The Ftse Over The Last 15 Years....

[TheCountOfNowhere]

Someone on the Northampton board told me today that it wasnt wrong to try and make a 200 K profit on a house bnought 15 years ago for 50K. I guess it's not if you are the one making the money.

They jusified it by saying that shares had gone up 5 fold in the same time period.

When I checked, the FTSE has gone up from 3026 ( sept 1994) to 5140 ( sept 2009) in 15 years ( up 70% )

During the prime HPI's in Dec 1999 the ftse was 6255, now at 5140 ( down 20% )

And that's not taking into account the Joke that is Q.E.

http://uk.finance.yahoo.com/echarts?s=%5EF...5EFTSE;range=my

Playing the stock market is about investing and risk, you take your losses and your gains.

The housiing market should be about having an affordable place to live. The gains on the housing market over the last 15 years should in theory be lower than the stock market, as they are low risk.

That would mean said 50K house is truely valued between 70-90K, about inline with inflation. It's up for sale at an asking price of 250K.

No wonder the V.I.s are trying to keep the market going. Its been easy money compared with risking your cash on the stock market.

[Bloo Loo]

Someone on the Northampton board told me today that it wasnt wrong to try and make a 200 K profit on a house bnought 15 years ago for 50K. I guess it's not if you are the one making the money.

They jusified it by saying that shares had gone up 5 fold in the same time period.

When I checked, the FTSE has gone up from 3026 ( sept 1994) to 5140 ( sept 2009) in 15 years ( up 70% )

During the prime HPI's in Dec 1999 the ftse was 6255, now at 5140 ( down 20% )

And that's not taking into account the Joke that is Q.E.

http://uk.finance.yahoo.com/echarts?s=%5EF...5EFTSE;range=my

Playing the stock market is about investing and risk, you take your losses and your gains.

The housiing market should be about having an affordable place to live. The gains on the housing market over the last 15 years should in theory be lower than the stock market, as they are low risk.

That would mean said 50K house is truely valued between 70-90K, about inline with inflation. It's up for sale at an asking price of 250K.

No wonder the V.I.s are trying to keep the market going. Its been easy money compared with risking your cash on the stock market.

its not the same thing...a house 15 years ago is the same house.

the FTSE is very differently made up....it changes every 3 months, so has no real reflection on the performance of shares that made it up 15 years ago. only a reflection of the best performing ones.

[ralphmalph]

The counter argument is that the FTSE 100 companies have been crap at maximising thier profits.

Or the stcok market has been rigged by removal of dividend tax relief by pension funds and Me McDoomed changing the law so pension funds have to hold his debt.

[ReggiePerrin]

Someone on the Northampton board told me today that it wasnt wrong to try and make a 200 K profit on a house bnought 15 years ago for 50K. I guess it's not if you are the one making the money.

They jusified it by saying that shares had gone up 5 fold in the same time period.

When I checked, the FTSE has gone up from 3026 ( sept 1994) to 5140 ( sept 2009) in 15 years ( up 70% )

During the prime HPI's in Dec 1999 the ftse was 6255, now at 5140 ( down 20% )

And that's not taking into account the Joke that is Q.E.

http://uk.finance.yahoo.com/echarts?s=%5EF...5EFTSE;range=my

Playing the stock market is about investing and risk, you take your losses and your gains.

The housiing market should be about having an affordable place to live. The gains on the housing market over the last 15 years should in theory be lower than the stock market, as they are low risk.

That would mean said 50K house is truely valued between 70-90K, about inline with inflation. It's up for sale at an asking price of 250K.

No wonder the V.I.s are trying to keep the market going. Its been easy money compared with risking your cash on the stock market.

Does the 50k for the house include mortgage payments and the other costs associated with maintaining it for the past 15 years?

[TheCountOfNowhere]

its not the same thing...a house 15 years ago is the same house.

the FTSE is very differently made up....it changes every 3 months, so has no real reflection on the performance of shares that made it up 15 years ago. only a reflection of the best performing ones.

Good point. If these are the best performing companies over the last 15 years then the average would be lower, around the inflation rate perhaps.

So, really, why should something that isnt an investment ( and not even a top rated invested, just a crappy semi in a crappy town ) suddenly be worth a £200K tax free profit.

Perhaps the FTSE is undervalued, wll we see a stock bubble to rival the housing one next. It might be better than a housing bubble at least people would be able to buy affordable houses with the massive profits from shares

[TheCountOfNowhere]

Does the 50k for the house include mortgage payments and the other costs associated with maintaining it for the past 15 years?

No mortgage and it's been let out. So the profit is even greater.

[porca misèria]

Someone on the Northampton board told me today that it wasnt wrong to try and make a 200 K profit on a house bnought 15 years ago for 50K. I guess it's not if you are the one making the money.

They jusified it by saying that shares had gone up 5 fold in the same time period.

When I checked, the FTSE has gone up from 3026 ( sept 1994) to 5140 ( sept 2009) in 15 years ( up 70% )

So that's 3.6% year-on-year. Plus dividends. But with the proviso that companies come in and out of the FTSE.

The house is 11.3%, and in place of a dividend you get the amenity value of a place to live.

But that's not quite as unbalanced as it seems. The house has maintenance costs, and part of the rise in house price indexes is due to many houses having had major improvement works done. A substantial element of that 11.3% is real money that people have invested.

