world wide financial crash will it make property cheaper

When doing these types of calculations Random, gold should be given a value of 1. Everything else varies in relation to that. To believe otherwise shows a lack of understanding of money and fiat currency. There have been periods of British and American dominance of world affairs in which gold pegs have artificially propped up the currencies and the values of assets measured in them. It also eliminated the concept of holding gold as an investment so distortions were introduced then too. But over thousands of years it (and silver) have been the only constant, but in the long run we are all dead so does it matter? If you have all your investments in gold you will starve to death anyway. :)

TODAY I believe gold is the standout SAFE investment. Other assets may outperform it but with real risks. It will become even more volatile in the short term though so it will keep anyone with a short term view awake at night. I sleep well because I am not looking to sell on peaks and buy the dips. What I have I hold.
 
these long long term arguments about gold are all very well and good, but in the long term WE ARE ALL DEAD.

I dont know about the rest of you guys, but i plan on building wealth for my own FUTURE PLEASURE and maybe those of my future kids (if any).
 
A bit of a deceiving chart really...e.g. Can you name 1 stock that was around in 1800?
Without knowing exactly how they have come to those figures I assume they are using some sort of index which is constantly cycling the stocks that make up group it represents, so buying specific blue chip stocks is not necessarily the haven that chart makes it out to be.

i always find these sought of counter arguments interesting.

At the end of the day you own a share in a business.

What is an index, but a list of businesses that are performing at that point in time (often but not always represented by market cap).

So should a part ownership in a business, just be put in a locked safe, and not looked at for the next 200 years?

I see the potential for massive profits in future years.
Why? because mankind is becoming more dissasociated with the relationship between shares and the underlying business. But that all good for me, it works in my favour.:D

Why in my favour? intrinsic value
 
I see the potential for massive profits in future years.
Why? because mankind is becoming more disassociated with the relationship between shares and the underlying business. But that all good for me, it works in my favour.:D
Why in my favour? intrinsic value
Shares, specifically in the US, are becoming disassociated with the underlying business due to HFT, black boxes, dark pools, all that jazz. Apparently computer algorithm trading makes up 80% of volume on the US market where several years ago it only made up 30%. This can sometimes work in your favour or sometimes it does not (e.g. the May 6th Flash Crash which broke the market on a technical/chart basis).

Your post reads like a riddle, I don't understand what you mean by it working in your favour due to intrinsic value...
 
Hi, I think the way to measure it is:

today is 20/06/2010 and we have X amt of dollars say $100000 to invest.

1) Buy $100K worth of gold
2) Buy $100K worth of property [Borrow $200K = neutral gearing?]
3) Buy $100K worth of shares

In the next 5-10 years, which of the above will return the highest amt?

You know what? I think shares will beat the pants off the other 2 but then again, I'm noted for picking the duds!!

KY
 
Different aims, depths & ways of looking at things, we choose what we want to worry about or don't.
In my humble position it really doesn't have to be all that complicated so I'm a sinner, I like to keep it simple. For what I'm into a charts line & the basic numbers & fund's usually tell me what to do & has served me well.

But anyway on a different level I took a rough stab as from the 80 period as it relates to personal reference & charts .
BHP x 1k at 2.50 = roughly 18k today plus d/ends whatever they'd be .
Gold x 1k = roughly 1,800, d/ends no clue , have never owned the stuff.
Property , the block across the road my dad bought for 3k in around 80 = roughly 200 now so - 2/3 at a k = roughly 66k - costs , whatever the hell they'd be .

Dunno where safe havens, golds and currencies work into all of this , I'm afraid that's for SF's department but anyway, food for thought.

Cheers
 
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Shares, specifically in the US, are becoming disassociated with the underlying business due to HFT, black boxes, dark pools, all that jazz. Apparently computer algorithm trading makes up 80% of volume on the US market where several years ago it only made up 30%.

Algorithm trading is usually very short term, taking advantage of very low transaction costs for high volume. Long term investors need to associate with the underlying business, short term traders need to disassociate from it because the business doesn't change that frequently.

Before I gave up writing algos due to lack of sleep my US based partner and I were working on incorporating news reading algos. Our initial program would read news headlines and avoid stocks with any news, that way any market movements were due to normal market noise and 7 sigma events were less likely. We were well behind what some others were doing with news algos.
 
Shares, specifically in the US, are becoming disassociated with the underlying business due to HFT, black boxes, dark pools, all that jazz. Apparently computer algorithm trading makes up 80% of volume on the US market where several years ago it only made up 30%. This can sometimes work in your favour or sometimes it does not (e.g. the May 6th Flash Crash which broke the market on a technical/chart basis).

Your post reads like a riddle, I don't understand what you mean by it working in your favour due to intrinsic value...

Yes you are spot on and thats exactly why it works in my favour.
Consider the recent 1000 drop point in the dow, now that was overall 1000 points, i think some shares dropped by 40% or more due to that glitch.

Now lets say i the market is pricing the shares of a company i am interested in at say $40.
I am only happy to invest, under $30.
I have a low ball offer of $28, it gets hit on these swings. I am quite happy.

Note i didnt do this.

Where i did participate recently was the additional purchasing of NAB shares.
I was able to get these shares at very good prices because of the factors you have identified above.

