . . tells you something; yes??

Regards,

Steve

 

[Mr. Fabulous]

Mr. Turkey,
Yeah, and no one saw that one coming... or maybe they just didn't want to see it. Not in the 'shares always trend up' basket I suppose. So what do you think of today's market? I've been reading some very interesting stuff from Jim Puplava in the last few months, and as a person who knows very little about the stockmarket, but trying to learn as much as I can, I'm kinda thinking the U.S. (read: the whole world) is headed for another 1929.
With the U.S. economy teetering on the edge with a foundation of foreign capital investment, what do you reckon may happen in the near future, say within the next five years? I know you (and everyone else) are not fortune tellers, just wanting to initiate a little discussion on the subject so that I can continue my education and get a few different views.

Mark
'no hat, some cattle'

 

[Mr Turkey]

To Steve

I dont have the figures for property, just a vague memory of when average yields were much higher. Im a property novice but have decided to do some learning now. Im sure it will come in handy.

This is another pointer to anticipate currency devaluation. When a return of zero on gold seems like a good deal on an inflation adjusted basis. Or alternatively stocks that are likely go ok in that environment. Stocks that will increase pricing power. Now I know our rates are above the US. Lets see what the RBA does, they have been threatening to raise them. I prefer food over banks at the moment. And of course the 5-sigma money that was a few years ahead of everybody is on silver.

I am worried about the debt levels of some people. Sure property will eventually benefit from currency devaluation as it always does eventually. But I fear some people are going to be really hurt.

Mr Turkey

 

[Mr Turkey]

Mark

I think Jim Puvlava is very right. The US market is still 40% overvalued. Have you seen what happens to insurers when equity markets tank? Look at AMP. So the US insurers are next? The chart of the DJIA suggests to me its being bought by someone desperate to hold it up.

This is just out
http://news.ft.com/servlet/ContentS...y&c=StoryFT&cid=1045511373906&p=1012571727088

Now when the Swiss insurers start getting the wobbles you might start wondering.

I have a few scenarios that are possible. All of them suggest silver, gold and food. This is the savings of the baby boomer generation that is getting crushed. Have they been saving less than they thought. Then there is the pension black holes our stage governments are developing. Who will be taxed for that? If taxes rocket maybe another country might be an idea.

To Steve, remember a common mistake in shares is "too-earlyism".

Mr Turkey

 

[Steve Navra]

Originally posted by Mr Turkey


To Steve, remember a common mistake in shares is "too-earlyism".

As opposed to " too-late'ism'??

I'm a major protagonist of "just-rightism"

Steve

 

[GameBoy]

There are many ways to make money from the market. Buy and hold is one. It took the US market a long long time to regain its loses after the 1929 crash, wouldn’t want to have used a buy and hold strategy then.
I guess one would call Steve Navra a system trader, having developed a mechanical system that gives him an ‘edge’ on the market. Once this edge has been gained its simply a matter of exploiting it again and again. Like a casino, they know they have an edge over most gamblers and exploit it.
Another thing to consider is that very few people actually make money from trading shares, with buy and hold its difficult to outperform the market. So if a crash does happen from baby boomers retiring, the current down turn ect you’ll feel the same pain the market feels. Robert K thinks such a crash is coming (I don’t know and don’t care really), as im looking to make money no matter which way it goes.
My strategy (as a client of Steves) is to purchase shares in his fund and invest in his fund. The money I invest in his fund will preserved on the way down, then will be in a strong position to take advantage of the upturn. Without having to pick the bottom! Best of all because the fund outperforms the market it will be profitable, so those shares should go up in any market conditions.
Im not trying to promote Steves fund, but just to share my thoughts on an overall strategy to ride out any storm that should come our way.
Don’t you just love investing? It’s the ultimate strategy game.

 

[Steve Navra]

Originally posted by GameBoy

Don’t you just love investing? It’s the ultimate strategy game.

Very appropriate coming from a 'GameBoy'

 

[Macca]

My understanding of the pricing structure is that all bullion prices are calculated in USD. The AUD is closely tied to the price of gold so here in Australia, when the price of gold goes up, so does the AUD. Because of the exchange rate calculation required our actual buy/sell price can go down even though the US price of gold has gone up as long as the AUD goes up a higher % than gold %. Just a further complication to the timing.

Obviously, we also need to make some allowance for the Iraqi situation. Saddam Hussein is a very wealthy man, as are most of his assistants, they could well have been buying gold for sometime, in the event that they need to "change their PPOR" in the near future.

It is also possible that other middle eastern countries have been buying gold to support their currencies, should some nasty "lurgy" escape into the atmosphere during any bombing of facilities in Iraq their cash flow from oil could be severely disrupted.

When the Iraqi crisis is over gold may take a sharp turn to the south, and take the AUD with it.

Right now is a time in the investment cycle when there are so many conflicting opinions that to "stand aside" is looking very attractive until Iraq is over.

 

[Bill.L]

The share market and property markets are two different animals and each has it's own peculiaraties regarding risk/reward. Don't expect what works in one to work in the other.

