That's the only thing you've said that I find myself in agreement with.
............and it's not likely too either
Where's the crash
- Thread starter pieman
- Start date
That's the only thing you've said that I find myself in agreement with.
............and it's not likely too either
For those who wish to belittle me with pithy comments and attack my investment position - without knowing a thing about it - then congratulations on living in complete denial. The primary thread running through my post was that people refuse to look at the reality of the worlds position - and this type of response confirms it.
The confirmation today that Australia has only now entered full scale recession (we should have entered it last quarter however we managed to avoid it with something ridiculous like .1% growth). Further the coal prices negotiated were down 60%, the stress testing on US banks was leaked and has shown the majors are anywhere from 170% over extended to 1000% - meaning they are insolvent - the markets are going into meltdown, the "dead cat bounce" was merely banks taking shorts via their "newly acquired" investment arms.
Whoever said commodities stock piling was running down - sorry couldn't be more wrong - the commodities are being totally hammered - worse end of all projections. Even copper is collapsing. The only bright note in China has been the rise in demand for cars - which on the whole is has not raised a serious blip on the world markets.
Australia, as I said, has only JUST entered recession, and you can get ready for the consequences of our markets going into meltdown - or you can simply keep saying it will never happen.....
Stress tests
http://turnerradionetwork.blogspot.com/2009/04/leaked-bank-stress-test-reults.html
Ore and commodities
http://www.theaustralian.news.com.au/business/story/0,28124,25356108-36418,00.html
http://www.forbes.com/feeds/afx/2009/04/16/afx6302399.html
http://online.wsj.com/article/BT-CO-20090420-712763.html
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZ4acRRenbPU&refer=home
I think thats fairly clear folks.
For those of you who are simply attacking me for providing an alternative view on this I recommend you keep investing, now is definitely the time to buy up BIG. For those of you have remained civil enough to consider my posts - you have been warned.
The confirmation today that Australia has only now entered full scale recession (we should have entered it last quarter however we managed to avoid it with something ridiculous like .1% growth). Further the coal prices negotiated were down 60%, the stress testing on US banks was leaked and has shown the majors are anywhere from 170% over extended to 1000% - meaning they are insolvent - the markets are going into meltdown, the "dead cat bounce" was merely banks taking shorts via their "newly acquired" investment arms.
Whoever said commodities stock piling was running down - sorry couldn't be more wrong - the commodities are being totally hammered - worse end of all projections. Even copper is collapsing. The only bright note in China has been the rise in demand for cars - which on the whole is has not raised a serious blip on the world markets.
Australia, as I said, has only JUST entered recession, and you can get ready for the consequences of our markets going into meltdown - or you can simply keep saying it will never happen.....
Stress tests
http://turnerradionetwork.blogspot.com/2009/04/leaked-bank-stress-test-reults.html
Ore and commodities
http://www.theaustralian.news.com.au/business/story/0,28124,25356108-36418,00.html
http://www.forbes.com/feeds/afx/2009/04/16/afx6302399.html
http://online.wsj.com/article/BT-CO-20090420-712763.html
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZ4acRRenbPU&refer=home
I think thats fairly clear folks.
For those of you who are simply attacking me for providing an alternative view on this I recommend you keep investing, now is definitely the time to buy up BIG. For those of you have remained civil enough to consider my posts - you have been warned.
Audas, you have chosen a lonely road, being a sceptic among the bulls. Many have tried before you but weight of numbers will always overwhelm logic.
Do not feel you have some moral obligation to save anyone. I once tried to protect newbies from the exuberance displayed here but it is pointless.
Audas has chosen to be bearish in the short term - hardly rocket science. OTOH property investing is about the long term, so his links to 'Copper falling 3% overnight', 'Iron Ore down 60% this year' (he omitted to mention it's back to 2006 levels & that fact has been priced in for a long time) aren't especially relevent.