I currently have a 'gut theory' at the moment, and it goes something like this:

Consider for a moment a theoretical world, where the investment 'cash' is $100.
If $90 of that is invested 'fundamentally' in traditional funds mangement type investments, and 10% is invested in 'hedge fund' type investments.
The gravitational pull of the $90 allows the $10 to whip in and out extracting profit through 'inefficiencies' in the market.

Now lets fast forward to stage two:
people start to loose confidence in the traditional 'funds management model', they see the hedge funds making some fantastic returns, yet the funds management model is being burnt (the hold for the long term doesnt seem too smart anymore).

So the market evolves,
the allocation to traditional 'funds management' decreases, the amount to hedge funds 'increases'.

But here we come to an interesting stage, the hedge funds were only efficient whilst the majority of funds were deployed in funds management. Too much money allocated to hedge funds means too much money chasing too few opportunities, THE MARGINAL RETURN ON OPPORTUNITY DECLINES. However it gets worse, not only does the marginal return decrease, but the marginal RISK increases, because they are all playing the same game.

Now this is just an extreme gross simplification of the real world.
But what i am trying to highlight here is the exacerbated movements in global asset classes at the moment and trying to understand why they are occuring.

In my opinion this is necessary to adequately factor in 'risk'.
 
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Oracle, I will be the first to admit Gold is volatile, much more so in price than property and I am personally not advocating any 30 year buy and hold strategy for Gold from these levels. I agree that one could have been severely burnt with Gold if buying near the peak, but there have been plenty of people burn by property also.


If you want to look at history then let's do so.

Let's compare Australian property to Australian Gold from the year that Gold made the record high in the last bull market/bubble and compare it to now:

Gold price data from here. I took the monthly bid data (Perth Mint spot) in AUD and averaged over 1 year, this resulted in a figure of $577 for Gold. Median house prices from here and here.

Sydney 1980
Gold @ $577, House price median at $68,850. 119 ounces buys median property.

Melbourne 1980
Gold @ $577, House price median at $39,500. 68 ounces buys median property.

Sydney 2010
Gold @ $1430, House price median at $590,000. 412 ounces buys median property.

Melbourne 2010
Gold @ $1430, House price median at $496,767. 347 ounces buys median property.

Priced in Gold housing in Melbourne is 5x more expensive than in 1980, in Sydney it is 3.5x more expensive.

Now, without bias you tell me which is in the bubble right now! If you think Gold is in a bubble now then what does that make property....a much larger bubble...

I'll tell you what doesn't look attractive today....HOUSING!


Gees your not wrong there Hobo , as I've been saying for 6 yrs now our housing prices are unsustainable .
As to where the balance of the two will land , God only knows .
Could well be the books re'written this time round.

Cheers
 
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Algorithm trading is usually very short term, taking advantage of very low transaction costs for high volume. Long term investors need to associate with the underlying business, short term traders need to disassociate from it because the business doesn't change that frequently.

Before I gave up writing algos due to lack of sleep my US based partner and I were working on incorporating news reading algos. Our initial program would read news headlines and avoid stocks with any news, that way any market movements were due to normal market noise and 7 sigma events were less likely. We were well behind what some others were doing with news algos.

this is a facinating area of the market.
Absolutely amazing, the major broking houses and hedge funds are all competiting to get the processing centre as close to the exchange as possible, to capture that faster milli milli second difference in information flow.

i am an 'outsider' here but would love to hear your views on this topic::)
 
this is a facinating area of the market.
Absolutely amazing, the major broking houses and hedge funds are all competiting to get the processing centre as close to the exchange as possible, to capture that faster milli milli second difference in information flow.

i am an 'outsider' here but would love to hear your views on this topic::)

IV, you know I'm glad that you in particular are interested because dispite all the algo trading that goes on in the markets now (particularly U.S.), intrinsic value is still how stocks are and should be valued. In fact one of our short term trading ideas was to form a list of stocks trading well below a measure of IV but instead of holding long term we'd buy on a 2StdDev intraday dip and sell on a 1StdDev bounce.

Classic mean reversion, but using intrinsic value we were more likely to avoid stocks that go all black swan on us. Mind you this doesnt work when shorting stocks at the peak because stocks dont trade symetrically, if you want to make money shorting you have to look at news events. I think we'd find it's rare when algo trading is devoid of any IV measure or other ballances. When it does happen it's often a glitch and usually pretty dangerous. Not sure if this is the sort of comment you wanted, it's just what comes to mind :)
 
IV, you know I'm glad that you in particular are interested because dispite all the algo trading that goes on in the markets now (particularly U.S.), intrinsic value is still how stocks are and should be valued. In fact one of our short term trading ideas was to form a list of stocks trading well below a measure of IV but instead of holding long term we'd buy on a 2StdDev intraday dip and sell on a 1StdDev bounce.

Classic mean reversion, but using intrinsic value we were more likely to avoid stocks that go all black swan on us. Mind you this doesnt work when shorting stocks at the peak because stocks dont trade symetrically, if you want to make money shorting you have to look at news events. I think we'd find it's rare when algo trading is devoid of any IV measure or other ballances. When it does happen it's often a glitch and usually pretty dangerous. Not sure if this is the sort of comment you wanted, it's just what comes to mind :)

Yes as previously said, all this is very interesting to me, because it assists in trying to work out the pyschology of the market, and the different factors in play.

I might invest, but i have to be sensitive to the pyschology of the market because i use margin debt. I cant be an ostrich.
 
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