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Posts posted by MrWallace

  1. When you have billionaires, oligarchs and dictators from the whole world rushing to put their riches into terraced houses and 'luxury' apartments, then it does have the ability to defy gravity.

    I thought the riots might have made a few of them think twice about London, but doesn't seem to have had much effect so far.

    Don't be silly, billionaires, oligarchs, mafia bosses and third world dictators and their families only live in the posh parts of London. And there is NO WAY the police would have let rioters loot and burn in Nottinghill and the City of Westminister.

  2. You really need to open your eyes to the way the world works. The people who run the show don't give a damn about doing the right, decent thing. We've just seen the banking system dip into the pockets of the public to pay for their stupid mistakes so the notion of putting yourself into penury in order to do the 'morally correct' thing and pay back leeches like that (if you even can mathematically pay them back) is just so much la-la-la bullcrap.

    Realising that you're in a position where you can't possibly repay and therefore defaulting and taking the resulting consequences IS taking responsibility. If you think the consequences are too light then complain to the lawmakers, not the people who conform to the law.

    I think you misunderstand, I actually agree with you, I believe that people with no assets and very little income after essentials have no other option, it's just funny the way the official tune has changed when suggestions that telling the creditors to go to hell or published on the BBC.

  3. Did you also see sswp vs payne and cooper in the high court the other day? Overpayments of benefits and social fund loans can be included in a DRO, I think the government will be rethinking DRO's, else for large overpayments it will be cheaper to just DRO yourself. You could always ask for a social fund loan to finance the DRO :)

    Quote from that article you quoted...

    "Charities say that, on the positive side, the DRO figures show that people are doing something about their financial problems. "

    That made me chuckle, yeah they're doing something positive and showing that they're serious about their financial problems, they're defaulting. It's like someone saying: "I have finally decided I'm going to be responsible and take my debt problems seriously... I'm telling my creditors to go whistle for it."

    I'm still laughing, it's just so surreal. It used to be that the responsible thing to do was look seriously at your spending, cut out all the unnecessary spending, set up a repayment plan that your creditors would agree to and stick to it until it's paid back. Now the responsible thing is do the opposite, according to that quote anyway...

    On a more serious note it is the only option, there is probably more debt than money as money = debt minus the interest. It is not really, real. At least not in the way that the goods and services it bought are/were real.

  4. Yes, yes we can

    And why does it have to be an either/ or question? There's plenty of blame to go round

    I get what you're saying, but it doesn't seem like an equal relationship to me.

    On the one hand we've got the general population, and on the other hand there are sophisticated banking operations out to get their debt claws into them and make money from money with everything from unsecured personal loans and credit cards to pawn shops and pay day loans. And they spend millions on slick PR gurus to tell them the best techniques to do it too, the PR gurus are constantly refining their ways to come up with the best techniques to manipulate people.

    They constantly bombard our media with adverts and even write to people directly in the mail. And they're not even working alone either, they are backed by their armies of commission salesmen in other industries selling and advertising everything from cars and TVs to holidays - trying to persuade people to just sign this paper in the show room and it is theirs.

    And mean while the government is silent and there are no equally loud voices warning of the dangers, just a few lines buried in the loan agreements small print.

    At least with our dangerous addictive things like tobacco they're not constantly telling you how great it is and there are very loud voices warning people about it's dangers, but not so with debt.

    You make a good point in your later post about my analogy of giving addictive drugs to school kids not being a fair one because borrowers aren't children. A better analogy might be when the British sold and push opium in China and turned a 1/3 of the population into drug addicts...

  5. We are now entering a new period where debt has no shame, default on debt, take out excessive debt knowing the chances of repaying are low.......

    In your opinion, is that a bad thing?

    Should people be ashamed of being bankrupt or in debt?

    People no doubt made a lot of bad decisions out of the desire to have everything now now now without having to save or even actually be able to afford the things they wanted, but how much of the blame should really rest on the debtor?

    The banks were supposed to be the sophisticated investors looking after everything with all their risk management models etc... But they just kept on lending the money out to almost anyone who wanted it.

