US Depression postoned; not prevented

[WinstonWolfe]

Now lets look at Winstons graph:
It shows a bottoming and then a nice consistent curve upwards. This is what i am interested in: the overall trend, not month to month figures. The same applies to US payrolls/jobless figures/new home building figures etc etc

You might be interested in Robert Shiller's (the creator of that graph) perspective on the bottom and up curve. He calls it a fish hook, and says it is unprecedented in the history of US housing....and he views it as artificial demand generated by govt intervention in the market.....and he holds grave fears for what happens when the govt retreats, as they eventually have to.

The article I refer to by David Galland adds further insight into how the govt is artificially propping up property prices, and private lenders are unlikely to fill their shoes, when the govt retreats. Not good news for US property.

 

[CG++]

i'm deeply concerned. not bearish yet, just very concerned that the risk is getting harder and harder to price into any transaction.

however - i'm doing my best to sure up my financial position. i have a little gold bullion (the actual metal, not a promissary note) and a bit of cash but i'm trying very hard to accumulate CF+ property in quality areas.

it's just getting harder and harder to get credit to make money and pay back said credit.

the next 18 months will be interesting to say the least.

Right on Bluecard, I'm also battening down the hatches. Actually have been for some time now. Too many risks, too many unforseeables and unknowns. Consdiering we escaped "something", credit is too tight for me to take risks. The bigger question for me is: Did we escape it?

Nice thread guys.

 

[Satanoperca]

The bigger question for me is: Did we escape it?

The answer is we will not know until the govnuts stop spending our tax payers money propping up capital markets.

I believed the govnuts have just postponed it, if anything they have made the problem bigger but not addressing the fundamental issue that increasing debt leads to prosperity.

By postponing it, the majority of people have become complacent and have not changed their spending habits.

Cheers

 

[Ausprop]

PPOR is a different ball game - we all have to live somewhere.

i meant for investing, those that are neg gearing, those that are 80+ LVR etc.

interesting. my attitude is quite different... they are all just investments except you get a tax break for the one you live in. rent is WAY cheaper than the cost of ownership

 

[Intrinsic_Value]

Which indicates you expect the residential market to go down and stay down for a significant time - or is it to do with cashflow? What is your inspiration for this move?

I see alot of risk, with fundamental return being limited (remember i own apartments not houses, so i have very limited land value). And i mention fundamental return, i cannot predict what the market will do, i can only look at it from a fundamental view point.

I also have to consider the following:
1) my debt levels
2) the opportunity cost of having capital 'trapped' in an illiquid asset.

Even if the market remains flat, i would no longer receive an adequate return after holding costs (on my purchase price the apartments were cash flow positive, after rising 50% in the last several years, on market value the ylds would be negative, ie i would not be receiving an income to wait).

So basically on a risk vs potential return, the numbers dont stack up for my circumstances. For someone else the out come might be different.

 

[JulieW]

Well the Elliot Wave proponents are nervous too! What a cloudy crystal ball we hold!

 

[Ausprop]

I see alot of risk, with fundamental return being limited (remember i own apartments not houses, so i have very limited land value). And i mention fundamental return, i cannot predict what the market will do, i can only look at it from a fundamental view point.

what is the fundamental view point? (just not sure what you mean). Do you disagree with Kevin Youngs retirement plan? my mate has a dozen or so properties, leveraged up and filled with whingeing grots.... wants 15. not sure if it is me or him that is nuts

 

[WinstonWolfe]

I always think Bill Gross's view is worth listening to....vested interest and all.

With control of 1 Trillion, he is the biggest bond market player in the world.....and is now moving into equities.
That will be an interesting move, as bond analyst pencils are sharper.

A point he brings up in the associated story to the chart below, is no matter how bad a country's finances are, its how bad they are COMPARED to the rest of the world that counts.

This month, Bill favors the fundamentals and finances of Canada, of all developed economies.....and he red flags the ring of fire.

 

[Aaron Sice]

interesting. my attitude is quite different... they are all just investments except you get a tax break for the one you live in. rent is WAY cheaper than the cost of ownership

that's a good point - i mean, i was certainly strategic in buying where i live, i would have preferred Ocean Reef but Amy wanted new.

more to think about eh..?

 

[Intrinsic_Value]

what is the fundamental view point? (just not sure what you mean). Do you disagree with Kevin Youngs retirement plan? my mate has a dozen or so properties, leveraged up and filled with whingeing grots.... wants 15. not sure if it is me or him that is nuts

Fundamental value is based on intrinsic value. For property this is much harder to determine.
Market value is based on buyer/seller psychology ie sentiment which can move prices above/below fundamental value. I dont like to invest based on market value due to the risk of change in investor pyschology.

 

[WinstonWolfe]

Have just read a 6 mth old article about China, by Pivot Capital Managment, run by Pars Mellstrom and Carl George.

Gottliebsen referred to the article in today's Business Spectator....and says these guys predicted the GFC, and their fund return bears that out.

The article is well worth the read. Six months ago, these guys predicted Chinese credit and investment driven growth, had to wind back early this year. good call imho.

This has repercussions for the US and Australia.

 

[Player]

Thanks for sharing that WW. I also read the Business Spectator article today. For those inetersted here's a link:

http://www.businessspectator.com.au...-growth-pd20100129-25SAS?OpenDocument&src=sph

Stocks also down for the month, apparently worst month since Nov 2008:

http://www.businessspectator.com.au...de-pd20100129-25V2N?OpenDocument&src=hp1&rf=s

Is the stimulus (stimuli) sugar rush(es) insufficient now and the economies more diabetic?

 

[haroldluntz]

moved post to another thread

 

[Intrinsic_Value]

I always think Bill Gross's view is worth listening to....vested interest and all.

With control of 1 Trillion, he is the biggest bond market player in the world.....and is now moving into equities.
That will be an interesting move, as bond analyst pencils are sharper.

A point he brings up in the associated story to the chart below, is no matter how bad a country's finances are, its how bad they are COMPARED to the rest of the world that counts.

This month, Bill favors the fundamentals and finances of Canada, of all developed economies.....and he red flags the ring of fire.

Good post Winston Wolf. And this post is for 'moderates' not gold bugs or doom/gloomers.
It hightlights a very relevent risk (but doesnt mean it will come true, only a risk).
And i strongly suggest paying attention to Bill Gross, he is a moderate, and he is very smart.
Again this doesn't mean sell everything, but i can tell you when Bill Gross speaks wall street does at least listen to his comments.

He is one of the commentators that i pay attention to (there are so many people out their yapping their opinions that you need to refine your reading, otherwise you can never make a decision)