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House Price Crash Forum

HedgeFundAnalyst

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Everything posted by HedgeFundAnalyst

  1. Not to sound arrogant, but I beleive it is the U.S. that is keeping this house of cards from crashing globally. The U.S. can create so much liquidity that it is able to sustain world-wide markets through a massive carry-trade. That carry-trade is unwinding - fast - and a few more rate hikes by the US Central Bank should seal the deal for the global housing crash with Britain, the Aussies, and the "Blue States" leading the way down.
  2. Oh yeah, with regard to some of the subtle and not so subtle racism that seems to be pervading the board... The fact of the matter is that the world is globalizing and those who embrace it are the ones will survive. As there is wealth convergence between Asia and the west, I can guarantee you the countries who will be positioned to take advantage of it are the dynamic heterogenous nations such as the USA, UK and Australia. Do not take the path of some of your myopic European neighbors. I don't like blanket statements, but one striking difference between the USA and the UK is the level of integration between races. In the USA, talk to most immigrants and they refer to themselves as Americans. In the UK, they will refer to themselves as Indians, East African, Pakistani, etc. Perhaps some USA style integration may serve you well. It may be time to close the doors to certain immigrants. Not because they are filthy scum, but rather, because Britain has to now focus on integrating this lot before accepting the next. Homegrown terrorist sickos are a failure of society, nothing else.
  3. As an American and New Yorker, I truly sympathize with Londoners. But the truth of the matter is that this suicide attack will hurt London tourism and further depress High Street Sales and the local economy. It wasn't the first suicide bombing that was dicomforting. It was the 2nd attempt that I found really chilling and then the public execution of an innocent "brown" man was what put my wife and I over the top and we changed our Thanksgiving plans. As a person of Asian descent, it is quite simply damn scary to see that. It's straight out of something from Bradbury or Wells. The terrorists were high-fiving each other when they saw the shooting because that is what those sickos want - chaos. Unfortunately, I can't see how this can be good in the short-term. In the long-term, London will survive as it has for centuries. It's a great place to visit and a great place to live (despite the cost!). Markets are based on fear and greed. We all sit here and see these charts of house prices to income and wonder to ourselves, when and how will it go down. It's always something different, whether it be an idiotic Labor government in the 70's, failed EU transition in the 90's, and now this. Stay clear and remember that things always go back to trend, but regardless of terrorism and the like, there is always FUNDAMENTAL value at reasonable valuation metrics.
  4. Thank you for the useful information, Dr. Bubb. It may be different this time in the U.K. due to the extent of the undervaluation in the 1990's. While relative to incomes, house prices seem over-valued in the U.K., relative to other investment options, they may be considered only mildly over-valued. Unlike the Federal Reserve, the BOE didn't cut interest rates as dramatically as compared to their levels in the late 90's. The U.K. has a much more balanced economy in my mind due to the extreme pain experienced in the early 90's caused by compliance with the ERM peg. My opinion is that the UK and US are in two different types of bubbles. The UK bubble has been caused by a decrease in the premium required to own a home versus other investments (buy to let phenomena?). In the U.S., the bubble can be wholly attributable to the madness of the Fed. While I have thrown out an alternative explanation as to why the UK may not depreciate significantly, I personally believe that the premium required to own a home will most likely increase back to normal thus effectively increasing required cap rates and decreasing home prices significantly.
  5. Calm down folks, everything will be fine. Hedge funds come and go but they are a permament fixture in finance, I guarantee that. The best way to invest in hedge funds is through an experienced advisor who can avoid the landmines out there. No doubt about it, this credit cycle will cause casualities. It always does, and I agree that it will be especially pronounced because of how long money has been free in the USA. Luckily my firm avoided synthetic CDO funds as we could not fully understand the risks and ultimately concluded regardless of how it was sliced and diced, it was a leveraged long trade. Nevertheless, contagion is possible and it will affect all asset classes should it happen. However, if hedge funds fall, you can bet that traditional investments will be crashing 3x as hard around them. So in the end, I'll take a good fund of funds portfolio over the best mutual funds any day of the year.
  6. Hi. Why would I, with the supposed 70k combined family income, buy a 1 bedroom flat and live with my lovebird wife when others with 70k combined income are living in nice 3 bed/2ba semi-detatched's they bought a few years earlier? Have I missed the boat? Is too late for me forever? Is my only course of action to lower my standard of living even though my peers who are but a few years older didn't have to lower their's? Is it because it is "different" this time? Is it because we are running out of space? Did life provide me with the short-end of the stick? Ah yes, it must be. Just like when people were saying you would miss the boat on the next new technology or that "technology is here to stay, so you must invest in it". Oh yes, why would I pay 1,000 pounds per month to live in your sh!tty little flat, when I can rent a whole house for less than 1,200 per month - maintenance, worry free, etc, etc.? You have better chances at the racetrack then renting a multiple number of 200,000 pound flats in Kentish Town for 1000 pounds, I'll tell you that.
  7. It's good that people are trying to think outside the box (even though the analysis is flawed). Stock traders like to use the 50% retracement rule. That is, upward movements in prices are often met with retracements of approximately 50%, give or take. Thus, if prices have risen from say 100 to 250, then expect 1/2 the gain to be given up; that would be 75. So the asset will probably fall to 175, meaning a 30% loss peak to trough. In the case of a 250% gain, expect a 36% loss peak to trough. Not that this is a scientific analysis either, but I find it a good rule of thumb.
  8. I would avoid stocks in general. The U.K. is almost assuredly headed for a recession which means lower earnings. In particular, avoid consumer/retail names. U.K. bonds look good here as interest rates fall.
  9. I for one am totally sick of hearing about how so and so is a bloody genius because he lives in some ghetto and his house has gone up from $100k to $270k in the last 5 years. Such is the extent of the bubble in many parts of the United States, particularly California and New York, where homeowners will spend 50%+ on housing payments and many don't deserve to own a home (based on income and credit history). I was recently in London and couldn't believe the number of for sale signs in the suburbs. To a savvy few it was apparent the bubble was bursting while others were nonchalant and ignorant as usual. I am dying for this to happen in the United States. There is evidence that it may be happening already; for instance inventories in Southern California have risen significantly as they have in the country as a whole. Perhaps the forces of supply and demand on price will manifest once the spring comes and a whole new set of homes add additional supply to the marketplace? Am I the only one who can't wait for leveraged homeowners to get squashed!
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