The stockmarket has always been about SELLING paper with the promise of a high and growing return. The reality is the makers of vast fortunes are usually those that sold the float. Technologies and industries change over time, and what was once a great business will eventually get overrun by changes it can't keep up with.
Everything that is produced by the various sectors of the market is just a commodity that goes through a period of boom followed by an increase in production then an oversupply in which all players lose money through low prices. Things like communication are just another commodity and will/are following the pattern. At present in the stockmarket we are going through a phase where there are more sectors in the oversupply area with falling returns. When the market turns around (ie the ASX200) and eventually goes to new highs, the leaders will probably be from some new sector that does not show on the radar screen yet. If I knew what it was I'd be a 5 sigma event.

What I'm trying to say is that the stockmarket is a game and you have to understand the history, parameters and rules to make money. One of the best rules to follow is NEVER average down a loser. This is the opposite of what many financial advisors advocate. Remember that what are perceived as wellrun companies with good management and returns could be the next Bond Corporation or Quintex or Pasminco or or or...

I'll explain why property has different rules later.

bye

 

[Les]

G'day Steve,

I'm a major protagonist of "just-rightism"

Really?? Steve, I would have thought you are more a proponent of "just-rightism"

(.....beating Geoffw - the pedant - to the punch )

Regards,

 

[Steve Navra]

pro·tag·o·nist [ pr tággnist ] (plural pro·tag·o·nists)
noun: an important or influential supporter or advocate of something such as a political or social issue

pro·po·nent [ pr pnnt ] (plural pro·po·nents)
noun: proposer: somebody who proposes something

So Les,

Am I an influential supporter, or a proposer?

Just defending myself

Perhaps the Judge and Jury himself can decide,

Ahem, where are you Geoff??

 

[Les]

G'day Steve,

I think I just obfuscated myself .......

From "somewhere" I had the thought that protagonist was "in opposition" to an idea.....

Regards,

 

[geoffw]

Originally posted by Les
G'day Steve,

I think I just obfuscated myself .......

From "somewhere" I had the thought that protagonist was "in opposition" to an idea.....

Regards,

Les,

You're probably thinking of "antagonist".

 

[bbruham]

G'day all,

Yes, I'm still here.
Waiting for my best mate(big George) to blow the crap out of the Iraqies!!!!!!
My little bundle of money has been deposited with the broker.
Now we're ready to go!!!!!!!!!
Every cent I have is now on three big stocks.( Almost as good as betting on a nag!)
$100,000 on AMP.$50,000 on TELSTRA and $25,000 on COLES.
If I had a stronger back bone (bloody coward I am.) I would put even more money into AMP.

bbruham.

 

[bundy1964]

Originally posted by bbruham
$100,000 on AMP.$50,000 on TELSTRA and $25,000 on COLES.
If I had a stronger back bone (bloody coward I am.) I would put even more money into AMP.
bbruham.

One is bleeding badly and doesnt look like being back for another year, one is a market leader with a few problems in it's past to straighten out and the other needs to stop the bleeding and move forward.......I own 2 out of 3

If I am going to buy shares I would look for a better performer than those 3 at the moment

bundy

 

[geoffw]

I'd buy into those companies at the moment- as long as they were put options

Though I might have trouble finding a taker.

(For those who may not know- "put options" are things which you can buy when you expect a stock will move downards- so you make money if it does)

 

[Steve Navra]

Originally posted by bbruham
Every cent I have is now on three big stocks.( Almost as good as betting on a nag!)
$100,000 on AMP.$50,000 on TELSTRA and $25,000 on COLES.

Hi Bbruham,

Let it be known that I like yourself am entering the market reasonably aggressively . . . but:

AMP: Major worries about the groups management. (If you can call it management at all)

TLS: Quasi governmental stocks are problematical . . . they tend to make political, rather than good business decisions.

CML: Similar to AMP, the current management leaves some to be desired and even giving the new board the benefit of the doubt, well it might not do any harm to give them some time to prove themselves.

All being said and done, hopefully it works for you . . . at least you have entered around a 4 year low, perhaps you might want to diversify amongst a few more stocks.
Anyway mate g'luck

Regards,

Steve

 

[Alan H]

Buy at the low of the market(property or shares) and Sell at the.........weeeelll..........at least Buy at the low of the market.........certainly gives you minimal downside. Sell if you like.

This is certainly pretty obvious advice to maximise profit but to do this in practice is often MUCH more difficult. Emotionally it is often akin to sticking your head in an oven or jumping off a cliff. Not exactly 'instinctive' things to do!

The current situation is a wonderful example of how our human behaviour responds in a 'heightened' investment environment. Property has been bubbling along beautifully and shares look a disaster.

If you follow the above theory then it may appear likely that now is a good time to be getting into Shares........but the figures show most are doing the exact opposite. Why?

"Well.... Shares could still drop further!" is a common response.

Yep. They sure could......but buying at the 'low' of a market is not necessarily the same as waiting for the 'bottom'. Many can judge when a market is 'low'....... very, very few can predict a 'bottom'. Buying 'low' may be sensible.......waiting for a 'bottom' may be considered by some to be stupid.

While all of us here have an active interest in property, I think the current situation is similar to having the opportunity to observe a comet that only comes around every few decades. The current interplay between Property/Shares/Bonds and World Events should really make us all ask ourselves how we are currently investing and why. No 'right' answers but IMHO it would certainly be a wasted learning opportunity if we didn't take advantage of this current period. Might learn a little about ourselves too.

End of ramble........