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Everything posted by DrBob

  1. Type "define: luxury" into Google and read the first two lines of the definition: Definitions of luxury on the Web: * something that is an indulgence rather than a necessity * lavishness: the quality possessed by something that is excessively expensive
  2. Stock markets, commodity prices and property prices are at/around all time highs, and 70% of final salary schemes have been closed. Of course pension funds should be in surplus at this stage in the economic cycle! When the markets crash, they will go back into deficit again. Surely if pension funds are to be sustainable, they will spend as much time in surplus as in deficit. The pension funds should be using their surpluses to secure defensive market positions, so they are protected during the following downswing.
  3. Potential renters need to be educated! Most of them don't realise that they, not the landlord, are in the position of power. I've met quite a few people (in London) who have seen a flat, wanted to rent it, and paid full whack despite misgivings (bathroom needing fixing, scaffolding outside etc). "We had to take it in case someone else got the flat" Perhaps the papers would like to fill their 'property' sections with advice for people renting: How to negotiate a rent discount Your rights under shorthold tenancies How to make sure your landlord is paying tax
  4. Oh dear. Looks like they may need to offer better pay to casual farm workers. That wouldn't be inflationary, would it?
  5. No problem for me. Call your ISP! Surely the whole idea of the internet is to be robust enough to withstand attacks on connections (the packets should be re-routed) .
  6. http://www.ft.com/cms/s/d3301c60-0e5c-11dc...0b5df10621.html Published: May 30 2007 04:26 | Last updated: May 30 2007 07:35 China stocks fall sharply as stamp tax is tripled Despite the sharp initial drop on Wednesday, most analysts do not expect the tax increase to have a significant impact on the market and predict that other measures will follow if retail investors continue to put new money into equities. The likely measures include making it easier for Chinese investors and institutions to invest overseas, an increase in domestic initial public offerings and other share sales and the launch of an equity index futures contract. Some analysts also expect further increases in interest rates. If the market still continues to rally, the authorities might consider imposing a capital gains tax on share trading, although officials fear this could prompt a collapse in share prices. Interesting Financial Times article. They think this will be a temporary market 'blip'. 0.3% stamp duty is still a very small tax burden, especially as there's no capital gains tax. If Chinese individuals are allowed to invest freely in stock markets overseas, there could be a prolonged worldwide stock market upswing as a huge population of mathematically-minded, savings-rich gambling enthusiasts enters the fray...
  7. Shame they are just 'toy' auctions. Perhaps this part of Ebay's site will be 'beefed-up' a little when the repossessions start in earnest!
  8. http://www.telegraph.co.uk/money/main.jhtm...5/29/cmeq29.xml Last Updated: 12:01am BST 29/05/2007 The private equity party There are ways to get a piece of the action. One of the simplest - and until recently overlooked - is via private equity investment trusts. The beauty of these is that you do not have to invest big stakes, and they have trumped most investment trusts over the past decade. Most of these trusts invest directly in unquoted companies, but some are funds-of-funds with a portfolio of other investment trusts and private equity funds But these trusts are not the only route to private equity. Two months ago Barclays Global Investors launched the first private equity exchange traded fund, which tracks the S&P Private Equity Index, while several venture capital trusts invest in the asset class too. Private equity is not a way to make a quick buck. Most private equity funds have a five-year lag before any investment is realised. And, as with any asset class, it is cyclical. Some of the returns have been substantial of late and, while the economy remains stable, experts believe there is no reason for concern. But should the climate change for the worse, some private equity transactions could come under pressure. A reasonably balanced article, once you read the last couple of paragraphs. I toyed with the idea of putting some money in a private equity trust, but they look incredibly vulnerable to a recession or credit crunch. It seems that private equity funds are investing/buying companies just because they need somewhere to put their money, rather than because they believe they represent good value. Will private ownership make large companies more or less resilient than their public counterparts in a recession? They'll probably be more willing to lay off staff, that's for sure.
  9. http://listings.ebay.co.uk/aw/plistings/ca...x.html?from=R11 52 listings under the "Home & Garden > Residential Property > UK & Ireland" category of Ebay UK. Most of them look serious, and a few are newbuilds. Could this be a new indicator for the upcoming HPC? Ebay could be a great way to sell in a hurry - a large potential audience, and the costs are probably very favourable compared to estate agencies.
  10. How about this posting: "go to a lender with no cover criteria (or proof thereof)" So according to the 'professionals' at Simple Money Solutions, BTLers who can't make their sums work should lie about their incomes to get a large enough mortage!
  11. http://www.dailymail.co.uk/pages/live/arti...d=1770&ct=5 Last updated at 18:01pm on 29th May 2007 Britons forced in to 'modern day slavery' by soaring house prices The report, from the Universities of Aberdeen and Loughborough, warns of the damaging social consequences of today's record home loans. Dr James Bone, a sociology lecturer from the University of Aberdeen, said: "For these young homeowners, the burden of mortgage debt will place great stress on those who have families. "Both debt-harassed parents are forced to work increasingly long hours to meet the mortgage payments. "Little time will be left for family life and little disposable income with which to enjoy it." He compares the plight of many young homeowners to "bonded labourers", forced by large mortgages into a position close to slavery. Unfortunately "Becky Barrow" can't bring herself to express the logical conclusion: don't buy a house!
