List Why Property Beats Shares

Crashy,

Understand you views and fair enough. I suppose I was just quite surprised to see someone on this forum whom was so critical of property.

I must admit that Dolf De Roos book “Real Estate Riches” provided the motivation for me to enter the property market, but I am unsure if he has any qualifications in accounting or financial planning.

Cheers,

Battz

crashy, just checked your web-site.

good luck to you.

but like battz said if you are so critical or property, what are you doing on a propertyinvesting.com forum??

As far as this goes,

“There are many false guru’s out there. The recent property boom has seen a flood of would-be ‘experts’ charging thousands of dollars to attend a seminar. These people have no formal qualifications, and usually everything they say is a lie. They try to impress you with pictures of flash cars and stories of untold wealth built in record time, and “you can do it too if you just follow my secret techniques.” They give references from people who don’t exist, like “Peter S, Melbourne.” It’s a pathetic attempt to sound more credible. You won’t get any of that from me. I hold a Diploma of Financial Advising from the Securities Institute of Australia,”…….

look. I know heaps of people with diplomas just like yours who have been charging people to *lose* them money by investing for them on the sharemarket. Diploma Schmoma. It’s a bit like music. the ones with the diplomas go off and teach, but they aren’t the musical geniuses of the world.

As far as that top bit goes, I am always really nervous of people trying to jack themselves up by pressing others down.
I think you should really wonder how that makes you look.
I know you want to market yourself as a guru – you will probably even end up getting customers that will give you testimonials ! – maybe the only reason you hate testimonials now might be because you don’t have any yet??? Once you have some ‘crashy changed my life’ stories I am sure you will see the benefit of them.

Basically, you are using fear and lack to sell. Of course you don’t ‘get’ testimonials – they are an ‘Abundance’ technique and a form of leverage.

the more negative and angry you are *against* everyone else, the more off-putting you become. it’s like you can huff and puff and the crowd you began to draw just all walked away.

What an interesting topic and something I wouldn’t mind commenting as I have a good knowledge of both investing strategies. Please people I don’t mean to sound blunt but am trying to be as blunt, objective and truthful as possible.

Wayne – You say that the stockmarket has historically returned 13% PA over the last X years. You also say bring up a long term chart and see for your self.

If I bought up a chart of say the ASX 200 for the past 50 years, what would we see?? Yes we would see a chart that is trending up for 50 years. This charts however are very deceiving. Let me ask you another question. In 1987 which top 5 companies weighted heavily on the major AUS indexes. I think you will find that Bond group, Quintex and the like would have heavily weighted the index. I ask you another question – Where are those companies now?? An index is always goign to trend up because as companies start to under-perform the ASX removes them. The upward trending index however does give people a false sense of security that stocks always go up which is totally wrong and is foolish to beleive so.

NCP – From $27 – $12
TLS – From $9 – $5
and the list goes on & on.

Now if you were a believer that stocks always go up, you would now have to capture a 200% gain in NCP to breakeven and a 100% gain in TLS to breakeven. Now if you can tell me of an investment that can make those sought of returns please let me know.

The only way to make money in stocks is to have a firm grasp of money management, positions sizing and basic technical analysis skills. These 3 combined can be used to create an effective yet simple system, which will mean you wont get caught holding your TLS & NCP’s thinking that stock always rise.

AS for your comments crashy – These property gurus have no qualification. Mate well they do have 1 qualification – That is results. That is all I care about. I know hundred of people with diplomas/degrees in finance that don’t have a clue.

AS for leverage. Property sh-ts all over shares. Try raise money to invest in shares without the appropriate licences. Even better try and explain to your investors you methodolgy. People have no clue about share which means it is hard to borrow large amounts of funds. Most people have some understanding of property as it is less mystic which means it is a lot easier to raise funds. I have know diploma/degree but do have a track record and can raise infinite amount of money.

Another comment was made that 95% of traders fail. Yes that is true. Through lack of knowledge or natural human behaviour trading is one of the hardest endeavors one could try to suceed at.

That is all for now, but I am ready to for some counter arguments from anyone if you so dare. I meant that in most friendly way possible.

Happy Investing

thanks insider – very interesting

retire by 40,
“In this instance, especially related to this boring Shares Vs Properties agrument, rather than wasting time to shot down the opponent position, why don’t each side do a favour to themselve to see the possibility to learn more on the other asset class and have it integrated into your overall strategy”

I’m sorry you find this thread boring (I don’t!! I’m loving the debate!!!) and there are hundreds of other threads that you might find more interesting, but seeing as you were interested enough to reply, thanks!!

