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House Price Crash Forum


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About NatTurner

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    HPC Newbie
  1. My thinking is that owning gold has nothing to do with the collapse of civilisation, but that it has very low correlation with all other asset classes including the other precious metals. Even an asset with a return of zero will add to your overall portfolio's return if it has no correlation with the rest of the portfolio. As long as you rebalance at regular intervals that is. The question is how much do you own, and I think it depends on your guesses for the expected returns of the other asset classes. With cash and bonds probably headed for negative returns over the next 5 years or so and equities also set to return very little because of no earnings growth and dividend cuts I think putting a substantial amount in gold, say 25 to 30%, makes sense.
  2. Just checked weekly returns on the S&P 500 and the Dow since 1950 and the correlation is 0.95 - so I exaggerated a bit. If it means anything, and I doubt it does, the S&P is up 48 times in nominal terms since 1950 while the Dow is up 39 times.
  3. It's not a good idea to use the Dow as a benchmark as it is a price-weighted index in contrast to a market-cap weighted index like the S&P 500. I read somewhere that if the following Dow stocks all went to zero it would only result in a loss of a few hundred points: GM Bank of America Citigroup American Express Microsoft Pfizer Intel That said it is 99% correlated with the S&P, but the actual level of the Dow itself is quite meaningless.
  4. Well considering that the funding would probably come from whatever the Housing Corporation has morphed into lately, if councils did decide to build it would just mean that Housing Associations would have to build less. It ends up a net zero.
  5. I think Local Housing Allowance will be introduced for council tenants this April. If so then she would start getting housing benefit only for a 1 bed property. She could always make up the difference herself, but at least its an incentive to get her to move.
  6. Australia is another place with ridiculously stringent planning laws like California and the UK which help the bubble inflate but will do nothing to temper the collapse.
  7. Probably half of that is social housing, and at least in London a large part of the remainder is occupied by those on housing benefit.
  8. NZ has a massive current account deficit so you can expect your currency to become worthless soon. At least you're self-sufficient in lamb.
  9. If there's not a recovery in earnings in 2010 then 4000 on the Dow is a possibility. That would put it on about a 10 P/E - not unreasonable for past bear market lows. In 1932 US Companies actually paid out more in dividends than they had earnings. The dividend yield topped out at 14%! And that's with falling prices.
  10. You can open up a Charles Schwab account in the U.S. and then buy one of two Pro-Shares ETFs: TBT - shorts 20+ year Treasuries PST - shorts 7-10 year Treasuries I may be wrong but i think TD Waterhouse has a US share dealing account which can be placed in an ISA.
  11. Sorry, just passing through - I know nothing about the UK market. In fact it seems much harder to get this sort of data on non-US markets. Probably have to pay a fortune to someone at JP Morgan.
  12. Forecasts for 2009 have already dropped by about 50%, so its probably more accurate to say that analysts are finally adjusting to reality. The market is definitely pricing in at least a modest V shaped recovery in 2010. An exponential trend of earnings from the 1950s shows that the market is trading at a P/E of 16. Last year's earnings reached 60% above that very long term trend (all the froth from financials I'm afraid).
  13. Not that it matters to the traders out there, but the S&P 500 is trading at over 20x projected 2009 earnings. By the way, if the forecasts are correct, in 6 months this earnings decline will be worse than 2000 to 2002. Any bets that by 2010 it will be worse than 1929 to 1932?
  14. Greetings from someone who trades the US markets. If you open an account that can do this, TD Waterhouse in the UK or Charles Schwab in the US (available to UK investors) you can invest in PST which shorts 7 to 10 year bonds or TBT which shorts 20+ year bonds. Both are ETFs from Pro-shares. I expect the management charges to be around 0.60% per year but maybe more.
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