Where does the market go from here?

Please get comfortable first, this is going to be a long post (Mini isn’t the only one who can write long posts [] )

Let me first of all say that, like Bill, I too shudder seeing how easily new people may be sucked in by the exhuberance of the ones who have been around a bit in real estate.

Owning two or three properties does NOT however make one necesssarily an expert.

There are many pitfalls along the way which many people aren’t as yet aware of. The world’s economy is basically in tatters so those of us with big debts (and no cash reserves) may well be in for a rude awakening shortly.

Coming back to the subject of options I have to however side with people like Richmond.

It is correct that one CAN indeed obtain big returns from options.

One can even teach others what to do in order to be successfull.

That isn’t however a guarantee that such a pupil WILL come out on top as this whole business of investing in shares or derivatives is very much a ‘mental’ game where one’s emotions play a big roll in bringing one ‘undone’.

So knowing what to do and actually doing it isn’t one and the same thing.

I know it can be done as my brother in law for some 14 years or so has been making a decent living writing options.

The difference between him and many other would-be could-be’s is that he has a large capital to work with which enables him to own the underlying shares so he is at least protected from losing his shirt by some of the options he SELLS possibly increasing enormously in value.

Someone with a small working capital [and even someone with a larger sum (like the $ 150K Richmond mentions)] will lose their shirt unless they have first acquired the necessary experience in the school of hard knocks enabling them to succeed.

Those who do happen to make money without first having acquired the skills are bound to lose it at a later stage (and that is an ironclad guarantee) unless they are extremely lucky.

Another important factor is that the individual is betting against the professionals. A private individual offers to buy (or sell) an option, places his order on the market board and will find that his order generally isn’t immediately filled as the market in Australia is too thin.

The almost invariable result is that his order will be filled the moment the price of the underlying share has moved in such a way so as to make the option investor’s offer a bargain, after which his offer is snapped up by one of the professionals. (I liken it to the private individual ‘being raped’).

Which brings us to the situation where Bill perhaps thinks that he is capable of managing someone else’s money.

Firstly, I would be asking such a proposed money manager what his actual (as against his hypothethical) record is over say the past five or six years.

Secondly I would ask whether he is licenced and whether he carries Personal Indemnity insurance.

Thirdly, chances are that someone who has been succesfull in making money on his own behalf, may well ‘freeze up’ the moment he is handling other people’s money. So my third qualification I would be asking is whether he has a record of handling other people’s money.

So unless I could be satisfied about such a manager’s experience I would not deal with him and I don’t think it would be a good idea for others to ignore the same selection standards.

Now Bill has been around a long time so I don’t think he could possibly object to someone applying the selection rules I mentioned above.

Isn’t that so Bill ?

Pisces

Hi Bill,

>>You have missed my point!

I am not writing options on behalf of anyone on the Forum.<<

No one says that you did Bill, only that apparently you suggested to someone (or perhaps several persons) to let you handle a large sum of money.

Hence my post providing some rules in selecting a money manager.

>>I have never said “sell up” but warned others that buying IP’s now is a certain loser.
Just be patient and wait.<<

If your outlook is wrong, all that happens is that one may have lost a bit of time. If you are right then the logical outcome will be that one will profit.

I can only agree with what you are saying there.

I note however that you haven’t answered my question about the selection rules Bill (just in case that someone else comes up with an options managing proposal).

And I am not ‘just’ picking on you Bill, I feel that similar caution is warranted when going into a real estate venture with someone.

Pisces

Wow. []

An agent told me that when Ballarat agents return to fixed prices, or “offers up to..”, rather than the still common “offers above…”, then the market is in equilibrium again.

Another told me that late March will be when the 50% NOT selling at auction in Melbourne will have amounted to a large enough stock of unsold properties to reduce prices.

It’s too early yet for either effect but our monitoring methodology indicates an easing in advertised prices in Melbourne right now.

*aaaaaaaaaarrrggggghhhhhhhhhhhh*

the relief that this is out in the open is excruciating

That’s right Westan, I think everybody who read this thread can take something from it… the fundamental reason for the site is to help and learn, let’s get back to the fundamentals[^]

I dont share everybodys opinion on bill from OZ, nor im sure does Dorthy. And from the previous posts i have read from bill he is nothing but trouble on this forum <<edited>> I am sick or reading the conflicts between members can we just get on with Property investing and not options .
Dom [8]

hehehe Feral election [}] well..comming from Canberra I can assure you that once in the Parliment the pollies DO turn ferral!

Opportunity knocks softly, listen carefully!

I’m going to defend Bill on this one, as I believe this has gone a bit far.

Firstly, I too have seen this email that has been mentioned several times.

The forumite was told not to deal with somebody they had met over the internet. Bill specifically states that there are many issues to discuss, and this MUST be face to face.

He also said that he was not asking the forumite to take any risk whatsoever. He is willing to sign a personal guarantee to that effect. Why does this mean that he’s going to take off and leave the country? Caveats can be placed on properties etc. etc., and there are many other means of ‘covering oneself’ in case Bill were to do a runner. Not likely.

He also told this person that he would pay a monthly in advance payment so that they could cover their commitments on a very negatively geared property investment. I also believe that there is implied in the contents an offer to prove his trading history. If I saw his history, and saw continued income of 40-60%, including losses, I’d happily hand over my money. Heck, how money financial planners happily show us their portfolios before we give them money to buy managed funds? None that I’ve heard of – cos they’re all broke. (OK, not all)

A MINIMUM profit of $21K per annum is guaranteed. 12% is not to be sneezed at surely! With no risk to you? Wow, this looks good. And Bill spells out exactly how he would win too. Isn’t this full disclosure? Don’t we want people to do that? Don’t wrappers advocate that for win/win?

