Thursday, Apr 23, 2009
Longer dole queues will push down house prices
MoneyWeek: Longer dole queues are bad news for house prices
"As prices drop, more 'loose holders' - like buy-to-let landlords who are desperate to service their bank borrowings – are driven into unloading their investments at fire-sale prices. It all adds up to a vicious downward value spiral."
Posted by damien @ 04:54 PM (1498 views) Add Comment
30 Comments
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1. britishblue said...
A nice simple and sensible article amongst all the crap that has been spewed out about green shoots in the last couple of weeks
2. crunchy said...
Don't you just love a chart?
As a technicle trader myself, I don't give a damn about fundamentals as the truth is alway revealed in the charts, candle by candle.
The minute you start to listen to hype and news is the moment you start losing money.
Unlike other sources charts do not tell LIES and the one featured here says it all.
3. 51ck-6-51x said...
crunchy -
Hype & news are not fundamentals :) The only lies in fundamentals are those of the dodgy accounting practices, of which one can know.
The thing about fundamental analysis is that to be useful one needs a heap of capital for a long time and would preferably go down the lines of taking controlling stakes in order to try to influence the managerial decisions.
Quantitative analysis also requires a heap of capital for the majority of trades... but not all. However quantitative analysis also involves a big investment in technology.
That only leaves technical analysis or guess work - and I'd definitely choose the former over the latter!
If one wants to make serious returns one needs a lot of luck or a lot of skill in one or more of the three types of analysis. (I'd prefer luck over skill any day of the week!)
Why would you not give a damn about fundamentals?
If, for example, you knew that the debt per share of a company were through the roof and unmanageable without a further issue of some kind but the chart shows an upward momentum (or whatever pattern you like) you would ignore the pile of debt because the market knows best?
4. 51ck-6-51x said...
(If I were using that chart I'd want it to go back to at least 1900, not 1991.)
5. 51ck-6-51x said...
(But I agree that a picture paints a thousand numbers)
6. crunchy said...
3. 51ck-6-51x said...Why would you not give a damn about fundamentals?
In the days of being a crap trader I would watch price go against me, just waiting for price to come back.
Balls to fundamentals I like making a profit. As a day trader you learn very quickly to keep your ears shut and your eyes open and stay out of the way of news breaks.
Warren B lost a bundle on the forex. Why? because of assumption. I trade what I see not what I think and it works 80% for me.
7. gone-to-colombia said...
Out of the fog of verbiage comes the reality of the situation.
Whenever there is a revolution, and in this I mean total change, the old regime and all its adherents cling to the hope that it will all return to 'normal', the way it used to be, only a few months will pass and everything will be back as it was. The lesson that is yet to be understood is that out of this present wreckage will come a new normality, one that will, in itself, only last until the next financial revolution, but that new reality will be different.
This article casts aside unreasoned hope and describes the situation with cool reasoning; one can only hope that its arguments are taken up by the main stream media.
The message should be –
protect that which is indispensible, i.e. some kind of secure banking system.
Let fall that which it is impossible to predict is worth saving,
Let the markets find their own value.
Then once the hurricane has passed rescue anything that can be salvaged.
This is what happened in the last great crash - Pre FDR demolition, with FDR came salvage and recovery.
The pre FDR phase was accidental; leaders did not possess an alternative strategy.
Trying to save everything is impossible.
8. 51ck-6-51x said...
Fundamental analysis ain't for day traders, and yes the market can stay irrational longer than you can stay solvent. I am not knocking technical analysis by the way, I just never saw a successful trader using technical analysis first hand (I'd love to though). I know people who make a profit trading on news and instinct and say technical trading is just a way of disguising this strategy, but I see articles on technical patterns all over the net. Without serious research it feels as though one can fit any prediction to anything at any time, by switching the ranges and scales of the charts and the patterns you are matching - but I have not researched so cannot bias either way on it!
9. crunchy said...
7. gone-to-colombia said..."one can only hope that its arguments are taken up by the main stream media."
That depends on who owns the media. The BOSS always dictates the tone in any organisation. They think it's best.
With you in principle.
10. crunchy said...
8. 51ck-6-51x
LOL.. dude you should trade with me one day. If you have never seen a successful tech trader you have been hanging out with the wrong crowd.
Trading is very simple, the tricky bit is maximising your account without over trading and that requires playing the bounces as well as swing trading.
Honestly 5ick trading is kids stuff If you can handle your emotions.
11. tyrellcorporation said...
The graph seems to show an almost perfect inverted correlation of house prices against unemployment. Could we deduce that with unemployment currently hovering around 2 million and with it projected to reach at least 3 million that we're looking at a further fall in prices of about 30%?
12. Mr G said...
Another cool and rational article from Money Week.
13. mr g said...
Another cool and rational article from Money Week, if only the rest of the media were as realistic.
14. amjidk said...
i think another 30% fall in house prices is very likely, however i think the majority of the decline will be after the General elections..
15. icarus said...
crunchy and 5ick - I have a feeling you're both right and if you went into specifics you'd see very much eye to eye.
The article says nothing about IRs and credit availability in inflating bubbles, especially house prices. Causation links - recession, so inflate bubbles to generate economic activity, bubbles get bigger and when the last one deflates we're all in the merde. Inflating bubbles is a policy tool that has been added in the last 15 years to the traditional tools - government Keynesian deficits - as a means of boosting aggregate demand and lifting economies out of recession. This is probably because it's been getting more and more difficult to boost flagging economies (growth rates in investment, profits, GDP etc. were pretty phenomenal 30-50 years ago, especially Germany, Japan, US). The actions of bankers etc. in inflating bubbles is important but probably secondary to government attempts to keep economies ticking over by low IRs and bubbles.
