Mr_Sminty

Why does housing continue to stay bouyant? The huge inflation in oil prices is leaving middle east and russian coffers bulging with dollars, from here it gushes into european and london financial markets. This leads to major amounts of dumb money going into poorly thought out investments and currencys such as the pound. I am not sure interest rate rises will really knock housing on the head in the UK, until the major global recession starts to rear up and the oil price collapses along with these petrodollar revenues, there will then finally be much less to finance sterling or the booming london economy. So dont bank on a further rate cut being the final straw that breaks the back in regards to house prices. Its going to take a recession

What is this mastermind!? Are there any successful economies that have a gold back currency at present for a bonus 5 points? I think this misses the point about what is a currency and what value people have in it, as long as people have faith that a currency maintains its relative buying power and is quickly and readily transferable then that is all most people care about. Being able to trade in your paper for some nuggest of gold doesnt really solve too much in the long run, it will just lead to less flexiblitly in where you spend how each person spends and where you invest, all holding back real economic innovation etc and putting such descisions in the hands of those who hold all the purse strings i.e.the gold. In say 50 years time when some innovative process can create gold cheaply what kind of argument will be talking of then. Im assuming we will have to find some new inanimate resource that people might covet. I think there must be a system that can have the flexibility of FIAT but the strength to prevent abuse and inflation, of course the question why have economists/financiers not worked this out yet means maybe its amatuer thinking on my part

Good thread. Maybe if we chopped down government and prevented it inflating currency through issuing of long dated debt and spending more than it takes in revenue that would be a start. Maybe like the judicary and the head of state are seperated from government, economics should be fully independent and given strict guidlines on what money is available to spend, price stability and money sustainability. How the hell is the US government going to maintain is huge spend on the military without major reforms or devaluation? Ive only got a 5k deposit so deflation hyper inflation wont drastically effect me for life so I watch the gold rally with interest, I dont believe I know enough about the facts to start buying gold regardless of the price(stick to fundamentals) I certainly dont buy the gold buy argument about gold backed currency the only option though, just something a little too extreme and inflexible about it. Maybe like mentioned above we will move to a gold system in the event of massive fallout, that might give the option of seperation of economic and monetary policy from short term political chancers pursuing their populist agendas. Kind of disrupts democracy in a way, with an elite making decisions for a country unelected but one could argue why is it that the prime minister cant try who he likes in whatever way the latest sun opinion polls are heading? Because we need independent experts with well defined rules to apply it correctly, I cant see it impossible for such an idea to be applied to economics etc. Political success would be based on the most efficient use of a set amount of money etc.

Have to say like someone else really good thread, nice to see a good old fashioned discussion about relevant issues with some good well balanced ideas, rather than gggggrrr im a big bear, puff puff well im a big bull rah rah rah which Ive been having to wade through recently. Clap for magpie and karhu from me! Oh and the supporting cast your important too

Cant be bothered to read all of this thread but just some points. The futures market is primarily or should primarily be for producers and buyers and sellers of goods to smooth out excess insufficient demand and thus hedge and make the business more flexible to adverse prices etc. As such they are willing to forgoe say a potential 5% profit to secure against the risk of a 25% loss. What I expect your referring to is pure speculation, that is those who are willing to take more risk to grab that 5% that might be going free. As for applying this to the general stock market where most part time investors and retail investors put their money is again thinking that its all about speculation, speculation is taking a punt and gambling and yes not everyone can win and the bookmaker(i.e. banks)will not be in it unless they take a cut to bring both sides of the specualtion party together. Theoretically the main reason for buying a stock is the right to future cash flows, much like someone migth buy a BTL for the future cash flows of rent. Most captial gains should be due to lack of supply for such a likely cash flow or underestimating of the original cash flows, anything else is speculation. The last rule can be applied to property and as such is open to specualtion, if people are willing to overpay for the intrinsic cash flows that it will generate then fair enough, however it is not risk free as implied by the original post One final point is that stocks and shares have annual financial reports and hard factual data relating to both the past and the present making them far more transparent and a far more rational apparaisal. The danger in property is that its generally for most people a one time punt (thus a totally diff market) and theres no real hard facts apart from nominal figures taking from poorly constructed averages and anecdotes from financially illierate people who claim that because a house was 5k in 1970s that a house for 250k will be worth theoretically 10million in 20 years time. Also regarding property any investment gain is secondary as a house serves a function and any gain when actually realised is already committed to a new property.