Most here are bullish over the long term. The short term is for market timers (which is what Audax appears to be). It's pleasing to see that he sees a once in a lifetime buying opportunity next year.... must mean he's confident about the long term (like the rest of us)
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Bit hard to know about your investment position when you don't mention it. You have however given all the usual rhetoric posted here numerous times by numerous posters about how the property market as we know it is coming to an end. It's become quite repetitive, in fact a lot of us now know thanks to people such as yourself that we're going to crash and burn - it's much appreciated, but if your intention is to educate us, do a quick search and bit of reading of the forum - everything you're talking about has been mentioned numerous times. I guess some of us just don't get it and are doomed to live lives of desperation and squalor - any day now.......
Thanks for all the link's,you want to read up a bit more on copper prices,from my understanding China is buying up big on the low price of copper,and will have massive stockpiles,"stuff gold" i can't post the link ,it's not all doom and gloom out there just a quick question how many recessions have you experienced in your years of investing?myself 3..
willair.imho
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Myself, two, but I couldn't have had the second one if it hadn't boomed in between, it's all cyclical.
Hi Audas
Welcome to the forum! Can you tell us about your investment position? Are you a property investor? The problem some of us have with predictions like this is they are just that - predictions of the future. I know the factors you mention and I disagree with some - for instance share markets are a positive indicator recently worldwide. But we can be here all year discussing that stuff and not get anywhere because none of us can predict the future.
I find a good test for someone's ability to predict the future if that is their claim is how well did they predict the present? What skin do they have in this game and how well have they done out of it? If you didn't predict the present why do you think you can predict the future? If you did and have made a lot of money then great - tell us about it - I like to take advice from wealthy people...
This forum works best when people share how they have made money from property (and other) investing. As an old boss of mine was fond of saying, "don't tell me how it can't be done, tell me how it can be done". I appreciate your advice is "sit in cash for a year or two while property crashes and then get in" but this isn't the approach of most investors I know. Most would acknowledge the current uncertainty and wouldn't be in a rush to do anything because of it but they also know prices could go up so they get some exposure now to alleviate this risk while also leaving some in reserve for later in case what you predict does come to pass and there are opportunities everywhere.
That is the approach I'm taking - I'm not leveraging myself off the planet ATM but if I see a quality asset that provides a good +ve cashflow I will grab it. As I can't predict the future I will take these opportunities when they arise as they may not come again. Your strategy may turn out better than that but it relies on your belief in your own ability to predict the future - I have no such belief in myself, let alone anyone else, so I go for a hedging approach.
Most here are bullish over the long term. The short term is for market timers (which is what Audax appears to be). It's pleasing to see that he sees a once in a lifetime buying opportunity next year.... must mean he's confident about the long term (like the rest of us)
This is a typical bull's reply. If a warning in given in a specific sense it is rebuffed with a general "we're in it for the long term because property doubles every 7 years" type reply. If a sceptical post is made in a general sense such as "Sydney property has been stagnant/falling for 5 years." it will be countered by a specific example such as "If I'd listened to you I wouldn't have bought in Perth."
The incontrovertible fact is that is there were many wise old bulls on SS recommending Sydney housing investment for capital gains after it had already peaked. The common wisdom then was to forget Perth, Rockhampton and Townsville where you could buy cf+ve property: Cap gains are the only game in town! If picking the end of a trend is "timing" then "timing" is critical. Most of the "Time in the market, not timing the market" statements are justification of errors. Life is all about timing, otherwise the meek would indeed inherit the earth.
If cash-flow was rubbished then and revered now, Has SS always been right or have the goal posts been moved? How would a newbe who had listened to those wise heads and leveraged 100% into very neg cash flow property survive the years, waiting for the good times? It is nearly seven years since the Sydney peak and without some government money distorting the market the losses would be unbearable by now. Sadly none of the disillusioned newbes come back and tell us.