Now, how did this person get in contact with Bill? Did Bill approach them? I think not. I think this person was one of the many 100’s, including me, who contacted Bill to ask for help, or in my case to touch base as I saw he mentioned Canberra? Before I had even met Bill he forwarded me a scenario that someone had sent him, asking for advice on what to do about their super neg geared property. He asked if I had any thoughts. I gave quite a few options, which were then passed back to the person, who eventually made their own decision. Perhaps it was the same person? Who knows!!! I don’t, because the person’s name was never revealed to me.

I personally have borrowed $180K from various friends, and offered them a 50% return on their money, with a max term of 18 months, and a min term of 3 months. We signed agreements with them, and they were more than happy.

I have met with Bill several times now, and found that he has as much integrity as anyone I have met. You all question his length of time in real estate – well Bill was one of the most successful agents in Canberra for a number of years, and has testimonies put together by a local radio station to prove it. Yes, he’s a bloody negative bugger at the moment, and I have had words with him about saying the same thing over and over. But then you don’t know the amount of people who approached Bill when he started putting his email up, asking him for help. Some of the people he helped stood to lose a whole lot of money in deals they had naively got themselves into.

However, with all his negativity, he has not advocated to sell all properties you own. He’s said to sell the dogs – which I would have thought was good advice. He’s offered plenty of advice, and some advertising tips to get your fair price. He’s offered to do a financial analysis, which often takes a couple of hours, and produces something like a 9 page report – completely free of charge. He’s offered his phone number if people wish to talk with him. I really wonder if the full story from ‘both’ of these people have come out. As I said, I’ve met with Bill many times, and not once has option trading come up. I would give him some money if he wanted it.

How can you say that having $200K cash in the bank is not ‘loaded’. I would think it is. You don’t know what Bill’s other assets are. He might be ‘diversifying’ his portfolio. He might have enough invested in real estate, and might enjoy the challenge of writing options – he’s obviously bloody good at it. I’m not – tried it once, didn’t like it (or was that s.., no, never mind). It’s a strategy that peter Spann advocates to help you fund your properties.

I think I’ve said enough. I’m sure there’ll be a lot of you that now think less of me, but that’s life I guess. I need to say it as I see it, as you all have done.

Cheers
Mel

G’day to all at the Forum….

I know if your reading this you’ve had a gutful, but as I have said “I am not the ripp off merchant some would have you believe”. I write this, acknowledging that I cannot change a mind made up..irrespective of the truth.

The gentleman who sent out the email asked my permission before doing so…I had no objections.
He informed me of Westan’s very negative point of view.
Westan emailed me and suggested that he had thought about” my band of followers” and suggested it was a perfect way to “get friendly” then fleece them. The thought never entered my mind, but Westan certainly entertained the idea as the “perfect way”.

I had hours on the phone with the person who, nearing retirement needed his finance re-organised as his broker was ill informed. Many calls, both email and phone corrected this just prior to Xmas. I discussed option writing with him and an amount that given my guarantee of making his mortgage payments and sharing in the profits he would need $150 – $200k to make it worthwhile. We decided to put it off as he was going overseas and I had not finalised another opportunity discussed with him to diversify our capital.

While we are at it Westan…please educate yourself in the difference between an option Buyer and an Option Writer(Seller) Your comment that I must surely lose when I am wrong…. you are confusing the two positions and referring to a trader who buys options.
The reason I write options is that 85% expire worthless and as you read up a simple book you will then understand the difference.

One thing is for sure I do not do business with anyone I have not met and we have got to know one another. No I am not writing options for the person in question or any other Forum member for that matter. The person has expressed an interest in visiting my Canberra clients and join us in an Investment that has both State & Federal Govt, grants and yes…we will probably write Options with some of the generated profits.

Mini….many months ago I offered to send you all that I was sending out to members of the Forum…to put your mind at rest. Yo had attacked my integrity and still do with your cohort Westan…. however you refused to accept the info and wanted it posted on the Forum. An impossible task…6 pages of Q’s and a 9 page report…something I have been doing face to face, by invitation for 20 years.Who knows,you may have learnt something. I did however send a copy to Admin at PI.Com. Perhaps I could also send them verification that I managed to get a Forumite out of a $706k scam at Docklands… after contracts exchanged…with his full deposit refunded.

I have had many emails from ex Forumites and a few of the remaining ones expressing their concern that I still have not put up my own web site.

I returned to PI.Com recently expecting “it would have all blown away” not to be…still the sniping and attacks on my Integrity. So I guess I will have to do as I said regarding my website. The content will surprise you, but as I have zero skills in that area will have to rely on the Forumites who have offered to do it for me… and like me FREE!

A handfull of property purchases in a rising market does not make you an expert. There is no such thing. After 30 odd years I can still learn something each day..usually about “herd mentallity” &”closed minds”.

Before I go…I do not advocate you selling your R/E, but warn you that if you have purchased recently or intend to, that you will do better in waiting until 2005… the race has been well and truly run.

Steve, I thank you for the right of reply and am probably kidding myself that this is the end of it.

All the best for 2004

Bill

Bill O’Mara