I have been watching from the sidelines for the past few months and I do believe the time is nigh! This is my first post.

I am intrigued that if one is planning to make money from this inevitable crash/downturn it seems that the majority of people appear to be waiting untill prices bottom out (3-6 years in my opinion), who will then buy to make money.

Here is a story about John:

The story of John the Investor

As a new and ‘green’ investor back in 1998/99 John decided to get into the stock-market. John found an article on the net regarding the top 10 technology funds to invest in. John had never bought a share in his life but thought this might be a good gravy train to ride. John went in without any thought of the downside. Every share John bought just seemed to fly up in price - However over the next couple of years John got increasingly intrigued at the madness that he had become caught up in. (CAT, Vocalis, Proteome sciences, ARM, Baltimore tech, Chiroscience/Celltech, NXT - these all gave returns of 500% - 1600%) People down the pub, mates, family everyone got involved - making huge amounts (on paper – as they never sold). They were all talking about a new paradigm - totally new underlying economic fundamentals and that these stocks would not crash but at worst level out and then continue rising in the long term. Everyone wanted to believe the good times could not end.

John asked himself what real work he had done to 'earn' these profits.

Anyway John started researching bubble mania - south sea, tulip, wall street 29/30, eighties housing boom etc. And john came to the conclusion that this technology share market ride (500%) would possibly implode and might even fall 60%. John was laughed at down the pub – people said he was mad. It seems obvious in hindsight but back then john was not so sure. Luckily John sold all his shares a couple of months before the NAS hit 5000 and as you know the rest is history.

But being a novice investor John did not realise he could have made just as much money (in fact more) if he had trusted his judgement and shorted the tech shares. John did not understand what shorting meant.
But luckily John used the money to buy a new build ‘buy to let property’ to rent out - (everyone was saying this was the way forward – ‘bags of money to be made’ - Sarah beeney and co.), and again over the next few years John saw the property value paper price double. But in reality the potential profit John would make if he was to sell would not be (double) 100% profit - because John’s initial deposit was £5K - so in fact his profit would be the amazing return of 2000%!!!

Again John asked himself 'what work have I done to 'earn' this?'. And the answer - ‘not much really’. He started to worry that in the future somebody somewhere would have to pay for his profit.

Just like before, (when the tech shares were booming) John got increasingly concerned at all his mates/family/people down the pub making huge amounts (on paper) by owning property and doing not very much.

So John got even more nervous again and mentioned this to his mates – but they said he was a ‘silly billy’ & ‘You always make money in property John’. ‘Bricks and mortar son – the best place to put your nest egg. John remembered last time he had told people he was worried about the tech boom and how greedy people were becoming, so again this time he did not listen to them, and sold his buy to let and decided to bank the profit.

But that question continued to nag at the back of his mind ‘Where would the money come from?’ He started to think that maybe the thousands he had profited by would come from the person who bought the house off him – unless that person sold it on at a profit– but eventually he figured someone would have to pay……and what an awful lot of money (trillions he reckoned). This was because nearly everyone was making lots of (on paper) money from houses – and spending this new found equity value on holidays and cars and keeping everyone in jobs. Indeed these were good times but someone would have to pay – sometime….

Anyway John started thinking back to his error in not shorting the Nas/ftse/individual tech stocks in March 2001. John decided the best way to short the market was to use a website like *************** and was amazed to see that he was ready to deal within 10 minutes of going on the site. He practiced with penny bets first to ensure he knew what he was doing.

This time John was not going to miss out on the money to be made on the way down.

John decided to come up with a list of the top 13 stocks that would be most likely to fall in the Great Property Market Bubble Collapse of 2005-2006:
So John went on the internet (what a great tool for allowing bubbles to form) and tried to work out whose businesses were connected to houses and which of these share price charts had been swelling the most since 1996. Indeed he saw that they had grown fat since the boom started. He tried to work out who had the most to loose by doing research on these companies but decided after much research that they were all going to be stuffed...( a bit like the tech stocks of old).