    A guy at work told me about one of his sons friends who was unemployed and living with his parents. Just after he turned 18 he took out a credit card after they sent one of their direct mail shots to his house. Not enough to advertise on TV they had to write to the young man offering him a credit card, anyway he took it. Two days after the card arrived it was maxed out on online poker.

    My work mate says his sons friend doesn't care and just wants to go bankrupt, he has not paid a penny and couldn't pay the debt even if he wanted too. But he's not worried either way though.

    Yeah it's mad, but when banks are handing out credit like it's rain water what do they expect? That would be like schools handing kids heroin with societies approval and then society moaning about the number of drug addicts and how there was no social stigma in being an addict any more.

    Can we really put the blame on the borrowers?

  6. If we had the US laws where you could walk away from a mortgage and be free of it simply by handing the keys back to the bank it would certainly help us get the housing crash so many on here want to see, as it is in the UK we will probably see the housing bubble take just as long to deflate as it took to inflate. US style mortgage laws here would lance the boil and get it over and done with a lot quicker as home owners in negative equity wouldn't be holding on.

    Saying that, the USA's laws would make the bubbles upside worse too. I mean, if house prices are rocketing and you have 'no job no income' why not take advantage of the banks 'no problem' offer by gambling risk free? All you need to do is take a mortgage with an ultra low teaser rate and if prices are higher still next year then flip it and take the cash, if not hand the keys back. It's like heads you win tails the bank (I mean tax payers) lose.

    If I were in the USA and in negative equity I'd hand the keys back, save my mortgage/rent money for a couple of years and buy again at the bottom after I had finally been kicked out. And I'd have all that money I'd saved in mortgage payments too.

    On a side note: The USA laws really show the way different groups are treated in society. Home owners in America are typically middle class or better off and not all that young either, for those people they have laws that let them get a way with irresponsible borrowing. Yet for the young they recently introduced changes to the bankruptcy laws that mean that a student loans can't be discharged through bankruptcy, including things like credit card debts run up when one was a student. That is like the other extreme and I think it is pretty sickening really. '****** the young' seems to be the new political mantra replacing 'it's the economy, stupid'.

  7. From where I'm sitting it looks like house prices are crashing, just slowly. In other words the bubble seems to be deflating as quickly as it inflated, or not to far from it.

    I had a look on aspc.co.uk and it looks like many homes are now fixed priced at under the valuation on the home report, it used to be offers over the valuation on the home report with 10% - 30% over the valuation price not being uncommon.

    So what do people think? How long did the bubble take to inflate and don't some bubbles, particularly bubbles in pretty illiquid assets, take as long to deflate as they took to inflate?

  8. I just made this exact point on a Times article I read on this.. I suppose they think an economy like Luxembourg is in trouble then as its only ranked 69 in the world...despite having the largest GDP per capita?!

    Exactly, nicest country I've ever worked in (or visited for that matter) is Norway, not only is it a lovely place with a great benefits system, there is low unemployment and the people there are rich.

    But as the size of the economy goes they're probably fairly low on the list because they don't have a large population. So Norway have very little clout on the world stage, but that doesn't seem to bother the people there who just want to live nice lives.

    Saying that, France has a population around about the size of the UK's it it wasn't until the financial crisis that the UK fell behind France.

  9. I don't mean to sound rude but I really think you and your primary school teacher mate are wasting your time favouring one of the mainstream parties over the other.

    They're all the same really, politicians gave their power over to 'the markets' long ago, and they plan to keep it that way too.

    If Labour were in power unemployment would be like it is now as they wouldn't be able to do much to force private enterprises to create jobs either. All the cuts would be happening too and they would have raised VAT as well. Their promises don't mean anything. Labour are owned by exactly the same group of people who own the Tories.

    Its like this. Pretty much all politicians of all the mainstream parties will always take the side of a higher social/economic class over another. For example, they will always favour landlord over their tenants, but if landlords get into trouble they will always side with the bankers over the landlords.