In the long term equities provide a much higher return than bonds or cash, there will be ups and downs along the way just as your pension provider will invest in super shares, dogs, overpay for bonds etc there will be winners and losers. Im not sure trying to micromanage a 40 year investment will be to significant, if you go into bonds when will you call the bottom of the stock market and go back into equities? Can you maybe split the equity investments across countries ie. UK, Japan, EU maybe that would be a way of lowering the equity risk? If you want to actively manage a pension plan its probably best setting up a SIPP and putting your own money in which you can claim tax back on, rather than getting your company pension admin to change investment strategy regularly(which most wont be too happy with). You could then maybe take a different strategy and use it to invest in lower risk assets than your company pension which will have to benefit of free money in the company contributions so could be more risky?

Wheeyy heeey she can sell me an overpriced one bed executive apartment investment anyday! Time to hit google

Lets all curl up and die in our own pesimistic bitterness whoo hooo! We can all join in! I learn something new everyday reading this forum!

I like Ishares, not sure the China one is great though, I think it invests in the top 25 red chips (top 25 chinese companies) whose corporate governance and stock exchange and transparency leaves something to be desired. Defo a good idea to see if you can find this thought pinched from somewhere else on the net, as Im pretty sure I didnt make it up, kinda makes sense though, foriegn ownership in Chinese stocks is still closely protected I think throw in corrupt chinese officials planted as management its not all going to be a bed of roses so not sure if this is real exposure to chinas growth, but maybe there isnt many real opportunities outside the commy party and select Investment banks Theres an Ishares Brazil might be worth a look at as your going for the exotics

ETFs, Barclays ishares (IJPN) have a charge of less than 1%, no stamp duty and are no purchase dealing costs on squaregain. They are basically trackers and payout underlying dividends, I have some! In a share ISA you could theoretically move between different markets buy buying and selling say the UK ishare or the JPN ishare depending on your outlook with no stamp duty and commission to pay (commission payable on selling I thnk) so they are a cheap way to be a bit more active.

In the FT today a good article about the very strong facts and reasons that predict sterling fall and hence import inflation and why interest rates might rise. If theres a fall of 10% against the Euro then you would see a rise to around 5-6% in Sterling rates A nobel prize economist reasearch says a currency fall offsets slower consumer consumption, a fall in sterling of 4-5% would be the equivalent to a interest rate cut for manufacturers and help on the global competitiveness front in the short term Therefore my conclusions is the following not to improbable result. BOE decides the economy can be rebalanced by a devaluation in the pound to keep the manufacturing sector providing some puff to the economy, consumer spending is pretty much debted up to the eyeballs and a further cut in rates will do little anyway, interest rates rise up over 2007-2008 to 6% prevent the pound going into free fall and therefore CPI at 2%. Throw into the mix low wage inflation and low growth for the UK 2007-2008, and an increase of mortgage payments of 33% come the end of 2008 and we will see how affordable these houses really are. Even if they do turn out to be marginally so, I think it will be the final end to HPI for a long while.

Very good point and I agree the whole things is going to take a long time before a number of people realise they are fecked. Low interest rates and globalisation will also ensure that its all happening in super slow motion. I can see economic case studies and research being done on the global property boom of the early 21st century, hopefully we wont have colonised Mars or living under the sea by the time these are written. However Im also getting an inkling that unless borrowing more than 75% of the value, the financial impact of buying as opposed to waiting for a crash will be minimal when weighed up against other factors that are important to someone such as sanity, relationships with other half etc. Knowing about potential overpricing and retirement planning etc as against MEWing till sick should offset the risk of falling prices IMO.

Rightgeous profits will obviously be made when you need to sell your metal for the devils currency to pay at tescos, or will you give any gain in the devils currency to the charity of your choice? Perhap you have a blessed allotment that provides food and in fact dont need to buy anything!? Ive read quite a lot about Islamic banking and finance products recently, it makes me laugh how repackaging risk and return purely on semantics to get around the "interest" cundrum is lapped up as being fine and dandy. Good to see how through the ages humans find ways of interpreting the spirit of the law to make a profit, being able to sell the notion of damning someone else for doing the same but via another way must also be a bonus. I suppose the Arab shieks also feel fine and dandy giving away 10% of their wealth each year to secure a place in heaven while the rest of the population live under oppression and poverty is a similiar interepration of the spirit of Islamic law

Anyone invested or thought of investing in this company? Reasons why or why not would be appreciated. Seem a good company, currently at 40p been told they are worth about £1. Dont know much about mining and commodities so Im a bit sceptical from a hunch viewpoint

The FD at Tescos is probably one of/the most respected in UK at present, so I think it very unlikely if he made the call to open a seperate REIT company it would be a consensus view that he was out of depth or making a big mistake. If Tesco makes good inroads into Asia and America it will need to raise huge capital to finance this and a REIT will surely be cheaper than both equity and debt I strongly feel that current sentiment regarding property is still strong, with both companies and retail investors willing to put money in such safe bets and with large financial institutions falling over themselves to raise capital and find projects to put money into meeting these needs while the belief is still there. As such I think REITs will be a success due to the global property boom.