Which one do you use? Technical or fundamental analysis?

[cuttlefish]

Re: Which one do you use? Technical or fundamental analysis

Well, I can't see a capitulation happening in the near future.

I wouldn't discount the possibility. Ever seen a credit squeeze combined with a sharp economic downturn?

 

[Realist]

Re: Which one do you use? Technical or fundamental analysis

What do you perceive as fair value... how would you quantify that?

Well I just work it out for myself for my situation .. Something like:

Say the average house price in the suburb I liked was $500,000 and rents for an equivalent place were $400 a week. And I have a $100,000 deposit.

So my mortgage (just interest) would be about $30,000 a year.
or my rent would be $20,000 a year.

Owning has other expenses that renting doesn't, insurance, body corporate, rates etc. say $5000 a year.

(Much higher for investors though - stamp duty for one. But Negative gearing can offset that.)

And having say a $100,000 deposit invested would get me about $10,000 a year after tax.

So I'd have to make up about $25,000 or a 5% increase on the house for it to be worthwhile buying.

Now, if I buy and my house went down - I'm screwed I lose alot of money. If I don't buy and it goes up 10% - well I missed the boat a bit but my deposit is growing as well. No great loss.

The house would really need to go up by more than 10% for me to lose much.

How do I know how much they'll go up? Gut feel, recent history, comparative cities, average earnings, economy situation, tax rates, interest rates. Many many factors.

My belief is when interest rates are high that is the time to buy! Because it weeds out punters and investors and when they go down your payments are easier to make.

 

[wayneL]

Re: Which one do you use? Technical or fundamental analysis

If you're a hard core counter cyclical you wouldn't buy property until it was neutrally or positively geared. And let me laugh when someone pipes up and say's that couldn't happen in the Sydney market ... they'd be the same ones that five years ago were saying property never goes down.

That being said, there's always that old saying - "whens the best time to buy property? .... now!". And the expression 'safe as houses' didn't come about for nothing either lol

I've always observed the mean gross yield and would consider that, along with the wages/house price ratio as an indicator of value.

We are still at greater than 2 sigma from the mean by both measures

Ever seen a credit squeeze combined with a sharp economic downturn?
Today 06:49 PM

The younger generation has never seen that... this may be about to change

 

[wayneL]

Re: Which one do you use? Technical or fundamental analysis

Well I just work it out for myself for my situation .. Something like:

Say the average house price in the suburb I liked was $500,000 and rents for an equivalent place were $400 a week. And I have a $100,000 deposit.

So my mortgage (just interest) would be about $30,000 a year.
or my rent would be $20,000 a year.

Owning has other expenses that renting doesn't, insurance, body corporate, rates etc. say $5000 a year.

(Much higher for investors though - stamp duty for one. But Negative gearing can offset that.)

And having say a $100,000 deposit invested would get me about $10,000 a year after tax.

So I'd have to make up about $25,000 or a 5% increase on the house for it to be worthwhile buying.

Now, if I buy and my house went down - I'm screwed I lose alot of money. If I don't buy and it goes up 10% - well I missed the boat a bit but my deposit is growing as well. No great loss.

The house would really need to go up by more than 10% for me to lose much.

How do I know how much they'll go up? Gut feel, recent history, comparative cities, average earnings, economy situation, tax rates, interest rates. Many many factors.

My belief is when interest rates are high that is the time to buy! Because it weeds out punters and investors and when they go down your payments are easier to make.

You are valuing the house more on a speculative than fundamental basis IMO.

Where's Ben Graham stand on perhaps the biggest purchase in your life?

"Value is a matter of opinion, whereas debt is real"
Mervin King - Governor, BoE

 

[Realist]

Re: Which one do you use? Technical or fundamental analysis

The younger generation has never seen that... this may be about to change

Well longterm houses will always go up, just like the sharemarket will. Just like the sun will rise tmorrow. (I know Snake will disagree of course ).

But that of course does not mean there are not optimal times to buy and sell.

