Is property in a bubble?

chucknorris

merlingrey wrote: »

In terms of price yes, do i really need to emphasize that? you're quote mining out of context.

The context of the post you quote mined from was clearly speaking in terms of prices in the absence of yields i elaborated on that point when you brought it up for maybe the second or third time around.

Yes i know you don't get yield on those things and don't rent/lend them out, you're either being facetious or you assume me to be a few brain cells short of a jellyfish.

I mean to put it into context a house could be £250k and a can of coke could be 50 pence, if the house goes down to £225k and the can of coke goes up to 60 pence we can say that cans of coke "did better" than house prices.

That does not mean: sell your house and buy cans of coke does it?

I think it was fairly obvious when I asked:

chucknorris wrote: »

Where would the yield come from, who would I rent watches and antiques to?

That I was joking, aimed at the fact that you are ignoring yield and focusing entirely on capital value. I think that you have a very strange investment perspective, you remind me of the precious metal speculators that used to frequent the forums a while back.

merlingrey

chucknorris wrote: »

I live in the UK, do you live somewhere else?

Where are you currently invested? My (excluding my wife's investments) portfolio is:

56% Investment property
25% Shares
18% Fixed pension
1% Cash

I don't generally speak on personal issues, position or status these days, i don't see it as relevant to the arguments.

I can say with some certainty that you're probably older than me and about 10x wealthier in assets and earnings (ignoring debt, i have £0.00 debt).

And that if i was in your position i would cut 10% of the investment property to hold cash aside, and dump ALL shares and buy gold (10%) and a international corporate bond fund (15%).

1% cash means your powder isn't being kept dry.

chucknorris

merlingrey wrote: »

I don't generally speak on personal issues, position or status these days, i don't see it as relevant to the arguments.

I can say with some certainty that you're probably older than me and about 10x wealthier in assets and earnings (ignoring debt, i have £0.00 debt).

And that if i was in your position i would cut 10% of the investment property to hold cash aside, and dump ALL shares and buy gold (10%) and a international corporate bond fund (15%).

1% cash means your powder isn't being kept dry.

After reading the above it is obvious that we would never agree on investment strategy, but to answer your points:

Yeah I will be older than you, I'm 58.

I don't see my debt as a bad thing, our mortgages are about 13% LTV, but our other (non property) assets exceed the value of the mortgages, the reason we keep them is that they are low margin trackers with an average rate of only 1%.

I am slowly increasing my share investments, I will not move into corporate bonds until I am older (when my lifespan reduces to about 15 years).

I can't see the day when I would invest in gold, its just not me, I think it is for people who live in fear.

I don't want or need to hold cash for 3 reasons:

1. I want my money to work harder than it would in cash.

2. I (excluding my wife's income) have positive cashflow of about £6k per month (after all living expenses etc.), and even though the cash that I do hold is only 1% of my portfolio, it is about £35k (excluding positive cashflow) so at any time there is cash available for me to cover things that might crop up now and again.

3. My wife does hold some (more than me) cash, and if necessary I can borrow off her.

merlingrey

chucknorris wrote: »

After reading the above it is obvious that we would never agree on investment strategy, but to answer your points:

Yeah I will be older than you, I'm 58.

I don't see my debt as a bad thing, our mortgages are about 13% LTV, but our other (non property) assets exceed the value of the mortgages, the reason we keep them is that they are low margin trackers with an average rate of only 1%.

I am slowly increasing my share investments, I will not move into corporate bonds until I am older (when my lifespan reduces to about 15 years).

I can't see the day when I would invest in gold, its just not me, I think it is for people who live in fear.

I don't want or need to hold cash for 3 reasons:

1. I want my money to work harder than it would in cash.

2. I (excluding my wife's income) have positive cashflow of about £6k per month (after all living expenses etc.), and even though the cash that I do hold is only 1% of my portfolio, it is about £35k (excluding positive cashflow) so at any time there is cash available for me to cover things that might crop up now and again.

3. My wife does hold some (more than me) cash, and if necessary I can borrow off her.

Well it all sounds stable and dandy for you right at this time, its why i don't really speak on individual circumstances because everyone is in a different position, you might weather any storm while somebody else might not and its hard to speak on all the variables.