  12. Prospects dim for quick home-price recovery (US article) The national index sank over a 12-month period for only the second time in its history and the first time since 1991. The drop is in stark contrast to a year ago, when home prices jumped 11.5 percent over the prior 12 months, according to the index. Investors seem to believe the downturn will continue. The Chicago Mercantile Exchange trades contracts based on the Case-Shiller indexes that enable investors to bet on future housing price trends. This product is fairly new with trading started about a year ago and is thinly traded. It also tilts a bit negatively because more traders seem to be using it as a hedge against falling home prices than as an investment. Still, the futures trading has been reasonably accurate in predicting price changes (they've been down all year) and the latest trading reveals that investors are betting prices will continue to decline. The 10-city futures average has prices falling 3.9 percent in the 12 months through February 2008. Will futures trading in house prices take off in the UK? Place your bets ...
  13. There's a lot of talk here of a potential sterling crisis. I don't know how likely this is, but I'd imagine that since we import most of our goods, a fall in sterling would be inflationary, demand further interest rate rises and push the housing market down further. How are other HPCers mitigating currency risk? I've put some money in gold and foreign shares, but they are both quite volatile and I'm not a huge risk-taker. Bonds seem a bit risky in an era of rising international interest rates. I'd like to save some cash in other currencies (Euros/dollars/Swiss francs etc). Does anyone know of practical ways to do this whilst still gaining interest? I could imaging an Exchange Traded Fund that puts cash into a weighted basket of major currencies, and pays a modest interest rate on the amount invested. It would be great for reducing currency risk, and could even be sheltered under a self-select ISA. Is there such a thing?
  14. We're all baying for blood, but in the face of inflationary pressures, a turning housing market and a fresh premiership, what will Gordon do next to ensure a soft landing? Reintroducing MIRAS is the obvious move as it can be presented as a tax cut, will support first-time buyers and might act as a sop to unions demanding inflationary pay rises. Assuming he can't influence the BoE's interest rate decisions , what else might a desperate PM do to avert the crash?
  15. So the house price crash going to be blamed on HIPs? Clearly rising interest rates, a vast bubble due to speculative buying, rising commodity costs and an incipient economic downturn have nothing to do with it.
  16. How about this: - Invest in your career, make sure you're indispensible during an economic downturn. - Keep saving. You want enough cash so you can buy even after lenders have tightened their standards/lowered their salary ratios. Having said this, you need to find a balance, have some fun and spend some of the money you are saving by not buying at present. - Put your cash in a secure savings account which will pay enough interest to keep up with inflation and which is tax-efficient (ie use up your ISA allowance and use National Savings Index-linked Savings Certificates). Avoid placing more than 33k with any one bank (in case the bank fails), as the Financial Services Compensation Scheme will not provide protection for deposits above this level. You might want to research the banks and avoid minnows with very heavy mortgage liabilities. - Watch the market, and when prices fall/stagnate to an affordable level, buy a good place cheaply. This might be 5 years away. Be as rigorous about your buying standards as you would at any other time (good location, potential for adding value etc). Consider buying at auction. Rental yields might be as good an indicator of the 'right' price as any. Of course there are other saving strategies (investing in defensive stocks, precious metals, commodities, or diversifying to other currencies) which might give greater returns but at greater risk. Check out the "Investment in general" forum. Sounds like you're well-prepared this time. Good luck!
  17. I grew up in Stockport. It's a very varied area, so your nephew needs to look carefully at local prices. 150k would be fine for a 2-bed flat in the leafy 'burbs of Bramhall or Cheadle Hulme, but too expensive for Brinnington and maybe for Reddish. Your nephew needs to think about who he'd be selling his 2-bed to in 5-10 years time. There aren't very many young professionals in Stockport - mostly families.
  18. Links to today's bearish Sunday Times articles: Buy-to-let: do the sums add up? End of house price boom is in sight Hell is buying a house Because we're worth it (article on Baby Boomers) Millions will still need home packs From a quick scout of timesonline.co.uk. Bob
  19. If you're interested in investing in wheat, have a look at exchange traded funds (ETF). They're traded as stocks on the LSE, and reflect the price of specific securities or indices. There's even one specifically for wheat (WEAT.L): http://www.etfsecurities.com/csl/etfs_wheat.asp Annual management charge is reasonable at 0.49%. I've put some money in the agriculture ETF (AIGA.L), but these aren't a one-way bet. Agricultural commodities have fared poorly over last 20 yrs. They will vary with political factors (particularly tariff/free trade agreements), and the commodities are priced in USD, so there's a currency risk. Rob
  20. I am in a very similar situation. Here are my thoughts: 1. Assuming annual house price inflation of 4% (which is what the more optimistic Estate Agents predict), you would have to hold onto a £250k flat for 5 to 7 years before the costs of buying are outweighed by the financial benefits (based on my own 'house buying spreadsheet'). If HPI is lower than this, or if prices fall, you'd have to stay in the flat much longer than this! 2. If you're 29, I assume you're a hospital junior doctor, so you'll be likely to move within the next 3 years or so (almost all London registrar rotations include at least a year in a farflung district general hospital). 3. Gordon Brown is signalling a big squeeze on doctors' pay. The European Working Time directive will cut down your out-of-hours supplements, and this year's sub-inflationary pay-deal for consultants (equivalent to 1.4%) bodes poorly for the rest of us. Despite the rises for advancing through the training grades, there's a real chance your salary will fall over the next couple of years (and if you do research, you'll definitely take a pay cut). My suggestion: Rent a flat near your place of work. Use all the hours you save on commuting and house renovation to enjoy your life, or to revise for your postgraduate exams. Pay off any outstanding student debts, save up a big house deposit in ISAs and high-interest accounts. Then buy a house when you've secured a permanent consultant job somewhere. Alternatively, emigrate to somewhere with a better work/life balance (that's my plan)! DrBob
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