Top of the list ESTATE AGENTS
1. COUNTRYWIDE
2. SAVILLS

Then HOUSE BUILDERS
3. BARRAT
4. BOVIS
5. BELLWAY
6. BERKELEY
7. PERSIMMON
8. REDROW
9. TAYLOR WOODROW

Then CONSTRUCTION
10. WIMPEY

Finally the Lenders
11. NORTHERN ROCK
12. BRADFORD & BINGLEY

Oh and also unlucky: 13. PARAGON (involved in buy to let).

Now John is not an economic guru, technical analyst or whizz kid. John is your common sense bloke down the pub. John likes the dynamics and psychology of crowd behaviour, fear and greed and John reckons that you don't have to be that intelligent and over analyse individual stocks, John says ‘just got to think one step ahead of the market - don't go with the flow - go with where you think the flow is going...’

John sat back and wondered if he would be right or wrong – after all things had been good for such a long time – why should the party end?


I liked John’s story and it certainly got me thinking.
Has anyone else got any opinions on other good property related stocks that may fall in the next year??
Are any of the above stocks going to have a higher share price in 9 months time?
Will the Property market keep going up?
Is there better money making opportunities elsewhere within the property sector, if a huge downturn/crash is going to happen?

And for the easiest (tax free!!!) way of going long or short in the market I have to recommend *************. It costs nothing to register and you get realtime streaming quotes and all the chart info etc that you need. Very easy to use and extremely helpful customer service if you phone them up (–no matter how stupid the question !) on any issues you do not understand.

**************

But be warned!!! If you invest and do not know what you are doing and have not spent ages looking at all the potential pitfalls - the market makers & spread makers will shaft you. Due to the high gearing nature of spread betting the profits are huge but the potential losses you could make are even huger.
Actually the same could be said about the high gearing nature of a 5k deposit on a 160k house!!

Anyway please tell me about other stocks to go short on. Or will some of the above stocks maintain their share price in the next year?

Regards

Daddy bear

Seems a long winded way to plug a spread betting site

Hi
I thought you deserved a reply after all your posting on behalf of Finspreads.

I have spread betting accounts with both Finspreads and E*trade. E*trade are light years ahead. Finspreads platform is grindingly slow (I have 2 mbps broadband! so not my fault) and has no facility to close a trade at the profit/loss figure you see on the screen.

E*trade is fast, intuitive, graphically superior and you can close a position with two clicks.

No competition imho!

THANKS FOR WASTING MY TIME !

It's like when you tell someone a long joke that they pretend they haven't heard.
Then at the end they deliver the punchline.

Thanks for the advice - was not posting on behalf of finspreads - just felt that they served my needs alot better then normal share dealing like using TD waterhouse etc.
But will open up an account with e*trade and give them a go.
Any other stocks that you thimk will be particularly affected by a downturn?

Is there anyone out there who thinks there are better spreadbetting firms?

I don't give a monkeys about the spread betting site - I've just heard E*trade are probably better.
What i am interested in is the potential of shorting shares affected by a downturn.
Any suggestions or advice?

Apologies for wasting your time - I just believe there is alot of money to be made on shorting on the way down.
Who cares what spread betting firm one uses - I was just explaining how easy it is to short a share - something i did not know of three weeks ago.

So my point? What shares should I short???

Daddy Bear
You seem to have been roughed up a bit early on in your posting career. Your rambling anecdote confused people a bit I think

It's relatively easy to point up a list of stocks vulnerable to low sales volumes in the housing market and a slowdown in the construction industry.

It's quite another thing to time your bet in order to go into the black straightaway.

I've had my fingers burnt already shorting PAG and BDEV. I seem to make money when I go long but my short positions keep costing me

It's been debated elsewhere just how much the city know (or care) about an HPC.

Big money is keeping these housing related stocks up at the moment not Joe Punter buying a grand's worth coz he read a tip in Shares magazine.

I'm not sure who is buying the likes of CWD, PAG, BDEV at the moment. I would have expected more caution from institutional investors!