Yes gold is a fear play but it's dangerous to assume that things cant go pear shaped (it wont happen to me it just happens to other people syndrome).

I don't mean like Armageddon (i'd rather have food, guns or even suicide pills in that case) but rather situations which could be global or regional that are mostly of the governments actions or inaction's to respond appropriately.
It's insurance and like insurance you tend not to want it to pay off, but when the risks rise the insurance has to rise to cover the risk.

padington

Thrugelmir wrote: »

Nothing to do with immigration.

Largest banks in the world (for a period of time). Credit boom. Asset boom. Left with immovable debt overhang. Familiar themes.

Debt is moved nationally by devaluing currency or cutting costs and immigration is a key way you do that by importing wage deflation. So immigration is everything do with it.

chucknorris

merlingrey wrote: »

Well it all sounds stable and dandy for you right at this time, its why i don't really speak on individual circumstances because everyone is in a different position, you might weather any storm while somebody else might not and its hard to speak on all the variables.

Yes gold is a fear play but it's dangerous to assume that things cant go pear shaped (it wont happen to me it just happens to other people syndrome).

I don't mean like Armageddon (i'd rather have food, guns or even suicide pills in that case) but rather situations which could be global or regional that are mostly of the governments actions or inaction's to respond appropriately.
It's insurance and like insurance you tend not to want it to pay off, but when the risks rise the insurance has to rise to cover the risk.

I don't believe in insurance, I think it is usually bad value, but obviously I have car insurance and I also property insurance on my investment property, but I self insure our home.

padington

merlingrey wrote: »

Both corporations and governments will rely on high interest rate borrowing (sovereign and corporate bonds) to stay solvent because the risks will be rising i think, the inflation will probably be spurred on by capital shifting back towards commodities in a stagnant economy .


You might misunderstand QE

Its important you understand the "money printing" only becomes printed money if there is a willing borrower.
And im saying there wont be any willing borrowers even at current rates so they can "print" gazillions it means nothing if nobody wants or can afford it.

When rates go up the QE becomes worthless to the wider economy except to keep banks lending to each other.
How does QE and low interest rates help governments borrow and countries lend to each other? answer ...it doesn't! the final phase of this mess ultimately is when governments need the money and cant raise it through taxes so they get it through higher interest rate bonds.

Carney just 'printed' 150 billion to lend to people that want mortgages. Price of mortgages just crashed to 2.39% for a TEN YEAR fix. House sales are still going through almost as fast as they were.

What does that tell you ?

padington

merlingrey wrote: »

Both corporations and governments will rely on high interest rate borrowing (sovereign and corporate bonds) to stay solvent because the risks will be rising i think, the inflation will probably be spurred on by capital shifting back towards commodities in a stagnant economy .


You might misunderstand QE

Its important you understand the "money printing" only becomes printed money if there is a willing borrower.
And im saying there wont be any willing borrowers even at current rates so they can "print" gazillions it means nothing if nobody wants or can afford it.

When rates go up the QE becomes worthless to the wider economy except to keep banks lending to each other.
How does QE and low interest rates help governments borrow and countries lend to each other? answer ...it doesn't! the final phase of this mess ultimately is when governments need the money and cant raise it through taxes so they get it through higher interest rate bonds.

Wrong, governments are desperate to import inflation to stop deflation setting in. Low interest rates and low currencies is the way to keep the deflationary wolf from the door not high interest rates and high currencies.

Hence the trend of low interest rates, which I believe may well stay below 5% until the rise of China in 2040.

News today that one gilt has gone negative and the Market is pricing in a one in four chance of negative interest rates coming soon.

merlingrey

chucknorris wrote: »

I don't believe in insurance, I think it is usually bad value, but obviously I have car insurance and I also property insurance on my investment property, but I self insure our home.

And you pay national insurance so you don't fork out £1 million if your Heart needs a transplant or some other situation.

chucknorris

merlingrey wrote: »

And you pay national insurance so you don't fork out £1 million if your Heart needs a transplant or some other situation.

No, that's not correct, I pay NI because it is not an option not to. That said though, I may start paying for private medical care, but that is because I have recently been fed up having to wait for ultrasound scans, physiotherapy sessions and MRI's on the NH.