    The only difference is with policies that the mega wealthy aren't untied about; such as the right to protest, free speech, ID cards and other civil liberties. Labour really dislike individual freedom and want as much state control over people as possible in order to socially engineer them into what they want them to be. Labour were also pretty keen on filling up the jails as fast as possible and criminalising as many things as they could, as quickly as they could. Labour will generally sell you a peerage too whilst the Tories will had them out to folk born with a silver spoon in their mouth, but really there is not a lot of difference between them when it comes to things like employment and the economy.

    What always surprises me though, is how come Labour's core vote of Social Democratic voters are so stupid that they vote for them time and time again? Don't they realise that when your vote can be taken for granted your views become worthless to these people?

    Labour introduced the non-dom tax break for foreign billionaires, it was such a break that I believe the IMF listed the UK as a tax haven for foreign nationals until 2008.

    Labour kept all the Tories buy-to-let legislation and engineered a housing (price, not building) boom to transfer wealth from the young and the less well off to the better off and the baby boomers.

    Labour built less council housing than the Tories and continued to sell it off.

    Labour introduced tuition fees because their goal was, as Tony Blair put it, 'to create a market in higher education'. They're totally cool with the market in elementary education too and Labour politicians, even the so called 'left-wing' ones, generally send their children to private schools.

    Labour increased the gap between rich and poor, during Labours term in office the earnings of the richest 0.1% soared and the bottom 50% of earners got poorer in real terms.

    Labour well and truly reversed social mobility. Senior Labour politicians like Harrett Harmen claim they're concerned about inequality amongst different sub-groups, race, religion, gender etc... but they one group they're not interested in is the working class. They're so far detached from the plights of ordinary working people that they don't even seem to be able to relate to them.

    Labour boasted about their "light touch" regulation and let the capitalist cowboys in the City of London, dodge taxes, run riot and blow up the banks and then bailed them all out with tax payers money when they did it and allowed them to return to business as usual.

    Labour MPs ripped off the tax payer with their expense claims at least as badly as MPs from every other party too.

    Why anybody who believes in social democracy turns out to vote for a party like that is beyond me. At least Conservative voters believe in the massive inequality they're voting for...

    Show your teacher mate my comments if you will, because I'd honestly like to hear what a Labour voters has to say about these things. If I knew any Labour voters who were social democrats I'd ask them myself but up here they've all switched to the SNP in disgust (not because they want independence).

  10. These numbers highlight the massive impact of too cheap credit followed by far less. FTBers were seemingly buying more houses when they were more expensive and the reverse is true now. How sustainable is such a trend over the medium-term though?

    There are of course still many EAs out there that believe rising prices = more sales and vice-versa.

    What these numbers can't measure is the background sentiment. How many FTBs in 2006 were worried about missing the boat? How many now could buy at the lower prices but are holding out for further falls? There's a difference between cant buy at today's prices and wont buy at today's prices.

    I don't think most wanna be home owners are really all that sophisticated as investors to be honest, and I doubt all that many of them aren't buying because they're holding out for further falls either to be honest. Some no doubt are, but I don't think it's as many as we might think.

    I think most FTBers couldn't really afford homes in 2006 and they still can't now, the difference seems to be that it didn't matter if you couldn't really afford a home in 2006 the bank would just lend you the money anyway while now they won't.

    I know someone who hates renting and really wants to buy but they have no savings and loads of credit card debt. I don't think they'll be able to get a mortgage at the moment. If it were still 2006 they could simply get a liar loan for any amount they wanted and buy whatever they wanted. If that opinion was still available now I imagine they would have already done it.

  11. I like the way they say that the deposit is 'demanded' as if no-one would voluntarily reduce the size of their loan.

    We're still a long way from debt aversion.

    The deposit is still the single biggest reason first time buyers aren't buying as they simply don't have tens of thousands of pounds of savings. They didn't during the boom times either mind you, but the lenders didn't seem to mind then.

  12. remember people buying marconi and some other techies all the way to the bottom.that worked out well.

    Like I say, it's a bit like a lottery ticket. A jackpot isn't that likely, but it doesn't hurt too much when you're wrong...

