What sets you apart from the RE whales?

[tom32]

Morality & capital

I want to be a whale. I just want to do it nicely - keeping a balanced life, my partner happy, not stuffing others (ie. buy from natural disaster victims) etc.

I read this a few times after the floods in the papers where agents said they hung up on people making offers for flood effected homes etc.

How is that immoral?

Someone needs to sell a home and someone is prepared to buy it in the face of adversity.

Of course they are trying to take advantage of a bad situation but if they do not the home does not sell at all and perhaps the bank sells it eventually in stead. This is not a good result for the seller...

I cannot see what is immoral in that?

I should add though you seem to hold the same view as many in the Australian population. I just do not know why??? Sure if someone is greiving they do not want to be pitched to but if they want to sell their home they have to sell it to someone and I suspect while you would not want to buy off say a flood victim for moral reasons nor would you want to pay the pre flood value either, after the flood at any rate.

And why am I different from financial success stories? I think mostly risk aversion. When I first hit shares in 2000 I saw the tech wreck. When I next hit them after just loading up in a bank deposit in the intervening years I hit 08 crash. Luckily both times I did not lose much as I had nothing significant to lose in 2000 and only started getting back in in 08 but it would seem the only way I can make money with my own coin is in Bank Deposits. Also the sure and steady rise in a deposit and projecting it out to some distant date is comforting, it will nearly be a shame to spend it this year or early next on a home...

Plus I have a pathalogical disorder where if I own shares I have to check on them 20 times a day affecting my day job which for the forseable future I will need to put weetbix on the table...

 

[Monopoly]

i think you're missing my point. cheers.

Nope, I think you're missing mine.

Serioulsy I know what you're saying, but hey I reckon we should just leave it at, there's merit in what we're both saying on the matter of flogging horses/donkeys!

 

[Monopoly]

I don't....

Of course you don't Dazzer me ol' mate, you are definitely in a league all your own boy!!!

 

[oracle]

When I first hit shares in 2000 I saw the tech wreck. When I next hit them after just loading up in a bank deposit in the intervening years I hit 08 crash. Luckily both times I did not lose much as I had nothing significant to lose in 2000 and only started getting back in in 08 but it would seem the only way I can make money with my own coin is in Bank Deposits.

Hey tom, can you let us know next time you get interested in shares. You might just save a lot of ppl some money by the timely warning.

Just kidding

Cheers,
Oracle.

 

[Sunfish]

Okay jokes aside here Aaron,

Yes successful people "don't flog dead horses" (or donkeys)! That's because they are generally smart enough to realise when a horse (or donkey) is dead, and as such don't tend to persue the floggings!

But can you tell if a parrot is dead or merely "resting"?

 

[tom32]

Hey tom, can you let us know next time you get interested in shares. You might just save a lot of ppl some money by the timely warning.

Just kidding

Cheers,
Oracle.

lol.

When I let my vanity go into overdrive it can extend as far as to causing me to wonder whether I caused the GFC when I bought those NAB and Mount Gibson Iron shares in 08...

It all seems to go along swimmmingly till I hit an investment.

I have on reflection worked out where I go wrong. Buying value actually means you hunt down the biggest dogs on the market. I select anything which looks on the surface to be value and then find wings have cracks in them or a storm in Paris that was supposed to have no material affect on an Australian insurance company actually sends them broke etc.

The inside knowledge wins out and those without it are left holding the baby when it cmes to shares.

It would nearly be a better philosophy to buy the worst value on the market as at least it is likely someone knows something and is buying for good reason...

 

[Aaron Sice]

But can you tell if a parrot is dead or merely "resting"?

Shoot it. If it bleeds, you were wrong.

 

[Sunfish]

lol.

When I let my vanity go into overdrive it can extend as far as to causing me to wonder whether I caused the GFC when I bought those NAB and Mount Gibson Iron shares in 08...

It all seems to go along swimmmingly till I hit an investment.

I have on reflection worked out where I go wrong. Buying value actually means you hunt down the biggest dogs on the market. I select anything which looks on the surface to be value and then find wings have cracks in them or a storm in Paris that was supposed to have no material affect on an Australian insurance company actually sends them broke etc.

The inside knowledge wins out and those without it are left holding the baby when it cmes to shares.

It would nearly be a better philosophy to buy the worst value on the market as at least it is likely someone knows something and is buying for good reason...

Not sure if you were tongue in cheek with this post but it is very accurate. For us mug punters the parameters which indicate value are stale by the time we read them. Never "bottom drawer" anything. Keep an eye on it and it's price chart. They will tell you when something is wrong before the news is made public. You spoke of insurance companies: HIH had a terrible chart and anyone who continued to hold and not salvage "something" didn't have their eye on the ball. Same with Enron.