You can trade December BDEV, CWD etc and that's nearly six months for your hunch to come good but can you live with those ever increasing red numbers for month after month???

Shorting is a dangeous game. Markets can stay irrational for longer then you have money. Yes these shares may fall in price but it will be when the company decides to release the profit warning that will be the time it occurs (i.e. when they want it to happen not when you want it to).

As for your list yes Countrywide should fall but that has a built in game from the sale of Rightmove. Yes we all know its site thats actually worth very little but the stock market think its worth £100m or so (and the capital gain from that is what is keeping Countrywide high at the moment).

Bradford and Bingley are the eternal takeover target. Any warning won't lead to be big fall in price as it will be seen as an invititation for a takeover. As for Northern Rock thats awkward as they are probably the most efficient bank in the world (there is no reason for anyone to take them over to extract costs) and while profits may fall the odds of them producing losses are minimal.

On re-reading my first post i can see how it appeared a bit rambling - and put people off! Apologies to all. There was a point in there somewhere and it had nothing to do with spreadbetting firms.

Back to shorting - From what I understand (remeber this is all new to me) all the stocks I have selected have an expiry date in march 06 - this did concern me but i was told you can lenghten the contract. Or is it the case that you have to close the trade by the expiry date?

Can i live with the red numbers?If they continue to go up? - well i will work on a stop loss of 30% above the selling short trade price - and with the small amounts I'm placing per penny, if they do go up by 30 % I will lose 3K per stock approx.
I think i am going to stick to 4 stocks - so 12K i can live with - that figure is ony a small % of the profit made on my BTL.

Am I being naieve?
The 4 stocks are; Wimpey, Paragon, Country wide and Northern Rock.

Any further advice on things to watch out for would be helpful.

Thanks

DB

ps. Does E*Trade provide a better service?

Some good words of wisdom. The Takeover scenario is one to consider. I am going to hold fire on this for a few weeks/months and hone my shorting skills with penny bets! And come up with safer shorts - DIY companies, CapetRight et.al.?

Thanks
DB

Troll?

What daresay is a TROLL?

30% stop loss? did i hear that properly your willing to part with 30% before your stop loss kicks in? if so then it just comfirms what sort of BTL investor youve been (IMHO). If not then ignore me

Anything less and you get shut out by the market.
Lets take countrywide: currently say trading at 338-342.
Yes i am happy with the philosophy that with SIPPs, Rightmove takeover etc there is the potential (worst case scenario) it might go 25% long to say 428. So I leave myself in up to that price and live with the red writing on the wall. convinced of my convictions that i do not intend to close the deal until MAR 06 - no way will this share be above 342 then - i reckon - 120.

Maybe im wrong - i loose what i can afford to.
Maybe i'm right?

What sort of BTL investor WAS I?

One who bought a flat hoping to hold it for 25 years- 30 years - safe investment - low risk - pension - kids etc - even got a fixed 5 year at 4.29% lowest ever was well chuffed at time, and then was horrified to discover it goes up by 50K in 18 months (a return of 1000%) - so I got to sell and pay redemption penalty of 3K !! As with that kind of rise theres got to be a bubble popping soon.

Maybe you think i'm a muppet. But eh i rode the tech boom, rode the BTL, and now think what the hell i might as well ride the bear market to come . And i ain't fallen off yet.
And what gets me is i know nufink about economics but common sense.

Sorry this sounds a arrogant but I only wanted to find out if there was any other ways of making money on this bubble pop from you seasoned investors- and i know for a fact that in 3 years time i will look back and think - god if only i'd done that or known 'that ' atthe time - I'm trying to preempt that
this time.

Any advice?

Enough .......

Thought this was a property market discusson forum, if you want to discuss stocks and shares fo over to singingpig.co.uk.

I think theo original post answers it won question.

If your chosen get rich activity fails the basic test of

'What have I done to earn this'

then

'Somebody will have to pay sometime'


The idea that an indiviual can be immune to this
relies on either the geeater fool strategy, or the 'it won't happen tome'
strategy.

