The End of the Beginning - GS or BS?

chucky

banks making a profit - GS paying back bail out funds.

UK banks will probably be doing the same - it can only be a good thing.

Generali

chucky wrote: »

banks making a profit - GS paying back bail out funds.

UK banks will probably be doing the same - it can only be a good thing.

The GS thing is good news. Having said that of course, Central Banks have made things so massively easy for the banks to make money that on an operating level it's almost inconceivable they could make a loss!

The next problem for them will be another wave of bad debts as the recession causes repos and other defaults to rise.

There are certainly pieces of good news coming through but we're not out of the mire yet.

chucky

Generali wrote: »

The GS thing is good news. Having said that of course, Central Banks have made things so massively easy for the banks to make money that on an operating level it's almost inconceivable they could make a loss!

The next problem for them will be another wave of bad debts as the recession causes repos and other defaults to rise.

There are certainly pieces of good news coming through but we're not out of the mire yet.

agree - there will be a few more ups and downs before it's all over.

even when we're at the end we probably won't even realise and assume it's another positive period expecting some bad news again.

lostinrates

chucky wrote: »

agree - there will be a few more ups and downs before it's all over.

even when we're at the end we probably won't even realise and assume it's another positive period expecting some bad news again.

I wholeheartedly agree with this. Its for that reason I think before going ahead with purchases, and we have to keep living, people such as FTB of houses should be sure they are not over borrowing, that they have a good fall back in place, like payment protection, and they should buy wisely.

We can't stop living, but we can live wisely.

drc

Generali wrote: »

I'm not saying everything's going to be fine now or even in 18 months but there appear to be signs of life in some of the darker corners of the debt markets.

Of course that's not necessarily great news for people looking at house prices to rise as interest rates will clearly rise rapidly from here if/when debt markets normalise (and by normalise I don't mean like 2005-7).

Is it possible for the markets to recover whilst at the same time house prices dropping? Are they mutually exclusive?

chucky

drc wrote: »

Is it possible for the markets to recover whilst at the same time house prices dropping? Are they mutually exclusive?

i wouldn't have thought so - most equities are probably foreign owned companies anyway.

there is some correlation but not a huge amount.

over on hpc.co.uk and moneyweek.com they seem to think it is but can't see how.

Generali

drc wrote: »

Is it possible for the markets to recover whilst at the same time house prices dropping?

If by markets you mean stock markets then absolutely it is. You have 2 different asset classes driven by different things. A good example would be the dot com bust when equity prices fell while house prices continued to rise.

On 1st Sept 2000, FTSE was at 6795.01, Nationwide average house price was £80,672 for Sept 2000.

31st Jan 2003 the FTSE was at 3567.41 - a drop of 47.5%. In Jan 2003 the average house price was £117,905, an increase of 46%.

chucky

Generali wrote: »

If by markets you mean stock markets then absolutely it is. You have 2 different asset classes driven by different things. A good example would be the dot com bust when equity prices fell while house prices continued to rise.

On 1st Sept 2000, FTSE was at 6795.01, Nationwide average house price was £80,672 for Sept 2000.

31st Jan 2003 the FTSE was at 3567.41 - a drop of 47.5%. In Jan 2003 the average house price was £117,905, an increase of 46%.

you can't dispute these numbers, thank you for pointing it out.
should have done some research.

the FTSE being so industry diversified, how could prices be linked apart from sentiment?

Thrugelmir

Generali wrote: »

If by markets you mean stock markets then absolutely it is. You have 2 different asset classes driven by different things. A good example would be the dot com bust when equity prices fell while house prices continued to rise.

On 1st Sept 2000, FTSE was at 6795.01, Nationwide average house price was £80,672 for Sept 2000.

31st Jan 2003 the FTSE was at 3567.41 - a drop of 47.5%. In Jan 2003 the average house price was £117,905, an increase of 46%.

Over the past 5 years shares with dividends reinvested have outperformed residential property as an investment. What stands out is the 10 year performance figures since 1999 where property has outperformed shares by a huge margin. Yet another indication of the the extent to which property became a bubble.

Generali

chucky wrote: »

you can't dispute these numbers, thank you for pointing it out.
should have done some research.

the FTSE being so industry diversified, how could prices be linked apart from sentiment?

They have different drivers. House prices in the UK seem to be about price and availability of money. British people will drive house prices up whenever they're given enough rope!

Stocks are driven by sentiment, relative returns between different asset classes and cash flowing into the markets (which in turn is driven by many other things such as pension fund rules).

All IMO of course.

PS Google Maps thingy:

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