Stock Markets Bombing!

Melissa177

Bonds are up, apparently.

Gorgeous_George

wolvoman wrote: »

I'm always amazed how so many people consider property to be the surest bet over the long term, so I did some digging.

The Halifax house index and the FTSE100 share index were both re-based (or actually based) in 1983. The house one on January 1st of that year and the stock index on December 31st of that year.

The Halifax index is now at 643.8 an increase of 543.8%.
The FTSE is now at 6200 an increase of 520%.

However the stock index excludes dividend payments which would have brought an average income of approx 3% per year plus the stock index was based 12 months after the house index.



PS. The FTSE100 in that time has one correction (1987) and one major downturn (2000-2003) whereas the housing index only has the one downturn (that of 1990-1995)

And, of course, the dividend from your house is a home (approximately equivalent to the rental value). Probably equating to 3% minimum.



GG

abaxas

Gorgeous_George wrote: »

And, of course, the dividend from your house is a home (approximately equivalent to the rental value). Probably equating to 3% minimum.



GG

What about the costs of ownership? Isnt that somewhere about 1-2% PA?

Ie fixing the roof, new kitchen etc.

Generali

Dow down on concern that retail sales are taking a knock as indebted (and bankrupt) consumers cut their spending on consumer goods. It's all about contagion.

BTL is a business not an investment. Cashflow not yield is the way to measure it.

Home ownership has intagible benefits that it is very hard to put a monetary value on.

Gorgeous_George

Spot on Generali and bettter put than my offering.

BTL should not be confused with property investment. I bought a property to let out. House price fluctuations are incidental.



GG

Alan_M_2

So would I be right in saying that the ECB doesn't actually hold any money in what I would understand as the traditional meaning of a bank?

I'm assuming they are more along the lines of a money brokerage, placing one banks money on the market (that happens to be having good cashflow) to help those that maybe don't.

Or am I being a little too simplistic?

One thing I realised some time ago is that none of these businesses play with their own money:rolleyes:

devils_advocate

Alan_M wrote: »

One thing I realised some time ago is that none of these businesses play with their own money:rolleyes:

Absolutely. It's just like sex. Why play with your own when you can play with someone else's.

Generali

Alan_M wrote: »

So would I be right in saying that the ECB doesn't actually hold any money in what I would understand as the traditional meaning of a bank?

I'm assuming they are more along the lines of a money brokerage, placing one banks money on the market (that happens to be having good cashflow) to help those that maybe don't.

To speak in general terms, a Central Bank can create money in its own currency. The Cental Bank of Furrinstanzland (the CBF) can create money by buying back bonds it has previously issued. In doing so the CBE borrows money and then creates money from thin air to pay that debt back (in the modern world of electronically held deposits it doesn't even need to buy paper and ink!).

Cashflow doesn't come into it when you can create and destroy money.

At the moment what the ECB (not to be confused with the CBF) is doing is creating money, lending it overnight or for a week to 'normal' banks in exchange for its own bonds (thus creating money) and then swapping them back again (thus destroying the money it created).

This is a pretty complicated topic and I'm really struggling to descibe it in simple terms - I'm a banker not a teacher dammit! A Central Bank has several functions: preserve the value of the currency, be lender of last resort, preserve the integrety of the financial system amongst them.

I'll see if google can turn up something helpful to y'all.

Alan_M_2

You were starting to lose me there but I get the gist of what you're saying.

I was reasonably sure somewhere along the line there was "Made up money" I've just never fully understood where this virtual money came from...you covered enough of that for me not to want to ask any more questions, certainly not if I don't want to be baffled!

Still find it all interesting though.

Generali

Hope I helped. If you want to know more then ask more or (better) get a simple economics text book out of the library. Hopefully that will be something written by someone paid to write rather than a dilletante like me.