Does the FTSE reflect the house market

ad9898_3

!!!!!!? wrote: »

I think the first signs of inflation will be in stocks and oil.

Oil is the concern here, we were stuck at 86.5 million barrels (total liquids) per day for over a year, even when we were at a record $147 a barrel, no more could be pumped, I pretty certain we saw a glimpse of peak oil before the banking crisis hit.

Oil is the sleeping giant at the moment, lack of demand as the global recession hits has sent the price off a cliff. Look for it to hit the stratosphere as soon as there is even a sniff of an upturn.

sabretoothtigger

Cannon_Fodder wrote: »

There was a FTSE crash around 2000, no similar house market dip/recovery afaik....

There was a general decline starting then but no crash, some banking stocks even rose over that year and the next

In answer to the OP I would say no but companies which fund the housing market are
effected by big falls in the market. ie. one day of ftse doesnt matter, one month or quarter does





2000 saw a drop of 10% in the ftse. 2001 was 20% fall and the year after before bouncing back 20% in 2003

Compare that to now, we're seeing 20% swings every month or weeks even. 10% fall on one day is a crash and we often see something like that, today was 9% rise

Generali

ad9898 wrote: »

Oil is the concern here, we were stuck at 86.5 million barrels (total liquids) per day for over a year, even when we were at a record $147 a barrel, no more could be pumped, I pretty certain we saw a glimpse of peak oil before the banking crisis hit.

Oil is the sleeping giant at the moment, lack of demand as the global recession hits has sent the price off a cliff. Look for it to hit the stratosphere as soon as there is even a sniff of an upturn.

Apparently peak phosphate is the panic du jour for the modern tin hat wearing cognoscenti. It's going to 'run out' in about 25 years at which point we all starve.

Swans1912

ad9898 wrote: »

Oil is the concern here, we were stuck at 86.5 million barrels (total liquids) per day for over a year, even when we were at a record $147 a barrel, no more could be pumped, I pretty certain we saw a glimpse of peak oil before the banking crisis hit.

Seems like we were 'lucky' that the banking crisis hit - otherwise the price of oil would have continued to climb!

It is a VERY interesting time!

sabretoothtigger

The price was only justified if growth predictions were correct for global demand, we didnt need a crisis but it made things obvious.
Theres still a good long term argument for finding alternatives

Generali

Oh yes, about the FTSE. I reckon there are a lot of value traps out there and the risks are to the downside. IIRC, one of the rationales behind the whole BTL things was that house prices and stock prices aren't correlated. Anecdotally that sounds about right, eg big falls in stock price in 1987 and 2001-3 when house prices were rising strongly.

Perhaps house prices are linked to peoples' current feelings about the economy today whereas stock prices reflect future concerns.

StevieJ

Generali wrote: »

Oh yes, about the FTSE. I reckon there are a lot of value traps out there and the risks are to the downside. IIRC, one of the rationales behind the whole BTL things was that house prices and stock prices aren't correlated. Anecdotally that sounds about right, eg big falls in stock price in 1987 and 2001-3 when house prices were rising strongly.

Perhaps house prices are linked to peoples' current feelings about the economy today whereas stock prices reflect future concerns.

I used to believe that they were independent, this time I think the problems they are both experiencing have a common source.

Generali

StevieJ wrote: »

I used to believe that they were independent, this time I think the problems they are both experiencing have a common source.

Perfectly true. There was plenty of borrowed money in equities and there certainly is in housing. However my feeling is that only the froth has gone from the housing market and that the real falls are to come thanks to all those people whose retirement income isn't funded.

StevieJ

Generali wrote: »

Perfectly true. There was plenty of borrowed money in equities and there certainly is in housing. However my feeling is that only the froth has gone from the housing market and that the real falls are to come thanks to all those people whose retirement income isn't funded.

How long is that gonna take
With regards to credit, I wasn't talking about leveraged equities, I was more referring to companies access to credit.

beingjdc

It entirely depends what they put in the FTSE. At the moment, it's got a lot of banks in. So yeah, if it went up, that might indicate that times were better for banks, etc. If the next time they rejig it it ends up with a load of oil and gas companies, then the FTSE going up would actually mean harder times for most potential housebuyers, so falling prices (except in Aberdeen, yes)