We have a better chance of finding overlooked value in the third tier companies but it's hard (and time consuming) to find out much about them.

Do your own research is the motto.

 

[investor2009]

For me it's just cash-flow, otherwise known as money.

I don't have enough of it to keep buying real estate over and over again.
I spend about 80% of my income on property. It will pay off one day but if I could double, or triple my asset base now, I'd be sitting even prettier, sooner.
Still doing better than many high income earners though which isn't bad.

I have no fear of investing in the right type of property purchases.
I have the knowledge and know-how.
I just don't have a large income to play with.

 

[chran]

How is that immoral?

You understand more than you admit:

they are trying to take advantage of a bad situation but if they do not the home does not sell at all and perhaps the bank sells it

The situation is bad for them (flood victims). They're selling because they must (ie insurance doesn't pay, bank sells it, etc). It's morally wrong to take advantage of these people.

And:

if someone is greiving they do not want to be pitched to but if they want to sell their home they have to sell it to someone and I suspect while you would not want to buy off say a flood victim for moral reasons nor would you want to pay the pre flood value either, after the flood at any rate.

You said it yourself. Buying from these people means taking advantage of their situation - again morally wrong.

Don't get me wrong. You can make $ from these deals. I'm just saying it's not my cup of tea by choice. It may take a little longer to become a whale, but I will be one some day.

 

[Aaron Sice]

You understand more than you admit:


The situation is bad for them (flood victims). They're selling because they must (ie insurance doesn't pay, bank sells it, etc). It's morally wrong to take advantage of these people.

And:


You said it yourself. Buying from these people means taking advantage of their situation - again morally wrong.

Don't get me wrong. You can make $ from these deals. I'm just saying it's not my cup of tea by choice. It may take a little longer to become a whale, but I will be one some day.

back the truck up, chuck.

1) people don't have to sell. period. you are merely offering.

2) you would buy for fair market value. if the building is destroyed, then you would pay land value. it's not like you can use the building after you've not paid for it.

3) ever thought about how devastation affects people? some people may not want to live there any more. you've just provided another option for those who may feel trapped by their situation.

4) quick to judge, methinks.

5) how is buying form those at the very bottom any different to selling to "suckers" at the very top? investing on any part in the name to make money would then be considered immoral.

6) that would spell trouble for anyone on the end of any stick.

 

[Xenia]

Great post.

I focus on 3 things
1. Mindset (keep intention focused on what I want and clarity on my goals)
2. Environment - getting around the right people. You can't fly with the eagles if you are scratching with the turkeys. I surround myself with millionaires on a daily basis.
3. Strategies - this I can outsource to others who are better than me. The above 2 cannot be outsourced.

 

[tom32]

Not sure if you were tongue in cheek with this post but it is very accurate. For us mug punters the parameters which indicate value are stale by the time we read them. Never "bottom drawer" anything. Keep an eye on it and it's price chart. They will tell you when something is wrong before the news is made public. You spoke of insurance companies: HIH had a terrible chart and anyone who continued to hold and not salvage "something" didn't have their eye on the ball. Same with Enron.

We have a better chance of finding overlooked value in the third tier companies but it's hard (and time consuming) to find out much about them.

Do your own research is the motto.

I was not being tongue in cheek. I learnt the best PE's with the highest growth prospects v price end up if you buy them have a high propensity of releasing information to the negative and pretty soon after the reason it was "value" is apparent. i.e. the thing you don't know but some do comes out.

My shitter insurer was Reinsurance Australia Ltd. Killed first by the Sydney hail stones, thats when I got in when they still had the ability to be an insurer etc and then the Paris Storms around Christmas 2000 finished them off... well after a few months languishing anyway. Nearly got out for a profit even after the storms when the directors said to the market basically >> in response to the recent share price slide we can only think it would be the impact from the paris storms....

People were buying in like crazy on this announcement and then they announced about two weeks later the impact from the paris storms. It meant they were downgraded to the point they could no longer be an insurer.

Anyway the best part about owning a reinsurer is even if you are a bit of a logic first feelings second kind of guy every time you see a plane crash in South America etc you can sit there and look devastated and when you tell the missus oh thats terrible they think you are being compassionate for all the worlds troubles...

 

[tom32]

back the truck up, chuck.

1) people don't have to sell. period. you are merely offering.

2) you would buy for fair market value. if the building is destroyed, then you would pay land value. it's not like you can use the building after you've not paid for it.

3) ever thought about how devastation affects people? some people may not want to live there any more. you've just provided another option for those who may feel trapped by their situation.

4) quick to judge, methinks.

5) how is buying form those at the very bottom any different to selling to "suckers" at the very top? investing on any part in the name to make money would then be considered immoral.