3 years ago in Sydney it was obvious you do not buy.

Right now seems about middle ground to me. You wont go horribly wrong buying or not buying.

The question is will they ever be "undervalued" - in which case I'd mortgage myself to the hilt and buy 2 of course.

I'm not sure Sydney house prices will ever be undervalued again in the near future.

Ben Graham would not buy one if he lived here. He only buys at a discount.

Buffet on the other hand would buy one. He'd make sure he does not pay too much for it of course, and it would be in a great suburb and truly solid house and he'd find an uncanny place which is about to magically get seaviews because some other building is being pulled down or something.

I'm not sure Buffet would buy now, but next year he may. Graham would wait and wait.

Ultimately Graham would get the best bargain, but Buffet would have the best house.

 

[Realist]

Re: Which one do you use? Technical or fundamental analysis

You are valuing the house more on a speculative than fundamental basis IMO.

The amusing thing is I would look at a chart of house prices.*

And you would wait till they are at a great discount compared to their true value!!

Ohh man, we've swapped identities..


*I'd look to see significant and constant recent price rises and use them as an indication of weakness though - not the other way around. I wouldn't buy cause everyone else was buying. I'll be buying when everyone else is selling.

 

[wayneL]

Re: Which one do you use? Technical or fundamental analysis

I'll be buying when everyone else is selling.

Well you ain't seen nuttin' yet.

 

[Julia]

Re: Which one do you use? Technical or fundamental analysis

Gee that reminds me about the old fart who won millions in lotto some years back.
He was freaking out about how it would affect his pension

Bob.

Yes, Bobby, just like the housewife who was interviewed on TV a few years ago with a house full of TV sets, I think about a dozen. She had bought them because each purchase of a TV set put her in the draw to win $100 worth of groceries!!!

Julia

 

[Realist]

Re: Which one do you use? Technical or fundamental analysis

Well you ain't seen nuttin' yet.

I hope you are right Wayne, I am an extremely patient investor. I waited and waited and will continue to do so before buying, my deposit is ever growing.

A crash would suit me fine.

But I'll try and do a Buffet not a Graham, I will buy a really nice place for a good price. I wont wait forever to get an absolute bargain - I may miss the boat if I do.

I think you are better off buying a great place at a good price, than a good place at a great price.

 

[wayneL]

Re: Which one do you use? Technical or fundamental analysis

But I'll try and do a Buffet not a Graham, I will buy a really nice place for a good price. I wont wait forever to get an absolute bargain - I may miss the boat if I do.

I think you are better off buying a great place at a good price, than a good place at a great price.

That seems sensible enough. There are other considerations with home ownership other than the purely mercantile aspects.

"A Wonderful Home at a Fair Price"? :

 

[Realist]

Re: Which one do you use? Technical or fundamental analysis

Yeah it depends if you are buying a house or a home.

Money is not everything in life.

As someone (maybe Kennas??) said "it's no fun driving around in a porsche as an old lonely man"

Life needs to be balanced. Money is important and you need to treat your investments carefully. But you need to live also, enjoy your money, money is a means to an end - make sure you have an end - a nice house, nice family and friends, go on holidays, do things, enjoy yourself.

Waiting forever to get the perfect bargain on a house is not wise. Buy a great house for a good price and enjoy it. Who cares if it goes down a little, in the whole scheme of things a few thousand here and there is irrelevant.

 

[mit]

Re: Which one do you use? Technical or fundamental analysis

If an investor and trader are buying the same stocks then it is actually the investor who takes more risk.

I just don't see any reason why you'd want to buy CBA to be honest.




What the?

You borrow $100,000. Buy CBA shares at about $44 and make $3.50 after taxes etc. So an 8% return. But your loan costs you 8% p/a to pay.

How do you make any money?

Interest on six months so 4% and it comes off before tax on the original 15% so 11% or 5.5% after tax. Remember this is leverage. As CBA has a relatively low volatility you could use CFDs at a reasonably high leverage (say 80%). So on the capital invested you make 22% in six months only capturing half of the trend. So not a bad return for a boring stock.