As far as seeing the possibility to learn more, I’m all for that. I immersed myself in studying shares in general for at least six months (while thinking i didn’t have enough capital to get into property) and the more i read, the more daunting it all was.
fundamental? technical? indexes? Mututal funds? commodities? Stagging? options? Futures? hedged? margins?? sheesh!!!

it just didn’t seem as ‘easy to get my head around’ as property was. i can’t say why that is, and it could have been because of the teachers. or I’m dumb. (actually, I’m not!!!!) Who knows why. But that’s my story. Then, I did a property investing course or two together with books and tapes – lots of different ‘gurus’ – and suddenly i turned from someone who didn’t get the numbers into someone that did. With that knowledge and a calculator i started to look and I found a mother-lode of deals out there with fabulous returns. All within the budget. Which admittedly wouldn’t have got me much RE in the current Australian property market, but that’s not where I’m investing.

OK. So. I now have extra cash from my properties which I can invest all over again. So this is where I have the choice – more properties, or shares? I know that many are doing both, and I *am* interested, or i wouldn’t be here, but so far I can’t find the a) security and b) returns in the right combination to make me proceed into shares. With the exception of comshares.com which I am looking at if anyone cares to comment. i don’t have the knowledge to go and find those deals in shares, and without it wouldn’t like my chances. And to *get* and maintain all that knowledge seems onerous, to say the least.

And to trust a fund to invest it for me seems stupid, given their performance! So I *am* a person who might be willing to be convinced into shares, but so far hasn’t been. I suppose I am limited by my time and interest in the subject. Investing in a top-500 fund would be the kind of shares foray that would suit me, but so far, I can do better with property.

good on ya crashy
always nice discussing things with you

cheers-
Mini

Ez-rent you said that finding under-valued stocks & over valued stocks is key. Sorry but I must disagree. Sausage software was overvalued at 20cents. What did that end up trading at?? The underlying analysis of picking under-valued & over valued stocks is fundamental analysis which in my opinion does not work.

This is some of the reasons why:-
* John picks a stock to analyse it and decides it is undervalued. He puts an order in with your broker then buy stock XYZ for $1.00. The stock trades up to $1.20 in a matter of weeks. Now surely it is over-valued (How do you determine this, fundamental analysis). He sells. The stock is trading at $2.50 in 5 weeks time. Why doesn’t fundamental analysis work?? People don’t care about fundamentals all they care about is price & greed. Yes it may have been overvalued at 1.20 but people didn’t care it was still $1.20 in their minds, even if the PE is 40.

* Picking undervalued stocks – Why doesn’t this work?? People have an obsession with picking the next big winner, hence trying to pick market bottoms. What is the common mantra told by the various guru’s (Rene Rivkin)?? Buy Low, Sell High & you will make a killing!!

Let’s re visit the recent example of the purchase of stock xyz. He bought @ $1 and sold at $1.20 because it was “over-valued”. The market did not care what John thought because it traded way above that 5 weeks later. Now if we reverse the situation to buying under-valued stocks the thought process goes a little like this. This is common human behaviour and a reason why there are so many losers in the market. I will use a real example – AMP
AMP is trading @ $20.00. It drops to $10.00. The crowd – Gee Wiz it has halved in price it must now be a good buy, twice as good in fact, it was $15.00 last week. We all know what AMP is trading at today.

*A lot of market commentators were also recommending ENRON before its demise. What did the fundamentals look like?? I think the charts told a different story.

The moral of the story is price is primary.

Jesse Livermoore Quote – `Buy high, Sell Low’.
For those that don’t know, Jesse Livermoore was one of the most famous traders in the early 1900’s. He amassed millions.

What do most people do?? Try to Buy Low, Sell High. It would go againt the human grain to buy High Sell Low. Would it or would it not??
People also do not know how to manage risk.

I just thought of another reason why it doesn’t work – John spends days & days analysing stock ABC. He finally decides that the stock is under-valued and buy’s @ $10.00. 2 months goes by and the stock is now trading @ $8.00. What do most financial planners do?? Dollar cost average. By more of a losing stock because they are right they must be. This strategy does not work & is one of the many reasons financial advisors have no idea. ANother 3 months go by and the stock is now trading @ $5.00. He buys more!! This guy must be right and a sucker for punishment. The stock now must almost double to break even. People have an over tendency to be right. I ask people what would you rather, be right or rich. Unfortunately most people would prefer to be right. I know of very successful traders who are only right 40% of the time & make millions.
* Lesson you do not have to know what is going to happen next to make money.