    Lets see... If there was, say, a 90% chance of them going under and a 10% chance of survival and a return to profitability; with the loss being £300 if they went under and the gain being £10,000 if they survived I'd take that bet.

    I'd rather do that than spend over a thousand pounds on a 1oz gold coin that's probably not going to go any where and has pretty much no chance of ever generating any kind of yield ever.

    PS. For the record, I DO NOT advocate buying shares in HMV, I just think it's a better idea than buying gold. ;)

  13. Houses can be bought for 3.5 times average earnings in many parts of Scotland, but huge prices in a few places like Aberdeen in Edinburgh have probably skewed Scotland's figures as many towns are becoming more affordable.

    Even in Aberdeen there are signs of prices falling. Somebody I know just accepted £165,000 for a two bedroom flat in Aberdeen valued at £170,000 by the home report. Several years ago they would never have had to do this.

  14. The only caveat is: do you trust their accounts?

    eg was Olympus undervalued?

    Do I trust their accounts? Well, in the absence of any evidence to suggest that their accounts in particular are unlikely to be trust worthy I don't see what option I have. If I'm not going to go on their accounts then I've got pretty much nothing to go on. I have only taken a brief look at Thorntons though.

  15. Nah, what's the worst that could happen, a fall to under 1m market cap? Surely not for a high street stalwart....

    Worst that could happen is they go bust of course. And it wouldn't take all that much for that to happen either.

    Gotta take some calculated risks though. What's the alternative? Keep it in the bank and let inflation eat it away? Buy an over priced property? Or maybe we could all just hoard gold and eat that instead?

    Personally, I'm looking to buy shares in companies that I think are under valued, some of those companies won't survive and will go bust, others will recover and do well. Look at Kenmare Resources, I got some shares in them because they have such a great asset, but that didn't stop the market valuing them at 12 pence per share at one time after a serious incident.

    If you're only interested in massive rock solid companies with huge assets some of the mega-miners like BHP Billition are way under valued. Microsoft is cheap relative to it's earnings too. If you compared the price of the FTSE in 2010 to it's price at the peak of the bubble 10 years earlier you would think that it has barely fallen. But if you compared the price of the FTSE in 2000 with the earnings the FTSE companies made in 2000, and then compared that with the price of the FTSE in 2010 with the earnings the FTSE companies made in 2010 you would see that in value terms shares are much, much cheaper now.

  16. Rebuild cost + land value.

    I think that's a pretty good way to value something actually, but I personally wouldn't value a property that way but I can totally understand why you would. An insurance company would be very interested in that figure though for obvious reasons.

    I don't invest in property but I do buy shares. If a company is unprofitable for a fair length of time it's in danger of going bankrupt and I'd therefore say it's value is the value of what you could expect to sell it's tangible assets for minus it's debts and liabilities (this is sort of like your rebuild cost + land value). But if a company is profitable and looks like it will stay that way in the medium to long-term I believe it's value is x number of times it's yearly profits (rental yield in the case of property).

    Price = value the market puts on it.

    Real Value = the intrinsic value based on rental yields.

    If the market wasn't fickle and always priced things at their real value then the efficient market hypothesis would be true and it would be pretty much impossible for investors to make any money.

  17. whats this value that you talk about?

    a house does not have a value , just a price.

    Many investors wouldn't say that. If I were a property investor the value I would assign to a property would be based on what I could rent it for minus my costs, the price would be what I'd have to pay to actually get it. If the price was considerably cheaper than what I believed it's intrinsic value to be then I would consider it a good investment.

    For example, if believed I could rent a certain home for £6,000 per year after costs and its price was £50,000 I'd probably consider the property under valued (i.e. priced less than it's intrinsic value) and buy it. But if this property's price was £150,000 I'd consider that over valued, i.e. having a price tag way above it's value and would not buy it.

    In the example above someone might well pay the seller £150,000 for the house today, only for the new owner to find that someone else would never give them that much for it in a years time and they would therefore lose money and find they had paid to much.