16. Wake Up said...
@ 12
"Another cool and rational article from Money Week, if only the rest of the media were as realistic."
Although many Moneyweek articles are usually a good read, some are way too bearish for me and John Stepek seems to change his tone from month to month. And that one last week warning of April 19th being a 'big event' worried me that they subscribe to the wacky wave theories discussed by some of the people on this site. They have also been very wrong with their advice in the past, for instance Merryn recommended piling into silver about 18 months ago but that would have been a disaster.
17. crunchy said...
51ck.. If you don't believe me I can give you a signal next week for an easy 100 pips.
I only trade the gbp/jpy pair. Yes, the scary one lol.
If so I will show you that a "proper" tech trader kicks ar8e. This signal is not to be traded folks, but it will prove my point.
18. crunchy said...
Try this one 144.127 long.. profit target 144.990. gbp/jpy.
19. This comment has been removed as it was found to be in breach of our Blog Policies.
20. 51ck-6-51x said...
crunchy -
As I said before, I am not knocking it, just want to get a handle on it. I know some extremely successful traders who will happily talk for hours about why technical trading is total nonsense, but it always seems to stem back to the anything can be fitted argument and I like to think I am more open minded.
Hence some questions...
1) what is the instruction? Is that buy JPY at 144.127, wait, sell at 144.99?
2) What about getting out if you're wrong - stop loss?
3) What about the time horizon of the trade? (I'm guessing it's sub-day, but how long do you give it before you simply walk away?)
4) Isn't that range really small (seeing as over the last three weeks the range has been 142 through 149)?
5) Is price the only indication, should one not look at anything else? Transactional volumes, or some momentum indicator like RSI maybe?
6) What is behind this decision (some pattern or support level)?
21. 51ck-6-51x said...
icarus - you make some very valid observations in my opinion.
22. crunchy said...
20. 51ck-6-51x
Bookmark this page and I will get back to you. Last trade was an overnight swing trade so I could not manage it. I set a trailing stop.
As I said above this was not a signal to trade because it was close to the end of the rally but my target was at a fib level and also at major resistance. Price may test this level again.
No more time for now!
23. 51ck-6-51x said...
ok... let me know whenever. May not be on line much next week as I'm having some surgery this w/e.
24. crunchy said...
This pair hit a double bottom at 141.235 and is rocketing off again. Let's see! Good luck with the op.
25. crunchy said...
out for now @ 142.848 doji.
26. 51ck-6-51x said...
Huh, what are you looking at? Not spot obv..
27. crunchy said...
Hourly chart... draw trendline across two previous highs. Looking for price to break through.
That would mean daily uptrend continuation. However if price breaks through the hourly swing low that would imply that the upward trend is over. This pair is in a tight squeeze between the two. It is in a decending triangle which is normally bearish. But I am seeing other signs of bullishness.
This has lasted for 5 day so range is getting tighter.
28. crunchy said...
Draw a trendline on the daily lows it will be more obvious.
29. crunchy said...
Ok 5ick, I am looking at my charts for next week, as I always do. This should give you an insight on my approach. I will try to keep it short.
On the gbp/jpy daily chart the pound is in a weak counter trend from a massive sell off, even so my bias is on longs until it proves me wrong.
If you draw a daily trendline joining the swing lows the pound is showing some weakness as it has dropped below line. This has caused this pair to be range bound for the past 3 days as sellers and buyers fight it out. I will not be trading for the next two days because the range may be too tight and the chance for whipsaws too great. It would be much safer for me to trade when this breaks out and starts to show it's hand.
As to where it is going is not clear yet..... Some of the things I look for are convincing trend line breaks on daily candle closes. I plot a 14 sma if the daily candle closes below this average I look to take shorts and if it closes above, longs. Back check to see how effective this is. Candles have been below this sma for seven days, so the trader who took that position short last week is still grinning. I also use support and resistance levels and plot the previous daily high, low and centre. When volitility returns I will always look for trades in the direction of the hourly mac/d because thats where the smart money is headed. In an uptrend I will trade with more money long than short because the risk is less. That's the basics the rest is intuition and trading multiple mac/d time frames. I have tried stochastics and RSI plus all the rest, but I feel less is best. I make quicker choices without them.
Technicle trading works for me, I think the difference betweem technicle and fundamental traders is that the f traders trade the cause
and t traders the effect. I dont hold much store in sudden breakouts and I normally wait for more confirmation on all tech patterns.
I always mumble "show me the money" first. lol. Hope something here is of use to you, but as we all know there ain't no system like your own and it's good because you created it and honed it to suit yourself.
30. 51ck-6-51x said...
thanks crunchy, it seems fairly sensible. (apart from the cause & effect observation - one cannot trade the effect, one would be too late, but I know what you mean, it's all about trading with an eye to what the crowd is about to do, whether that be a momentum trade or a reversal) whilst not overloading on risk or becoming attached.
Op was a success by the way, I have a load of stitches in my gum now :( and am on drowsy painkillers! However, I did make a good months salary on the [on line] poker tables between naps, which pleased Mrs 53xy-6-51x :)