Either way, there are no guarantees that it won't, or that the
individual is the greatest fool this time.

There's no such thing as a free lunch.

ABB

Daddy Bear

I think you are probably right, but I haven’t got the bottle to do it! / also don’t understand Spread betting, is there somewhere you can read unbiased
Information on this subject?

Good luck with the bets!

Big AL

Big Al

You don't need the bottle you just have to be prepared to loose what you are putting up (x lots).

Tring to understand spread betting was the whole point of my original post. I was exactly the same as you were two weeks ago. I have always bought and sold shares via a normal standard broker. Very inconvenient. I paid alot of tax as well.
Spread betting is alot simpler (transactions) and you do not pay tax.

What one can do is log on to a spread betting firm. I have only ever used ******** but I hear there are a number of other better sites - try ********. you just follow the instructions and set up an account.
Then spend 2 weeks at least trying out penny bets and getting to know the system. Set up a watch list. try doing different deal/ Only ever bet a penny.
Use Stop losses and PRe orders and make sure you understand exactly how it all works - rules and regs. In two weeks i came up with 20 qu's which i wrote down and then phoned them up. They Very helpful explained it all and took time. they want to keep punters happy.
Now be very clear i do not day trade. i am just using spread betting for dealing in shares without tax and over a long time period - e.g. 9 months.
i am going to pick 4 -5 copmpanies place my bet. set my stop losses at 30% (be v. careful on this). When i dealt in shares the normal way i worked on a 10% stop loss and that was only when i only knew how to go long on the market, not short.

Shorting is selling a share at todays price but you are legally bound to but it back within a fixed time period (you can extend this). E.g you sell countrywide MARCH 06 at 400p and then you have to buy it back before MAR 06 - anytime during this period. So if it falls to 300p and you buy you make 100p.

In spread betting you place a bet per penny/point change . i have been placing bets of 1p (shorting) and my profit so far is 56p. Due to a fall in price by 56p
It figures that if i had placed a bet of £10 per penny change I could have profited £560. However if the price had gone up by 56p i would have lost £560.

Anyway your best bet is to go on a site and work out the details yourself - thats the only way to learn it proper.

I am off on holiday for two weeks and will only start shorting at a higher price when i am fully convinced the bear marklet has started - i am hoping for a long slow stagnatiing downturn and not a crash - that way i will drip feeed money in slowly raisng my bets over a long period. I do not think i am lucky enough to time the high point of the market.

I am starting to ramble i am sure there are others who have better explanations of spreadbetting and are more savvy. Remember i am only in this 2 weeks I have a huge amount to learn. Thats why i came on here originally but sadly I have not received that much advice. And i do not feel confident enough to give it yet.

My one parting message - risk what you can loose - losses could be massive if we are wrong - remeber stop loss!

Surely there are alot more people out there that can give loads of good advice on spread betting the property market downturn. Please reply.

All I can say is that you can be "right" but still lose a shed load of money.

I posted on the *********************.com site about my experiences shorting Countrywide. I'm convinced this company is ripe for a collapse in price but while the market is still in bull mode the price continues to rise. Eventually I think I'll be proved right but in the meantime I have to sit and suffer (notwithstanding Friday's fall).

In short, the worst that can happen, is the worst that can happen and you have to be prepared for that

spiv.

Spiv

Are you stop/lossing and realising your loss. Or are you sitting tight on a paper loss? Whern does your term run out? Can you extend this?
Will you hold out to MAR 06 before you close the deal? What stop loss % do you run. Iwas told i was a muppet for running a 30% stop loss - but any lower does not one get locked out to easily?
Your opions will be much appreciated - i'v only just opened up a spread betting account.
Also who is best to trade with?
and Why?

I'm staying out until after the MPC deciscion. Would it be a good idea to go in 24hrs before assuming a 0.25% drop is already factored in? The Markets been in Bull mode for 5 years give or take....run with the bulls and run with the bears....We all know the bulls are still running and the bears they be a hibernating.... but something is a stirring.
What other good news can the market/individual companies get in the next 6 months?