    Likewise, if I bought it as an investment for £50,000 I might not be able to sell it for more than £50,000 in a years time either, but that wouldn't matter to me as the income I could generate from it would mean I still had an asset with more than £50,000 of value to me as an investor.

    However, if my main reason for buying it was to sell it for a higher price rather than generate a revenue from it I wouldn't be an investor, I'd be a speculator.

    The difference between investment and speculation is how you intend to profit from something, for example if you bought farmland because you believed the land would yield x returns from the crops it would produce that would be an investment. If you bought the land because you thought someone would pay you more for the land next year than you paid for it this year then that would be speculation.

    An investor should typically try and assess the true, underlying value of an asset (in value investing theory this is known as it's intrinsic value) and never buy if the price is more than what they believe is it's true value. Anyone buying a home (or anything else for that matter) as an investment without trying to assess the assets real value isn't investing at all, they're just speculating/gambling. Most of the buy-to-letters in the past decade were speculators gambling not serious landlord investors investing. I believe this to be true because they spent their time talking about how much their properties were going to be worth in the future rather than the income their properties would generate.

    Does that logic make any sense at all?

  18. I agree and disagree with this.

    Some things that are obvious (outside the realm of pseudo science) are that oil is a finite resource and that we are finding it harder to find big fields.

    The flip side of this is that the extraction technology is getting better, as is the exploration technology. This is what most of the more negative commentries on the future prospects for oil miss. Current extraction technologies leave massive quantities of oil in place.

    If you examine the improvements in technology over the last 20 or so years you can see that there have been some radical changes. So the true story is a convolution of both the decline in production of "easy oil" plus the improvements in technology that improve recovery.

    So the obvious argument then becomes, why isn't the North Sea producing more as these new improvements in technology take effect ? And the answer is that there is less field development going on there and less investment in the technology because the economics simply don't make it worthwhile. For example back in the 90's I think the oil price was at around 15 USD per barrel at one point. Now at this level the cost of production of oil from the North Sea which is much higher than in places like Saudi makes the investment not really worthwhile. That's why the North Sea is becoming a patchwork of smaller operators all trying to squeeze out as much as possible with very little investment in new technology. The big players have moved on to bigger and more profitable fields. I don't really see this as a bad thing. In the same way the coal mining was shut down because we could get cheaper coal elsewhere, it makes little sense to keep investing in oil when we can source it for lower cost elsewhere. In the future it may again become economical to work the coal mine and the north sea, in the meantime we should probably invest our money developing cheaper sources of energy like shale gas and coal gasification (as was mentioned by another poster), as well as gradual diversification into wind and tidal, coupled with an increase in energy efficiency (for example turning all street lights to LED would probably save a massive amount of energy, all these sorts of things have to be factored in to make an assessment, and the fact that technology is chaning so rapidly makes this very difficult).

    It's very difficult to use the price of oil as a benchmark for demand (and whether or not we have reached peak) both because of fluctuating demand in the economy and price speculation, as well as technology. I would say though that the advent of shale gas production should really be classed as disruptive technology. This is increasing rapidly in the US and is likely to have a similar impact in the UK and Europe. The zloty could become a hard petro backed currency in a realtively short space of time.

    Interesting you think the Zloty could become a hard petro currency, I've worked in the oil industry for around 8 years now and Poland seems to have very recently popped up as place on our radar... There are gas rigs over there too now. It would be interesting to see how much reserves Poland actually has.

    You're right about reverses still being there. If you're prepared to pay $1,000 a barrel there is more oil than we could ever use. But extracting it at previous rates, I can't see that in the future. Once well pressure goes it's really, really difficult; and that happens at about 50% depletion.

  19. MrWallace:

    I was very nearly going to dip my toe in Thorntons gooey chocolate muck when they fell to 40p and showed some support.

    Only £1k but now they are 50% off it'll be £500 for 2,500 shares. The brand alone is worth reviving and as GPS says they are stuck in the middle... that said the strategy is obviously to go mass market on supermarket shelves and once overheads are curtailed they'll lose some of the premium pricing.