6) that would spell trouble for anyone on the end of any stick.

I guess upon reflection the only caveat to what you say / I said and where I would agree with chran in one circumstance would be making an offer when the level of devastation is of far more "value" than the item in question being offered on.

For example I would not offer someone who had minutes earlier had their left leg taken off by a train $1.00 for their left and now useless to them shoe even if as it happened I had lost my right leg to a train incident years before and always looked for opportunities to buy a shoe for my left foot in isolation. While the individual may want to sell the shoe at some stage it is probably a bit sick to ask the question then and there... Might wait a few weeks and hit them up for their whole left legs wardrobe, socks shoes etc etc.

Similarly if there was a fatality in the home and even if I know the mortgage could then not be paid I would not be knocking on the front door at day one while they were grieving the loss unless I was going to be generous in my offer so really being charitable. I certainly would not be lowballing this one and due to that I would not make an offer at all in that situation.

But the general devastation caused by a flood with massess both needing and others just wanting to get of their flood prone homes I would be more than happy to throw my cap into the ring if it means getting a bargain. I imagine if the sellers accept they are also happy to get out. It's a win / win and the agents saying they would not be presenting offers in those circumstances are not doing the current owners any favours IMO. Indeed I think they are breaking their fiduciary duty to the owner and could probably be sued if it turns out these offers were as good as the owners were ever going to get post flood.

 

[Aaron Sice]

I guess upon reflection the only caveat to what you say / I said and where I would agree with chran in one circumstance would be making an offer when the level of devastation is of far more "value" than the item in question being offered on.

For example I would not offer someone who had minutes earlier had their left leg taken off by a train $1.00 for their left and now useless to them shoe even if as it happened I had lost my right leg to a train incident years before and always looked for opportunities to buy a shoe for my left foot in isolation. While the individual may want to sell the shoe at some stage it is probably a bit sick to ask the question then and there... Might wait a few weeks and hit them up for their whole left legs wardrobe, socks shoes etc etc.

Similarly if there was a fatality in the home and even if I know the mortgage could then not be paid I would not be knocking on the front door at day one while they were grieving the loss unless I was going to be generous in my offer so really being charitable. I certainly would not be lowballing this one and due to that I would not make an offer at all in that situation.

But the general devastation caused by a flood with massess both needing and others just wanting to get of their flood prone homes I would be more than happy to throw my cap into the ring if it means getting a bargain. I imagine if the sellers accept they are also happy to get out. It's a win / win and the agents saying they would not be presenting offers in those circumstances are not doing the current owners any favours IMO. Indeed I think they are breaking their fiduciary duty to the owner and could probably be sued if it turns out these offers were as good as the owners were ever going to get post flood.

comparing losing a house to the insensivity of someone losing a limb is a VERY long bow to draw.

 

[tom32]

comparing losing a house to the insensivity of someone losing a limb is a VERY long bow to draw.

Agree.

Just setting some boundaries on my own behavior before Chran or anyone put up a similar argument to say I was void of all morals.

There are of course some circumstances where making an offer is insensitive, but someone in trouble financially with an underwater house in more ways than one is not one of them IMO.

 

[Aaron Sice]

Agree.

Just setting some boundaries on my own behavior before Chran or anyone put up a similar argument to say I was void of all morals.

There are of course some circumstances where making an offer is insensitive, but someone in trouble financially with an underwater house in more ways than one is not one of them IMO.

agree.

often a complete, tie cutting, way-out is to sell and move on.

insurance will cover the house (hopefully - if not they self insured so they haven't lost any more than they would have otherwise) and the land is still there, the title still exists and is worth money.

a 1:100 storm a bad area does not make.

 

[tom32]

agree.

often a complete, tie cutting, way-out is to sell and move on.

insurance will cover the house (hopefully - if not they self insured so they haven't lost any more than they would have otherwise) and the land is still there, the title still exists and is worth money.

a 1:100 storm a bad area does not make.

As long as value reflects the risk.

It did not before the event int would seem but the closer an event is in peoples minds the more the risk is built into the price.

Buying shortly after is good policy IMO, certainly not 20 years later thinking you have another 80 years to go when floods are a thing of the past and people think building dams in brisbane is stupid because it never rains....

Of course it should be pointed out 1:100 year flood events can occur in rapid succession but if it is priced in, thats all good anyway. Hell I would love to live on the brisbane river for the other 99 years... actually too bad Sydney Harbour doesn't flood far prefer to live there.

 

[Aaron Sice]

obviously you wouldn't purchase it if it didn't reflect your risk value.

no one forcing you to buy it any more than the flood victims are being forced to sell it.

 

[chran]

back the truck up, chuck.

There is no truck
All I'm saying is that you understand the moral dilemma more that you realise.