* Another flaw of fundamental analysis is time it takes to analyse stocks this way. You cannot to broad searched of over 200 stocks using this method which means it not a very time effective tool.

Any way enough babbling and back to property talk.

Yet again I have not done a spell or grammer check so excuse those slippery typing fingers.

Hehe! Tech vs Fundamental analysis is just as contentious as Shares v Property!

I was lucky to have a good mentor. What he taught me makes sense and has worked for me thus far – thats the main thing..

[email protected]

EZ-Rent. The free tax and cashflow simulator for Australian property investors.
http://www.ez-rent.com

It’s my FAVOURITE question. Thanks for asking it.

Shares do not have a vacancy factor. Try liquidating just 745 bricks in your house. What is a better way of owning part of a progressive company without having to buy it outright? Try buying and selling the same property 4 times in one day with a profit at the end. Ever seen a Daytrader not transfixed by a computer screen? It’s a great computer game and there’s always the opportunity of realising far better than the promised return of 87% on poker machines.

Warrants, put options, margin lending, derivitaves .. allow for a profit even when the share price drops. Make money on the way up and also on the way down.

However .. a full loss on shares means a full loss. Zero. Bricks will retain some value. Rents may remain constant even as market value drops. This is cashflow as Steve purports. Steve’s risk lies within a reasonable jump in interest rates, which could push marginal positive cashflow over the line into negative. This is when a fire sale may occur, to minimise losses.

The underlying answer is not in which investment is better. Personalities, risk perception, feeling of control, excitement, long term, short term growth .. it’s about the individual’s circumstance. There will be as many answers to this question as there are the number of positive and negative experiences in each.

Kind regards to all, Phil

MAtt I knew someone was going to bring warren buffet into the picture. If you can try and tell me about another very successful (multi-millionaire) who uses fundamental analysis successfully. Warren Buffet did not just buy stocks. He was the majority share holder so he could go in and build the company that’s why he is so rich. Mum & dads & average investors that use this technique cannot be majority share holders.

I think the book that everybody should read is Buffettology. If they have read it then they should read it again.

‘it’s the fundamental analysis part that i think is boring. Reading annual reports, and such.Having to have an encyclopaedic knowledge of the economy and always reading the financial section of the newspaper’

Buffettology will tell you why the world’s most successful investor takes little notice of what is in the financial section of the newspaper. He does not care about daily fluctuations in share price. Fundamental analysis is not a full time job. I think it is similar to a property purchase – 90% of the research is done before the investment. Of course if you are attempting to earn an income from shares in the short term from technical analysis and you need to analyse daily price movements there is more work involved. However this would be similar to trying to make money in daily fluctuations in a the price of a property, and you can’t tell me that you wouldn’t have your work cut out doing that. The main point here is that the more the average investor tries to ‘trade’ and make money from short term fluctations, the worse they do.

This article explains that most investors would be better keeping the shares they originally bought, instead of jumping from one thing to another;

http://www.aspectfinancial.com.au/af/news?xsl-newsID=6&xtm-licensee=aspecthuntley

‘John picks a stock to analyse it and decides it is undervalued. He puts an order in with your broker then buy stock XYZ for $1.00. The stock trades up to $1.20 in a matter of weeks. Now surely it is over-valued (How do you determine this, fundamental analysis). He sells. The stock is trading at $2.50 in 5 weeks time’

Warren Buffett does not sell the stock. He will only sell the stock if the fundamentals of the business have changed, not if the price has gone up.

‘Warren Buffett did not just buy stocks. He was the majority share holder so he could go in and build the company that’s why he is so rich. Mum & dads & average investors that use this technique cannot be majority share holders.’

I don’t think that it is fair to say that his success is based on being a majority shareholder in companies. He of course does have a controlling influence as a major shareholder, but from what I have read, he will only buy into a company that has good management and is good from a business perspective. He doesn’t try to get in there and change it. Therefore, the same returns can be had by ‘mum and dad’ investors.

A good way to find a few Buffett-style stocks is to use the search features at;

http://www.aspectfinancial.com.au

I have found it really useful, and they have a 14 day free trial on at the moment…..

And I really recommend the Buffettology book!

Matt

ps. sorry if my post is long winded or sounds like a book review…!