Forum Replies Created
Whoops, I forgot to respond to "are australian banks short of capital at the moment".
What our banks are critically short of is liquid assets. Only seven tenths of one per cent (0.7%) of all bank assets are held in truly liquid assets – RBA deposits and government securities. The remainder of what they call liquid assets are actually just loans and obligations between the various banks. If we consider the banking system as a single entity, clearly these don't add to liquidity.
http://rba.gov.au/PublicationsAndResearch/RDP/RDP2008-06.htmlBelieve me, I have very grave concerns for Australian banks. Their exposure to the real estate and other sectors of the leveraged speculator community is almost enough to leave me wearing brown pants.
Cheers, F. [cowboy2]
alani wrote:are australian banks short of capital at the moment, umm, I dont think so, is there going to be a mass influx of retirees next year? did the japanesse have superannuation systems in place??Pfft! Are you saying the primary reason the Japanese have had 15 years of stagnation and mild deflation was because they had too many retirees with too little savings?
To borrow a quote: "umm, I don't think so".
It was the bursting of their share market and housing market bubbles that crippled the banks with bad debts. Because their economy then (just as does ours today) depended upon ever increasing credit for economic 'growth', the crippling of the credit creation machine meant that 'growth' did not occur.
If you have better informed ideas, you might like to contribute to wikipedia here:
http://en.wikipedia.org/wiki/DeflationThe section on Japan fails to mention the causes of deflation you mentioned.
Here's a paper I read recently on the topic:
Japan’s deflation, problems in the financial system and monetary policy – BIS
http://www.bis.org/publ/work188.pdf?noframes=1I notice that there is not one single mention of the word "superannuation" in their explanation. Nor "retiree", nor "retirement", nor "aging", nor "demographic".
Here's another paper from the US Federal Reserve:
Preventing Deflation: Lessons from Japan’s Experience in the 1990s
http://www.federalreserve.gov/pubs/ifdp/2002/729/ifdp729.pdfAgain, no mention of those words. It seems to be all about bubbles bursting in real estate and share markets, unsustainable debt to gdp, non-performing loans, ZIRP etcetera…
Sure, Japan was and is different to Australia. They have Gojira, and we don't. (But then again we have Kevin Bloody Wilson and they don't!) We could all name a thousand differences if we set our minds to it. But the similarities in terms of bubbles, credit addiction, malinvestment and monetary policy effectiveness are the only important bits in that they are the driving force behind Japan's 'lost decade' (which is stretching now towards a 'lost generation').
Don't forget that things in Japan aren't so bad. Their unemployment rate is lower than ours:
Wages in Japan are pretty much in line with ours. Such stagnation an mild deflation of course would prove disasterous for the leveraged speculator community, and the banks would hate it like hell, but for ordinary people? Not so bad.I actually have a half-developed, half-arsed thesis that holds this kind of economic stagnation to be the final destination of all fiat-based economies. Far from being an abnormal state, it may just be that this is the mythical 'equilibrium', reached only after the powers of central banks to encourage eternal credit-money creation and inflation has collapsed (all CBs are on the path to ZIRP).
Cheers, F. [cowboy2]
crashy wrote:foundation wrote:You clearly haven't been keeping your eye on the inflation figures that are coming through.it's this kind of arrogant, aggressive, argumentative know-it-all attitude that really pisses people off.
give it a rest
I think I've been very measured in response to the provocation, aggression and outright lies from yourself and your buddy harb?
Did you see the TD Securities survey?
I guess not.
Cheers, F. [cowboy2]
harb wrote:At the current rate the return on cash is going to be falling below the inflation rate before X-mas.You clearly haven't been keeping your eye on the inflation figures that are coming through.
Quote:Your 'risk free investment portfolio' is soon going to become a 'return free investment portfolio'Return free in dollar terms is fine. It will continue rising in purchasing power compared to real estate.
Cheers, F.[cowboy2]
harb wrote:foundation wrote:Flash, I bought a few dozen bullion-grade fine silver one ounce coins over 2004 & 2005. Also some Unc Australian Mint silver coins ranging from an ounce up to a couple of 10oz'ers. All bought when silver spot was less than US$7. None for more than AU$10.50. Currently up around 66%.Which I'm sure you've already sold back in March, none of it for less then $20. It was at that point that you foresaw the interest rates falling below 5% before Christmas and decided to move everything in a term deposit at 9% pa, or did you manage to get 10% ? You're a legend mate, I don't know how you do it.
Your sarcasm is noted. You are clearly (and flagrantly falsely) implying that the details I have given of my previous investment decisions are based on post-hoc fitting to best investments. I have provided plenty of evidence that your suggestion is false, that I did in fact make the investments when, and in what, I stated. I ask you politely to refrain from inferring otherwise.