Any newcomers who doubt my facts could search the archives looking for combinations of posters such as Aceyducy, Thommo and Seechange and topics such as Rockhampton, Townsville, Perth and "cash flow". Seechange was possibly the first of the Sydney based investors to expand into Rocky etc. Because he has been doin' it so long without changing his basic philosophy just "where and when", you could do worse than read some of his old posts.
cashflow is and always has been king - IMO neg gearing is only for very small holdings by people that have their main focus elsewhere, usually their job.
Kholer just sent me something saying copper is up 70% since late December... what gives?
Hand on my heart Ausprop, it hasn't always been so here. Quite the reverse.
Don't take my word for it: Search the archives.
And this is a typical bear reply. He'll survive the same way he planned on when he took out the loan - the $'s of the loan/income etc are all the same, worst case he may look at a drop in value in the interim before it increases again.
Now you can come back with, well what if he loses his job? What if he decides to panic sell etc etc But this isn't the fault of the property or his original investment entry. If he changes the goal posts, then of course the investment will look different. If you lose your job and income then being leveraged at a 'safe' 50% could also wipe you out.
My answer to your question about the poor 100% leveraged newbie surviving would be - exactly the same way he was surviving when instead of a 10% paper loss he was sitting on a 10% paper gain. Not every investor out there is capitalising interest SF, in fact I'd say it would only be a small % of SS'ers who are doing it.
Hi Sunfish
Agree with you, people are changing strategies with changing times, some sooner than others.
Do you change your strategies with changing times and is your timing always spot on?
Cheers
Pete
The OP has given warnings about the short term. They aren't especially relevent to long term property investors.
The OP has added that he sees a once in a lifetime buying opportunity - he also see property increasing in the long term - he's a long term property bull too.
Do you see property going down in the long term ? Are you a long term property bull ?
I don't think anyone here has ever said that property is always guaranteed to go up in the short term. Most of us acknowledge that there are cycles.
Most here don't see property as a trading proposition, they see it as a B&H investment. Timing the entry is beneficial, but not essential. The OP appears to have the luxury of not holding property & is attempting to time his entry. Those of us who do hold property can also time our entry, but we mostly don't sell it, so timing an exit is irrelevent... so the OPs opinion of the short term is irrelevent for those that are long term B&H investors.
SS isn't just one person with one strategy. There are lots of different people out here that take advantage of what life throws at us - the goal posts are always moving - the RBA halves IRs, the equity fairy visits once every decade, KR props up the bottom of the market - we take advantage of CG when we can & of CF when we can. I think being flexible to adapt to the current circumstances is the key.
Maybe read some of the Somers books..... that'll tell you the answer
.My timing has never been spot on Turk, that's why I remain conservative with my investments. I have never agreed with the "fully committed, fully leveraged" property strategy and have been saying so for many years. That strategy would still be -ve today if entered into 4-5 years ago.
It is a big change from going for broke with borrowed money on -ve geared property to conservative LVRs and high cash flows in half the lifespan of a proposed investment. They cannot both be the right strategy. I contend that it would have been simply bad investing to commit everything to Sydney property in '04-'05, that there was plenty of advice to do so here on SS, many would have followed that advice and most of those would not be active members here now (are there any?). If you search the archives you would find that most of the bulls are no longer active either so unless you consider yourself "disposable" do a lot of independent thinking and do not rely on others, especially anyone in the industry.
It is a big change from going for broke with borrowed money on -ve geared property to conservative LVRs and high cash flows in half the lifespan of a proposed investment. They cannot both be the right strategy. I contend that it would have been simply bad investing to commit everything to Sydney property in '04-'05, that there was plenty of advice to do so here on SS, many would have followed that advice and most of those would not be active members here now (are there any?). If you search the archives you would find that most of the bulls are no longer active either so unless you consider yourself "disposable" do a lot of independent thinking and do not rely on others, especially anyone in the industry.
