Timing the Market

[Hound Dog]

As part of my ongoing education regarding real estate I am using this post boom period to study some of the books I have and currently reading "Wealth Creation through Tax Driven Real Estate Strategies" by Les Szekely & Anthony Cordato.First Published in 1991 the book is basically in three parts
Part 1 - Real Eastate Investment Strategies
Part 2 - Tax Leveraged Real Estate
Part 3 - Analysing Individual Properties
It is within the first part of the book that is written by Anthony that Real Estate is examined as a market in its own right and factors that influence it
are examined.The point of view taken is that timing is the most important factor.The Cycle Theory (assuming 8 years in which time there would be a boom and a bust) they say by watching Inflation,Interest Rates and Rentals, it is possible to time the market and create wealth by buying after a small rise and selling after the large rise.
Are there any forumites actively pursuing this style of Property Investing (Timing the market) as opposed to the Somers style - Buy and hold .I would be keen to hear how it is working out . Thanks in advance for your responses.

Regards
Hound Dog

 

[Merovingian]

The point of view taken is that timing is the most important factor.The Cycle Theory (assuming 8 years in which time there would be a boom and a bust) they say by watching Inflation,Interest Rates and Rentals, it is possible to time the market and create wealth by buying after a small rise and selling after the large rise.

I saw it written somewhere that one could also use the following factors to time the market, which, in addition, may prove useful:

1. Auction clearance rates. The higher the percentage, the more houses are sold through an auction, indicating the sellers are satisfied with their selling prices, (an upward market trend). A lower clearance rate may indicate prices falling — sellers don't get what they want for a house, so they abandon selling for a while.
2. Building approvals. The more building approvals, the more demand there may be for housing.
3. Media sentiment.

I agree that timing the market is important, but time in the market is also very valuable...

 

[topcropper]

I suppose I think I'm trying to time the market cycles, and it doesn't seem too hard to me. I decided that the property market was overvalued early 2003, sold and put the cash into the sharemarket. I missed some property gains, but the sharemarket was too cheap to miss. It was easy to positive gear into quality companys.

I just looked at the price to earnings of the two markets, [property, shares] compared to the historic PE's, and decided that was the way to go. Shares are now fair value, and looking like getting overvalued, so I'm looking foreward to taking profits. I've already got out of retail, and property related stocks. Loaded up on energy and resources.

Compare property and shares PE's in early 2000. It was the other way around. Shares were very expensive, with very high PE's, and property was cheap. The sharemarket corrected with the tech crash, and property took off. Land was so cheap It was possible to positively gear into quality real estate. Now only clapped out houses in the sticks can be positively geared. This has been caused by herd mentality. Investors blindly following the crowd from one thing to the next. September 11, and Iraq had a lot to do with why the sharemarket was so cheap.

The way the sharemarket is going, I could be out before too long. I will just go to cash, and wait for something to correct back to fair value. The patient investor will be rewarded.

See ya's.