I haven't sold any precious metal. I don't intend to ever do so unless somebody offers me an insane amount of money. I intend to increase my holdings over time, but haven't bought anything since the beginning of 2006 (as per my earlier post). I certainly did buy in 2004 and 2005 though. Here's another bit of proof that I was long my preciousness in June 2005:
foundation wrote:And people think I'm silly for hoarding precious metals instead of buying houses!
<snip>
Slightly on topic – how to benefit from high oil prices? In the short to medium term some oil exploration companies should do well, but the smaller ones will be a loser in years to come as oil reserves dwindle. For long term growth I'd expect the biggest oil/energy companies to be best placed to develop or embrace alternative fuel technology. Anyone with a stake in uranium reserves should be a winner, and of course biofuel and sugar will provide alternatives to petrol. (And don't forget that a bit of gold and silver will be nice to hold when the Americans are forced to face the reality of their excesses!)https://www.propertyinvesting.com/forums/property-investing/general-property/18228
Cheers, F. [cowboy2]
crashy wrote:Im confused here. you quote an old post that is supposed to prove that you DONT post late trades, but all you have done is provide another example of you doing just that. anyone can say "oh I did this back then and it's gone up, arent I clever?"hows that for googling your old posts?
That's not an example of your google prowess. I merely showed that you were being wrong and making an arse of yourself. I wasn't trying to paint myself as anything, only to set the record straight after your multiple attempts to rewrite history and paint me as a liar. What is it with you? Are you naturally and unavoidably this aggressive?
Shares
I showed you that in August 2007 (prior to the November 1 2007 high of 6853), I'd already sold out all my direct share holdings. This was in response to your completely incorrect claim that I "didnt say anything at the time" and was therefore (sarcastic jibe) "a fully qualified hindsight genius". I'm sure I can come up with posts from the end of 2006 or early 2007 that confirm that I both sold all my shares and talked about it at the time. But by August 2007, plenty of people thought I had made a poor decision. I'm still happy knowing that I bought at good value then sold when it was clear that they were overvalued. Now I'm buying at the best value that's been available ever in my life. I'm not trying to time the market with precision, merely play off the natural tendency of people to irrationally price the bull market too high and irrationally price the bear market too low.
Bullion
I provided evidence that I bought my precious prior to July 2006. Regardless of whether you believe I'd bought my gold and silver before that date or merely on that date and back-dated my purchase to make me look clever (this seems to be what you are implying), gold is currently AU$1,100 at spot and silver at AU$15 spot. Both well up on prices from July 2006. I really don't care what you think about me. I'm pretty happy with my investment choices to date. But I think you really do discredit yourself by making patently false claims about me. Here's another quote from 2005 (when I was actively buying gold):Quote:why not stash your cash in a high interest account (alternatively buy a couple of gold sovereigns), and spend your spare time reading.https://www.propertyinvesting.com/forum/topic/19819.html
Note the wink? I try very hard not to give investment advice. I've always said I'm happy to tell people what I'm investing in, but not to advise them. It's notable that nobody took me up on my offer:
Quote:Come on down to my beach shack for a weekend, bring a slab of beer (preferably J.Squire or Coopers) and your $290 will get you two days of one-on-one econo-chat, market discussion and a healthy dose of logic thrown in for free.Cheers, F. [cowboy2]
crashy wrote:"Other investments include gold and silver purchased in 2004-2006"
again, said nothing at the time.
You're making a fool of yourself again crashy! Check this post (there are plenty of other examples here too) from July 7, 2006:
foundation wrote:Flash, I bought a few dozen bullion-grade fine silver one ounce coins over 2004 & 2005. Also some Unc Australian Mint silver coins ranging from an ounce up to a couple of 10oz'ers. All bought when silver spot was less than US$7. None for more than AU$10.50. Currently up around 66%. I also bought gold coins during '04/'05. 1/10th, 1/4, 1/2th oz Maples mostly plus a couple of handfuls of Australian sovereigns, half sovereigns, a couple of 1/4oz Panda, and my fave – a mongolian 1oz decorated with cartoon-style chickens. My cheapest oz was IIRC AU$511, and my most expensive was $600. Currently up around 48%. So I'm hardly a stranger to such 'alternative' investments. If you searched for some of my older posts you'd find references to this. I'm happy to talk about what I'm doing, but you won't get anything out of me that could be considered investment advice.https://www.propertyinvesting.com/forum/topic/24432.html
I still stand by my original thesis from that thread, "Australia's Debt Mountain – Why house prices cannot double by 2016"
Quote:As the DOW has plunged the last few days, lets wait for F to come out and tell us he sold Weds at the top.That's absurd! You clearly don't understand investment!