Im starting to think it may be better to get in a little bit late then too early - unless of course these shares drop like stones - I want a long slow stagnating fall. (Sept)

One thing thats always worried me about spreadbetting...if you go long the upside side is infinite..shares can keep on rising, however if they fall you can only loose so much the downside is finite.
if you go short you could loose infinitely (shares keep rising) but you only can gain a certain amount even if the company goes into admin.... hmmmm

Is there a plus/ advantage to going short.

And another thing does anyone else know of an investment where you can put 5K down and get a return of 100K. E.g. put 5K down on a 100K flat and it doubles in price to 200k, in 3-4 yrears Such high leverage gives you a 2000% return. Compare this to a bank deposit of 35-40% in 4-5years (compound@ 5% approx)
If that is sustainable I'll eat my house!!
The only other time i have seen that in my short life is with the dot coms....

Basic common sense says that you must be able to get a 2000% return on the yang side to that yin. (The Crash) i.e does shorting the market in a spread bet offer that yang?

somethings got to give somewhere.

Why does Countrywide seem to be everyones favourit short?

What else is worth a sniff??

Daddy Bear

All the High Sreet Banks and Lenders.

'My Family anecdotal' could do with a look at this

Fascinating thread Daddy Bear and its a pity that more of the spread betters on the forum haven't contributed more. My take is that you really cannot predict the short term movements unless you can comit full time,but sentiment is surely the purest indicator.
Perhaps looking at Dr Bubb's charts of psychology throughout the phases of a bubble could help to identify when the true bear market has set in.

I for one am very interested in looking for opportunities following the markets down.

How can you make a first post 4 times?

http://www.housepricecrash.co.uk/forum/ind...topic=13026&hl=
http://www.housepricecrash.co.uk/forum/ind...wtopic=9122&hl=
http://www.housepricecrash.co.uk/forum/ind...topic=13028&hl=
http://www.housepricecrash.co.uk/forum/ind...topic=11346&hl=

There's something dodgy about you. I don't know what it is, but you smell of scam.

I posted 4 times in different forums to see if I could get a response - some useful info but to be honest in all the different locations I have learnt nothing. No real valuable contributions just replies like - troll, dodgy,...wasting my time...etc...

Don't reply then.
However there must be loads of people who have viewed these posts and are interested in shorting the market on the way down...and I hope i have been some help.

Two weeks ago I knew nothing about spread betting or shorting and have had to learn from scratch - Im just trying to pass on what i've learnt.

P{lease do not continue this thread if you have nothing useful to say about spread betting or shorting the market.

Nuff said

DB

[quote=spiv,Jul 30 2005, 08:57 PM]
All I can say is that you can be "right" but still lose a shed load of money.

I posted on the *********************.com site about my experiences shorting Countrywide. I'm convinced this company is ripe for a collapse in price but while the market is still in bull mode the price continues to rise. Eventually I think I'll be proved right but in the meantime I have to sit and suffer (notwithstanding Friday's fall).

In short, the worst that can happen, is the worst that can happen and you have to be prepared for that

Thanks for that have a good holiday!

I highly recommend Secrets for Profiting in Bull and Bear Markets by Stan Weinstein.

The basic problem with shorting in a rising market or near the top is there is a lot of new profits looking for a home. And it seems to bargain hunt in irrational places. Also the rational but early short sellers all try the same thing at the same time with high leverage. You get short covering blow ups until everyone gives up short selling. Of course a profit downgrade could come any time and the stock plummets but until that announcement the position is likely to get blown up. So yes it is quite tricky. Historically its better to ignore the clever short and wait for the entire market to show weakness.

From Stan Weinstein's book:

Don't ever short a stock that is above its rising 30-week MA.
Don't sell short a stock because its PE is too high.
Don't sell short because the stock has run up too much.
Don't sell short a sucker stock that everyone else agrees must crash.
Don't sell short a stock that trades thinly.
Don't sell short a stock in a strong group.
Don't sell short without protecting yourself with a buy-stop order.

