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Hedging Against Hpc


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#16 Mixle

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Posted 13 March 2011 - 07:23 PM

ok, now we are getting somewhere. Never say impossible, there is always a way to do something, even if it's 80% effective. This is the quest which I'm surprised that a website like this is not dedicated more to solving. So are you saying that the financial markets are all expecting a fall in house prices? The general public seem to be in the opposite camp. Where is the arbitrage opportunity in this? Time to start the collective brain, people

Best,
L


Yes, market expects fall. Have you asked the general public? Anecdotally, I think a fall is widely expected. It has been in the papers a while now. More critically, many VIs are already leveraged and therefore unable to take the other side of the bet.

#17 Number79

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Posted 13 March 2011 - 07:23 PM

I am in a position to buy a house, for cash, but I prefer to keep the cash in the bank and rent a house to live in. I can't think of a better defence against falling house prices.


+1

although if done at the right time some other things would be helping nicely like shiny metal, stock, ns&i etc

#18 Number79

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Posted 13 March 2011 - 07:24 PM

Yes, market expects fall. Have you asked the general public? Anecdotally, I think a fall is widely expected. It has been in the papers a while now. More critically, many VIs are already leveraged and therefore unable to take the other side of the bet.


even those that dont expect a fall are expecting their mortgages to increase, they just havent joined up the dots yet.

#19 Bruce Banner

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Posted 13 March 2011 - 07:25 PM

+1

although if done at the right time some other things would be helping nicely like shiny metal, stock, ns&i etc


In my case, NS&I and EUR ;).
.



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Lest there be any doubt.

No I believe prices will fall and am astounded that a so called Conservative led government could act in such a stupid way. As you can see from today, there are 2,000 HtB applicants and it has been on MSM none stop all day and they make up about 3.5% of a typical months mortgages.

BTL is a good potential way to bankruptcy and yes sometimes I make points to hopefully make people think.


#20 leafsta

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Posted 13 March 2011 - 07:36 PM

In my case, NS&I and EUR ;).


Out of interest...

Ok, so buy EUR as the EUR is likely to rise against sterling im guessing.... :huh:

Why is it good to invest via ns&i?

#21 Georgia O'Keeffe

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Posted 13 March 2011 - 07:36 PM

i wouldnt of thought it was worth it now, maybe a year ago. Any forward looking instruments would already be priced accordingly as you highlight with IG, shares wouldnt be particularly good as they are too high beta.

Thats leaves marrying someone filthy rich as your best bet so you dont give a toss if they fall

Edited by Tamara De Lempicka, 13 March 2011 - 07:38 PM.


#22 Number79

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Posted 13 March 2011 - 07:40 PM

Out of interest...

Ok, so buy EUR as the EUR is likely to rise against sterling im guessing.... :huh:

Why is it good to invest via ns&i?


no, no, he answered my post when I mentioned other things done at the right time. This isnt it. I still like the odds on metals though along with other commodities.

#23 Bruce Banner

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Posted 13 March 2011 - 07:42 PM

Out of interest...

Ok, so buy EUR as the EUR is likely to rise against sterling im guessing.... :huh:

Why is it good to invest via ns&i?


My EUR bought at 1.5 EUR/GBP are doing well.

NS&I are paying me 3.9% (not available for new deposits) and are, arguably, as safe as you can get.
.



----------------------------------------------------------------------------------------------------------
Lest there be any doubt.

No I believe prices will fall and am astounded that a so called Conservative led government could act in such a stupid way. As you can see from today, there are 2,000 HtB applicants and it has been on MSM none stop all day and they make up about 3.5% of a typical months mortgages.

BTL is a good potential way to bankruptcy and yes sometimes I make points to hopefully make people think.


#24 Number79

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Posted 13 March 2011 - 07:47 PM

.

Edited by richyc, 13 March 2011 - 07:52 PM.


#25 leafsta

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Posted 13 March 2011 - 07:48 PM

My EUR bought at 1.5 EUR/GBP are doing well.

NS&I are paying me 3.9% (not available for new deposits) and are, arguably, as safe as you can get.


Ahh I see, thanks.

Ive had an offer on my property leaving me a decent amount to hold on to until prices (hopefully) drop. In the meantime, im going back with the folks to continue saving to put towards any future house purchase......any ideas what do do with the $$ in the meantime?

#26 Number79

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Posted 13 March 2011 - 07:51 PM

Ahh I see, thanks.

Ive had an offer on my property leaving me a decent amount to hold on to until prices (hopefully) drop. In the meantime, im going back with the folks to continue saving to put towards any future house purchase......any ideas what do do with the $$ in the meantime?


right now I would say you have the best hedge by being out and able to add to your savings, things looking not so obvious at the moment so I would leave it as cash and take the time to work it all out.

#27 okaycuckoo

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Posted 13 March 2011 - 07:58 PM

This is Robert Shiller a couple of years ago on the kind of product you're looking for - doesn't seem to have caught on in the US yet, so looks like your hopes are dashed!

The company you started, MacroMarkets, just got approval for tradable securities linked to the Case-Shiller house-price index. How does that factor in?

One reason we have bubbles in the housing market is because there's been no way to short housing [that is, to make money when prices fall]. The ability to short is essential to an efficient market, otherwise there's nothing to stop zealots from pricing things abnormally high. If you buy one of these long securities, called UMM, it's like buying a house, except you don't have to go through the real estate agent, take possession of a property, maintain it, rent it out. But we also have the DMM, which is short housing. Markets like this will also create an infrastructure for products. For example, insurers could issue home-equity insurance and then hedge themselves by taking a position in this market.

The Case-Shiller housing futures that trade on the Chicago Mercantile Exchange haven't really taken off, though.

I know. It's bizarre. People are fascinated by housing they want to read the home section of the newspaper and gossip about it. But they don't seem to want to trade it. I think it's all a matter of getting it right. And we continue to work on it. It's like insurance. They invented life insurance in the 1600s, but it didn't become common until the 20th century.


Read more: http://www.time.com/...l#ixzz1GVleh0gB


#28 Georgia O'Keeffe

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Posted 13 March 2011 - 07:58 PM

right now I would say you have the best hedge by being out and able to add to your savings, things looking not so obvious at the moment so I would leave it as cash and take the time to work it all out.

If you are sure houseprices will fall, id say this is always the best bet unless you are prepared to lose some Capital

#29 Number79

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Posted 13 March 2011 - 08:03 PM

If you are sure houseprices will fall, id say this is always the best bet unless you are prepared to lose some Capital


even if you werent sure would you agree that staying cash may still be the best option now? If prices start to rise then once you are sure of the trend change then at least you can move quickly.

#30 Georgia O'Keeffe

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Posted 13 March 2011 - 08:16 PM

even if you werent sure would you agree that staying cash may still be the best option now? If prices start to rise then once you are sure of the trend change then at least you can move quickly.

well im slightly bias because i think cash is a great place to invest in for the next 2 to 3 years but id also agree in general because its pretty stress free compared to other assets crossed with houses

Edited by Tamara De Lempicka, 13 March 2011 - 08:21 PM.





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