Hi MW,
Have you read "The Big Short" by Michael Lewis? It is an absolutely fascinating account about the guys who went against the herd. The psychological strains on Paulson and Burry were intense as they waited for their bets to come right.
Cheers
Lol
The true special person is the one who runs with the herd, and turns before the edge of the cliff, which is why over the last couple of years I was always asking A/Prof when he thought it was going to end. If I could have my time over again, THIS is what I would be trying to learn, is the psychology around the herd mentality of investing, and how to spot the initial turning points with greater accuracy (as most people who have been investing successfully for at least 15-20 years can probably see some signs earlier than the people whose money they will be receiving)
MW
Hi Tech/A,
Do you think it was a once in a lifetime opportunity for your generation?
Cheers
Just rememberr the signs for when it happens again in our lifetime.
I'll be too old to give a damn but you younger ones may well get on it!
If you accept the premise that the rise in house prices since 2002 was driven primarily by a large rise in household debt facilitated by loose lending standards by banks competing for market share then yes, the party ended about 2 years ago now.
Now that the end of massive intervention by central banks to keep interest rates artifically low is winding down, it's seems quite likely that there will be downward pressure on house prices from here. The RBA lowering interest rates may cushsion the market for a time but there is clearly a reluctance to lower rates much further.
I started buying in 1995
Why?
I could finance 100%
I could be positively geared immediately
I was buying 4 bed homes for $97K
$280/ week rent and Interest only at 6.5%
Just kept buying while the bank supplied the money.
Still hold 4 properties all freeholded from the initial
buys.
Now supplying passive income. (Which is my
primary investment goal).
Just showing how I recognised opportunity.
Not that hard!
Where can a retail 'investor' buy these Sydney Airport bonds?
fiig allow you to purchase them - they break them down from the 500K tranches you normally have to buy
they even started allowing you to buy in 10K lots instead of 50K
not sure if other companies provide a similar service.
i used them to buy an Envestra 2025 ILB that yields me 3.4% + CPI and has had capital growth of ~3% since December.
I've said in previous threads that a combination of ILB and IAB with some floating rate or fixed interest thrown in can provide quite good income streams at relatively low risk.
Southern Cross Airports Corporation Pty Ltd 2030 ILB currently offers a yield of 7.25% (CPI at 2.5%) and the 2020 ILB around 6.85%, with Envestra still offering 6.45%
I'm seriously considering selling out of more equities, but am already around 60% bonds / hybrids in my SMSF, but at the above kinds of yields am thinking I can live with those kinds of returns for the next 7 to 17 years
San Francisco’s Million Dollar Homes Spur Condo Surge
San Francisco’s median house price is poised to surpass $1 million this year after setting a record in May, the California Association of Realtors estimates. The county is the only one in the state with values to set a new high, said Leslie Appleton-Young, chief economist for the group. A limited supply of houses available for sale has allowed condo developers to step in and lure frustrated buyers such as Boortz.
The San Francisco area had the biggest gain in home prices among 20 U.S. cities in the S&P/Case-Shiller index, according to data released yesterday. Single-family house prices in April jumped 24 percent from a year earlier, compared with gains of 12 percent of the broader gauge, which was still the biggest advance in more than seven years.
The median price for a single-family home sold in the city was $947,260 in May, up 2.7 percent from April and 32 percent from a year earlier, according to the state Realtors group. It topped the $932,350 record set in 2007. Surpassing $1 million “certainly looks like it’s going to happen,” said Los Angeles-based Appleton-Young.
Seems like the RBA is getting its wish on inflating the housing bubble yet again with artificially low interest rates.
Sarcasm? Surely you don't actually think that that's the reason for lowering interest rates...
In any case I believe that waiting for the property prices in Australia to come crashing down is a big mistake.
Any slow down or correction will be a buying opportunity for the many that are seething about the fact that they did not buy many more in their younger years and instead wasted their money on holidays and coffee.
The best time to buy property is and always will be now.
One of the stated aims of lower interest rates has been to move growth from the resource sector back to housing and retail.
Would you like to put up some financial statics to compare buying versus renting and investing the difference?
rental yields are still lower than mortgage interest rates. Factor in buying and selling costs, maintenance and holding costs, and it's clear from a financial point that renting is far cheaper than buying. If you've decided to never buy a house and don't mind salary sacrificing some of the difference between renting and buying then you've got a nice low taxed way to save for retirement.
Factor in most people can afford to rent a lot closer to where they work than they can buy, and you win on the lower commute times. I worked with a guy who finally gave in to his GFs nagging to buy a house. They "emigrated" from St Leonards to the NSW Central coast as that had property in their price range (partly life style too since he liked to take his tinny our fishing). His commute time went from 20 min door to door drive to 1.5 hours of drive train and walk, along with the regular train delays and cancellations he had to put up with.
So I say while property investors are ready to subisdise rent people might as well take advantage of it
Which suburb are you in?
I don't think the RBA is trying to 'inflate house prices' fwiw.
Part of the process for lower interest rates is to inflate asset prices, and let the wealth effect encourage people to spend more.
Seems like the RBA is getting its wish on inflating the housing bubble yet again with artificially low interest rates.
Sounds a bit more sensible with the key word there being "part" and also not pointing directly to housing...
A far cry from
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