Sorry.

that was long winded. it remided me of the story of the brother of the president of somewhere in africa who needed to get 40 million pounds out if the country and stuff. i got an email from him.

mogadembwe, i think his name was.

Yes! I'm helping him. All I need to do is send him another £1000 for clearance fees, then £40,000,000 will be winging it's way into my account.

DB,

I'm strictly an amateur so please don't lend too much weight to my views.

With CWD I'm sitting tight on my position, but if it gets much worse I'll have to take the hit and close out. I'm playing with relatively small amounts so it won't affect me too much whatever happens. For that reason I don't employ a pre determined stop loss (you can probably see why I don't do this full time !!)

I trade through my brother's account and I don't even know who that's with so I can't really comment on the best company.

As far as CWD are concerned I just think that it's all coming to a head and I'm prepared to take a loss if I've mistimed.

Sorry I can't be of any more help.

spiv.

if you want people to discuss CWD with you can take a look on the free bulletin boards over on www.advfn.com. Long standing thread there with loads of CWD shorters that have been following the stock for months / years. Me included. Don't think many have made money on it yet as it invariably rises after any fall. Don't ask why.

There is an interesting (US centric) article about shorting housing stock here http://www.thestreet.com/_yahoo/pom/pomste...h/10237407.html

It uses a calendar spread strategy - which apparently can be used to bet on a sow decline.

Daddy bear here


Just back from holiday.....


Have a look at the share price history since July 31st of all the companies listed in the original article of this thread .. (apart from Paragon, Couyntrywide) it may be the start of something... They have all taken a hell of a beating in the last 2 weeks since the original thread..
Why does Paragon and Countrywide seem so resilient to the big bad bear??

Any views?

DB

Sorry about the accuracy / detail of this but................How to short your own home.

Just saw an ad on TV, I think the company was called national housebuyers or something. They will buy your house from you, you pick the time you move out....Hey presto- you can short your own home.

Seems like they are going long and have got it wrong.

Hows about this: give me market price for my gaffe now and I'll buy it back in five years at market value!!!

Anyone with a better memory / attention span than my goodself seen this??? Or was I dreaming????

I wondered what Nick Leeson was up to nowdays.

I am short Barratt, and making money again, after the recent fall,

BUT I PREFER PUTS,
and it is hard to find puts in UK Builders.
You can buy Puts on US Builders and on Banks (US & UK)

I'm sorry, i'm totally not convinced with daddy bear. You're here to make people go short on spread betting and con people out of their money.

Countrywide (largest estate agency in UK) has a share price of 349p today - fallen from it's high of 375p approx.

It's a bumpy ride but is there any reason why an estate agency price would go up long term in these market conditions (I'm basing this on a downturn of 30% in UK property market) - even including potential revenue from sellers pack and floatation of right move?

If one bets on a spread betting site you do not pay 40% capital gains tax (on earnings above yearly limit of £8k approx). More so it's quick and convenient and very easy to short the market on the way down, put in stop losses and sell/buy orders.
Can anyone tell me why it would be better to use a conventional broker?

Anyway i could not give a monkeys whether you invest or not I am interested in people who have better trading techniques/ investment strategies and are focussing on other shares I have not thought of.

Please tell me how i could con people out of money by telling them to go short on CWD. Imagine if 1000 people took me up on that idea and invested £1000 each on the same day (likely eh?) thats 1 million pound - on a 750 million pound company that's not going to translate into much SP movement - especially considering 75% of this stock is owned by institutions.

Forget the long winded story at the beginning of this thread and focus on the question?

What shares does one short to make money on the property downturn?
What are the best tactics to use?
When does one short?
How long should one's contracts be?
What stop losses should people lay?

p.s If someone had explained shorting the market and the benefits of a spreadbetting firm over a conventional broker when the NAS hit 5000 pts I would be a very rich man. Consider £50 per point back then!! And it was so Inevitable - a bit like the housing crash now.....

5000-1600 = 3400 x 50 = 170K!!

Daddy Bear