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frugalista

Parents Finally Admit Prices Are Falling

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On the phone to ma and pa frugalista back in blighty last night. Went something like this:

frugalista: rough times ahead for the uk economy.

ma and pa: yes, it seems that house prices have started to fall.

frugalista: that's old news.

ma and pa: no, no, we only read it last week.

frugalista: i am afraid i think you have lost that 30k you invested in a BTL in 2003 [my brother rents one room and the other is rented to his friend]

ma and pa: oh well, we will hang on to it, it's a long term investment really.

frugalista: shares have gone up 25-30% in that time. [i told them at the time not to buy the BTL but put the money in shares. But their other baby-boomer friends convinced them otherwise]

ma and pa: yes, it's great, we have made £500 on our ISA.

frugalista: well, look, you need to offload stuff when it is at the top of the market.

ma and pa: eh?

frugalista: yes, like when everyone and their mother-in-law is buying shares and forming investment clubs and when stock picking programmes are on daytime TV, that's the time when you should ***SELL*** all your shares. Same with property.

ma and pa: really?

At which point I started trying to explain about bubble theory, Tulipmania etc., with only limited success. They really are intelligent people, they just seem to know practically nothing about markets. Their pensions are practically worthless. What can you do? How many others are in the same boat?

frugalista

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At which point I started trying to explain about bubble theory, Tulipmania etc., with only limited success. They really are intelligent people, they just seem to know practically nothing about markets. Their pensions are practically worthless. What can  you do? How many others are in the same boat?

Our neighbour over the road owns a BTL. He's a business man, in his late 50s/early 60s, two cars etc.

A few years ago he took his money out of ISAs and went into property.

The question to my mind is when does the penny drop amongst the baby boomers that property is no longer the investment that they thought it was.

I guess some will realise it before others do and sell before long. But there will be many thickos who will hang on and sell later.

Still, the mass selling will keep driving prices downwards for years.

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Frugalista

Does your ma and pa always talk in unison?

Though I wish I could have had a conversation with my parents like that when they were alive. All they were interested in was scandal.

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Same here. Last year, my dad bought two BTLs. My stepmum also bought one. This year, they have realised that house prices are "easing off" and the parental pressure on me to buy (I'm a 2TB) has done likewise. My dad's forecast is for a HP fall of ~5% (probably because he read it in the Guardian).

But they still have what they consider to be the trump card: "but prices always rise in the long term". It's going to take some time to shift this expectation.

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Interesting subject this. Many, many people seem to buy and sell at completely the wrong time and they are not all thick either.

I have been dabbling in shares for a couple of years now. When I started I did OK, but then I got unlucky? and lost a bit. (Bearing mind I was only gambling with what I could afford.)

I think I can claim not being stupid. I hold down an analytical job and I figured I could do alright. I watched a couple of stocked and signed on to an internet dealing site and made my move. It was very exciting, all those thoughts of early retirement and long holidays in the sun.

As I said I did OK to start with, then I lost. Fortunately, I got out before I lost the lot. That made me sit back and revaluate my own capabilities. I realised that I was not very good at short trading, as I had selected a couple of stocks and then gone with the wrong one! DOH! As I said I am a techie analyst so I fell back on what I am good at, drawing on my life’s experience, rather than trying to be something I am not. I bought long. I was again unlucky because the company I bought into went and did a reverse take over thingy! The share fell hard, but I hung on because I had done my homework and they have an excellent product (in fact when I first bought into them the stock was just starting to rise). Since then I have bought more stock in the same company and they are turning the corner and I have been able to put together a nice little pile of stock.

What I have done is learnt to go against the flow, something that is easy to say but hard to put is practise because we have a very strong herding instinct.

It takes patience, nerve, homework, but above all know yourself.

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It takes patience, nerve, homework, but above all know yourself.

Nicely put. In total agreement. I suspect my family think our STR was *not such* a bad move after all.

P.S. also takes 'guts' or is that the same as nerve? ;)

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I suspect my family think our STR was *not such* a bad move after all.

When the majority start to agree, it becomes a self fulfilling prophesy. The more the merrier then. :)

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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