The real killer is tax. Dividends are taxed, the amenity of your house isn't[1]. Capital gains on shares are taxed, but not on your house. Housing has been a huge long-term tax break for the rich.

[1] council tax isn't tied to ownership - renters pay it too.

[Bloo Loo]

Good point. If these are the best performing companies over the last 15 years then the average would be lower, around the inflation rate perhaps.

So, really, why should something that isnt an investment ( and not even a top rated invested, just a crappy semi in a crappy town ) suddenly be worth a £200K tax free profit.

Perhaps the FTSE is undervalued, wll we see a stock bubble to rival the housing one next. It might be better than a housing bubble at least people would be able to buy affordable houses with the massive profits from shares

the answer is, as always...banking.....lending to boost asset prices always does just that, and the greedy farqirs keep on till it hits the wall....they did it with the stock market just before the great depression, they did it with property in the last 10.

when the lending bubble bursts, the assets do too. they will this time too.

[ReggiePerrin]

No mortgage and it's been let out. So the profit is even greater.

It's a heck of a gamble, placing all your faith in a single asset. I wonder how many people who put all their faith in property are now ruined financially?

I'm sure I'll be corrected if I'm wrong;

But buying a property with a mortgage is a leveraged investment, which means you stand to lose far more than you invested. On the flipside you also stand to gain far more than you invested.

With the exception of the Great Depression, most people who invest in the stockmarket don't take a loan out to pay for their shares, they only risk losing their initial investment if things go pear-shaped.

[TheCountOfNowhere]

the answer is, as always...banking.....lending to boost asset prices always does just that, and the greedy farqirs keep on till it hits the wall....they did it with the stock market just before the great depression, they did it with property in the last 10.

when the lending bubble bursts, the assets do too. they will this time too.

Undoubtedly.

The question is as usual, how will his happen. A quick sharp inflationary shock, or an 18 year Japan type deflation.

Some days I think the former, some the later.

I wish I knew

P.S. Regarding the comments about the value of the house increasing by X amount more because of upkeep/mortgage etc.

When my friend bought the house he about it at Salary x 3, and he said that was a struggle.

Now he would have to buy is at Salary x 5. A FTB would need to earn 125K a year to be in the same position to buy as he was, and remember this is for a small 3 bed semi in a small town.

I think my initial argument is sound, the house value should go up in line with inflation/wages.

Also, the house should be worth less because it's not 15 years older and needs lots of maintenance.

Edited September 23, 2009 by TheCountOfNowhere

[abharrisson]

Someone on the Northampton board told me today that it wasnt wrong to try and make a 200 K profit on a house bnought 15 years ago for 50K. I guess it's not if you are the one making the money.

They jusified it by saying that shares had gone up 5 fold in the same time period.

When I checked, the FTSE has gone up from 3026 ( sept 1994) to 5140 ( sept 2009) in 15 years ( up 70% )

During the prime HPI's in Dec 1999 the ftse was 6255, now at 5140 ( down 20% )

And that's not taking into account the Joke that is Q.E.

http://uk.finance.yahoo.com/echarts?s=%5EF...5EFTSE;range=my

Playing the stock market is about investing and risk, you take your losses and your gains.

The housiing market should be about having an affordable place to live. The gains on the housing market over the last 15 years should in theory be lower than the stock market, as they are low risk.

That would mean said 50K house is truely valued between 70-90K, about inline with inflation. It's up for sale at an asking price of 250K.

No wonder the V.I.s are trying to keep the market going. Its been easy money compared with risking your cash on the stock market.

wonder how british land did over the period ?

[ReggiePerrin]

wonder how british land did over the period ?

From Jan 1999 to Sept 2009 your investment would have 'grown' by -0.81%

[abharrisson]

From Jan 1999 to Sept 2009 your investment would have 'grown' by -0.81%

And that shows you the differences between the stock market and holding actual property assets.

[TheCountOfNowhere]

From Jan 1999 to Sept 2009 your investment would have 'grown' by -0.81%

That's the funniest post i've seen in ages

[abharrisson]

That's the funniest post i've seen in ages

I'm surprised it surprised you, surely you knew that ?

[slurms mackenzie]

Playing the stock market is about investing and risk, you take your losses and your gains.

The housiing market should be about having an affordable place to live. The gains on the housing market over the last 15 years should in theory be lower than the stock market, as they are low risk.

No wonder the V.I.s are trying to keep the market going. Its been easy money compared with risking your cash on the stock market.

Maybe stocks were overvalued 15 years ago or maybe they're undervalued now, and we're not taking into account the dividend, that's not the point

As a stock market investor who takes the rough with the smooth, I believe that houses shouldn't be about risk and capital gain, speculation should be taken out of anything other than the first home.

Yer house is for living in, it's not a gambling chip.

[scottbeard]

The counter argument is that the FTSE 100 companies have been crap at maximising thier profits.

Or the stcok market has been rigged by removal of dividend tax relief by pension funds and Me McDoomed changing the law so pension funds have to hold his debt.

Unlike insurance companies, pension funds do not HAVE to hold government bonds. They choose to, mainly for reduced risk and as a good match for pension liabilities (bonds pay a fixed amount each year- just like many pensions). As it happens, government bonds have also out-performed shares from 2000 to 2009!