I hope prices do not rise. I would prefer they fall lower. I am an investor not a speculator! I would prefer to continue to accumulate assets at 15% to 20% net yields for the next ten or twenty years (or longer) than see the much smaller asset base I currently hold rise quickly. That would mean I couldn't buy more at the current very good values! I'll point out though, that I'm investing slowly into shares that are well managed, have little (preferably zero) debt, produce goods for which there is low demand elasticity etcetera, and currently hold the bulk of my investments in cash.
Quote:Im curious though, if you are such an investing expert, why is it you hold precious metals in a period where you expect massive deflation?I'm not an investing expert. But to ignore the jibes and answer the question, it's because they're pretty. And shiny. And heavy. But mostly pretty.
And because they are a store of real value, of real wealth (as they are the product of effort+energy and scarce) whereas paper money is intrinsically worthless. So my aim is to over the long term hold 10% of my assets in precious metals. As I said earlier, I'm all for holding real assets. Sure, in a general deflation their dollar value would fall and their income/yield would fall, but they would maintain their real value over time. But I wouldn't for a second consider borrowing money to buy real assets.
I'll happily admit that there is a slim chance that the deflation will be temporary and not become entrenched as it did in Japan. In that case it would possibly be followed by a period of high inflation. If signs point to that outcome, I'll change tack. But if not, I'll keep doing what I do.
Cheers, F. [cowboy2]
L.A Aussie wrote:foundation wrote:And no, even if mortgage rates fell to 5%, I would not be borrowing money to buy real estate…
If the property was pos geared, and you were looking to buy and hold long term, why wouldn't you?
Because I fully expect a decade of deflation, ala Japan. And because of this, I have structured my investments to deal with this as the most likely outcome, but also to be flexible, liquid and able to respond to completely the opposite scenario.
I expect property prices to fall and fall hard over coming years. No amount of positive gearing would make up for falling prices. I expect very few if any areas to be protected. Meanwhile, deflation will raise the absolute value of outstanding loans. That is why I said "I would not be borrowing money to buy real estate". Nothing wrong with buying outright, I just wouldn't do it with a loan.
Now my cash (which is where my sharemarket dollars went after I sold all my direct shares in December 2007, plus savings since then, plus the cash which I already had saved) more than doubled in purchasing power over the last 12 months compared to the shares I'm now buying. Level 2 investor indeed! My superannuation went up almost 6% over the last 12 months because it was invested largely in cash! My remaining cash fund has increased its purchasing power relative to real estate in my area by over 20% in the last 3 months…
Don't knock the cash. There is a time where cash truly is king.
Other investments include gold and silver purchased in 2004-2006, two houses – fully paid off – plus an option arrangement on a bit of absolute beach-front land, shares bought in the last couple of months (bought at fantastic value, with recession-resistant earnings from a $10k purchase that make that $25/wk positively geared property you speak of look pretty lame).
Quote:That doesn't mean it's not a good time to buy a good opportunity now – shares or property.Agreed! So which to buy? I'd choose a 10x P/E (after all expenses) over a 25x P/E (gross, before expenses) any day!
I fully expect the average P/E on a 3br house to return to the 10x to 15x earnings range, and not through higher rents.
Cheers, F. [cowboy2]
crashy wrote:the only thing that excites (F)wit is "oooo goody, another opportunity to make crashy look stoopid"
Why would I need to? You seem so well adapted at achieving that outcome for yourself!
Hint: Name-calling is childish.
Cheers, F. [cowboy2]
Harb: For what it's worth I expect the RBA to cut the OCR well below the record low of 4.25% it hit in 2001. Well below. However, this expectation is based on an outlook that features rather nasty economic conditions. My investments are structured to deal with these developments. And no, even if mortgage rates fell to 5%, I would not be borrowing money to buy real estate…
harb wrote:foundation wrote:Huh? This only takes interest rates back to where they were last November.Where is the latest cut taking us back to, 5 years ago ? Wait another month and it 'll be back to 7 years ago.
How is your landlord doing, could you say hello from me and ask him if he wouldn't mind passing that rate cut to you so your rent go back to what you were paying 5 years ago. I'm sure he'll agree to it.I'm sure you have me confused with somebody else. I'm a (multiple) property owner, not a renter.
The latest cut takes the SVR back to August 2006 level according to the RBA measure for September (9.35%) minus the full amount of the RBA cut in October (1.0%) minis the amount the banks have pledged to pass on from the latest cut (0.6%). That is, SVR should be 7.75% versus 7.80% from August 2006… not quite sure where you got 5 years from? In November 2003 (that's 5 years ago, y'know
), the SVR was 6.80%.Cheers, F. [cowboy2]
), and spend your spare time reading.
), the SVR was 6.80%.