Thommo,
As you well know, both cash flow and growth potential are key considerations for any investment decision. To suggest that either of these is the only consideration misses the mark completely. Sure, a few years back the discussion was largely around the capital gains potential from a leveraged portfolio, but IMHO that argument hasn't changed a zot given my investment horizon is still several decades. What has changed lately is the emphasis on servicability and cash flow that has occurred as a result of fear supplanting greed as the dominant emotion of the times.
That will happen in every market cycle, the emphasis will change to reflect the dominant mood. What won't change is the importance of both in any investment decision. Capital gains in the near term may well be subdued due to tight credit and increasing unemployment, for example, but that is a timer's game to try and pick these elements. If you're aiming at entering the market now then there's a strong case for waiting a while. But for those already invested, the timing decision is now irrelevant.
Property investing is not Mensa. It has at its core a fundamental comprehension of several key factors, notably:
- Risk Mitigation
- Cash Flow
- Growth Potential
- Leverage
- Time Value of Money / Compound Returns
To try and argue that SS was always about leverage and growth and is now all about cash flow is wrong. SS has always been about sustainable portfolio accumulation using the power of leverage and understanding the time value of money. Where other forums like PI.com fall down is they over-emphasise the importance of cash flow and market timing / trading properties. Cash Flow is not king, its just the crown prince that allows for the true king of time and the queen of leverage to grow a substantial portfolio. Neglect it at your peril, but promote it beyond its status and you undermine your wealth accumulation journey.
All politely IMHO...
Cheers,
Michael
I just read this article Why Is China Buying Up Copper
Seeing as the money the Govt and the people had came from the resources sector, if China are starting to buy more resources again from us and royalties/taxes start flowing back in to our Govt's coffers, people start getting employed here again, so they eventually start spending money here again, how does this equate to prices continuing to drop hard here like US and others?
Surely this will be putting the brakes on the gloomers chances of a crash.
Dave
Seeing as the money the Govt and the people had came from the resources sector, if China are starting to buy more resources again from us and royalties/taxes start flowing back in to our Govt's coffers, people start getting employed here again, so they eventually start spending money here again, how does this equate to prices continuing to drop hard here like US and others?
Surely this will be putting the brakes on the gloomers chances of a crash.
Dave
I don't know why you're getting upset with people being bullish, SF.
The Audas guy/girl is making some bold bear statements, and from what everyone can tell there is no cattle with the hat.
So, where's the cred?
Everyone is allowed to be bullish or bearish, and give their opinions as to why, and we all do.
Most try to back it up, and those that don't we either call for cred, or ignore and make our own mind up.
I'm a bull, but I'm a longer-termer, and I invest for both cap gain and cashflow, so I'm not paying much attention to a bear.
I'm not going to say buy, buy to someone who only wants cap growth when I think the market is flat, but over the longer term if you are after cashflow as well, then continually buying is good.
Dare I say it - property does keep on doubling every 7-10 years. It's historical fact, and it certainly has been the case in my life, so it's o.k to say it in the context of a cashflow and cap growth investment over the longer term.
That Audas person is treating us all like day traders with no clues, and he/she deserves to get his/her @rse kicked a bit.
It's probably NR or HG or one of those blokes making a comeback anyway.
The Audas guy/girl is making some bold bear statements, and from what everyone can tell there is no cattle with the hat.
So, where's the cred?
Everyone is allowed to be bullish or bearish, and give their opinions as to why, and we all do.
Most try to back it up, and those that don't we either call for cred, or ignore and make our own mind up.
I'm a bull, but I'm a longer-termer, and I invest for both cap gain and cashflow, so I'm not paying much attention to a bear.
I'm not going to say buy, buy to someone who only wants cap growth when I think the market is flat, but over the longer term if you are after cashflow as well, then continually buying is good.
Dare I say it - property does keep on doubling every 7-10 years. It's historical fact, and it certainly has been the case in my life, so it's o.k to say it in the context of a cashflow and cap growth investment over the longer term.
That Audas person is treating us all like day traders with no clues, and he/she deserves to get his/her @rse kicked a bit.
It's probably NR or HG or one of those blokes making a comeback anyway.