But any way that's imaginary. I just checked my records I have bought CBA twice. The first time in Jan/February for a 10% move (30% after leverage) over 35 days and hold it currently since 26th Jun for 3.5% so far (10% after leverage). This is before tax but I get a lot of dividends and thus franking credits. This includes franking credits on stocks I lost money on but held for dividend.

MIT

MIT

 

[It's Snake Pliskin]

Re: Which one do you use? Technical or fundamental analysis

Well longterm houses will always go up, just like the sharemarket will. Just like the sun will rise tmorrow. (I know Snake will disagree of course ).

What do you mean by that? Actually,property can go the other way permenately, depending on location of course.

What are longterm houses? Property is property.

But that of course does not mean there are not optimal times to buy and sell.

3 years ago in Sydney it was obvious you do not buy.

Right now seems about middle ground to me. You wont go horribly wrong buying or not buying.

The question is will they ever be "undervalued" - in which case I'd mortgage myself to the hilt and buy 2 of course.

Houses are valued not undervalued. They have a value that is represented by a valuation by a property valuer. If a house is for sale at a lower price than its true valuation, then that is undervalued, but no fool would do that especially if in the hands of an agent. So we tend talk about its value or it being valued.

I'm not sure Sydney house prices will ever be undervalued again in the near future.

A houses` value is its value.

Ben Graham would not buy one if he lived here. He only buys at a discount.

Then he would be dissapointed because a property`s value is its value.

Buffet on the other hand would buy one. He'd make sure he does not pay too much for it of course, and it would be in a great suburb and truly solid house and he'd find an uncanny place which is about to magically get seaviews because some other building is being pulled down or something.

Did he tell you this?

I'm not sure Buffet would buy now, but next year he may. Graham would wait and wait.

Ultimately Graham would get the best bargain, but Buffet would have the best house.

So Buffett is an asthetic kind of guy, and Graham is a tight ****? Is that what you are saying?

I don`t see the similarities between property and stocks.

 

[It's Snake Pliskin]

Re: Which one do you use? Technical or fundamental analysis

Money is not everything in life.

As someone (maybe Kennas??) said "it's no fun driving around in a porsche as an old lonely man"

Especially if you have your hand on the wrong gear stick!

 

[It's Snake Pliskin]

Re: Which one do you use? Technical or fundamental analysis

 

[wayneL]

Re: Which one do you use? Technical or fundamental analysis

Especially if you have your hand on the wrong gear stick!

:

 

[Realist]

Re: Which one do you use? Technical or fundamental analysis

Houses are valued not undervalued. They have a value that is represented by a valuation by a property valuer. If a house is for sale at a lower price than its true valuation, then that is undervalued, but no fool would do that especially if in the hands of an agent. So we tend talk about its value or it being valued.
.

So you are trying to tell me that no-one has ever sold a house for less than it is worth?



When interest rates go up, unemployment rises, oil soars - there'll be people mortgaged to the hilt that have to sell, they simply can't afford the mortgage. That's when you'll get a house for less than it is truly worth.

Hence houses will be undervalued compared to their true value.

 

[tech/a]

Re: Which one do you use? Technical or fundamental analysis

God now he's a Housing Expert.

Ive never read so much verbal diarrheoa on Trading and Property Investment in the 52 yrs Ive been on this planet.

 

[Realist]

Re: Which one do you use? Technical or fundamental analysis

God now he's a Housing Expert.

Ive never read so much verbal diarrheoa on Trading and Property Investment in the 52 yrs Ive been on this planet.

Please tell us oh wise one what you think the Sydney property market will do over the next 2 years.

 

[tech/a]

Re: Which one do you use? Technical or fundamental analysis

I'll leave that to the expert----Your only interested in your own voice not that of any other.
Regardless of what would be presented you would and do take a counter veiw.

There are some knowledgable people here who just dont bother to become involved.
Some have attempted most including myself dont even bother.

Whats the point??