    I'm glad you didn't get in at 40p per share, but even if you had my gut reaction would still be that it wasn't a bad investment and you should hold on. My advice is look at shares as a long-term investment, only invested money you can afford to lose and don't invest money that you expect to need in the near future. That way you can't be forced to sell, and a loss isn't a loss until the company goes under or you decide to sell and take it.

    I know how it feels to have a share you own collapse, my worst one was Game Group Plc, I bought some shares at 20 pence and I'm currently averaged in at 15 pence a share - I'd get half of that if I sold them today. But I believe the company is worth over 15p a share and I don't need the money at the moment so I'm happy to wait. Still, not my best investment decision though.

    Good luck your investments :)

  20. You are a f***ing idiot and I claim my £5.

    There is no such concept as "Market Value vs Real Value".


    Charming... ;) There is such a concept believe it or not, but it's usually called intrinsic value. I am of course talking about is Benjamin Graham's value investing concept/theory. He wrote about this in his book the intelligent investor.

    Intrinsic value is the underlying value contained in the asset its self. This value is usually calculated by the future income the asset will/can generate. You actually made a good point about speculation though, future income is speculative as nobody really knows the future for sure. I think you know what I mean, but I'm not going to argue with you over it if you happen to see things differently.

    I really do believe that Mr Graham's value investing is a sound approach to investing, and I really wouldn't consider the market's price as a true reflection of 'real' value either. I remember in 2007 a badly maintained 1 bedroom flat in a not so great part of Aberdeen would cost £120,000+. I'd see that and think, yeah, right, that's the price today, but it's not worth that, no way is that it's true/real/intrinsic value.

    Anyway, I guess if you owned the flat I'm talking about and sold it for £120,000 on a day in the past when someone would have given you £120,000 for it then it would be pretty hard for me to tell you that £120,000 wasn't it's value when you had the £120,000 it sold for sitting in your bank account. But nevertheless I'd still see it that way, I'd say it's value wasn't £120,000 and the person who paid you that probably made a very bad mistake by paying so much money for something of so little value.

  21. The best time to buy shares is when there is blood flowing in the streets.

    I might consider investing a little bit of money in Thorntons shares in the new year, if the share price bottoms out. They are forecast to break even this year, not make a huge loss.

    According to my so far very limited research there are 68,365,500 shares in Thorntons currently trading at 20.3 pence per share meaning the market thinks Thorntons is worth about £13.88 million quid. The share price rarely fell below £1 per share between 2002 and 2008 and actually hit a high of £2 per share. Recessions can be a good time to buy shares, especially if the recession is a long one. Bear markets tend to end when there is not only fear but a feeling of hopelessness and utter despair because it is at that point that everyone who will sell has been shaken out and given up meaning the market won't go any lower.

    But anyway, is just under 14 million quid a far value for Thorntons?

    As a general rule, if you can buy a company for 10 times it's average yearly profits you've got it cheap. But analysts aren't forecasting any profit at all this year. Is it likely to stay this way? They seem to be selling a lot of their chocolates in super-markets now so maybe they will become profitable again when they close any retail stores they have that are making a loss? I don't know, but what I do know is they are a very old company with a history of making lots of money and still a well respected brand.

    In the 52 weeks that ended on the 26th of June 2010 they made a profit of £4.354 million, or 6.5p per share.

    In the 52 weeks that ended on the 27th of June 2009 they made a profit of £3.605 million, or 5.4p per share.

    The only thing that concerns me is their net debt which is £24.5 million, or around 11.3% of their £218 million turnover. Saying that, according to their balance sheet their net assets are worth far more than their debts.

    I'm going to look into Thorntons more are if it looks good, buy some shares in the new year once the price bottoms out.

    It's when everyone is talking about how great a company is and how it's share price is going to the moon that you should be really worried about investing in it, think 1999 dot com bubble where the techs were all way over valued.

  22. But what someone will give you on any given day is really the PURE market value - is it not ?

    Yep, what someone will give you on any given day is it's market value, its market value can change like the wind so never mistake market value for real value.

    Like I say, if Mr Market was a person he'd have some sort of bio-polar disorder, and probably a touch of schizophrenia too.

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