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marzipan

Signs Of A Bubble

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On the train home last night, I heard some guys having a conversation about houses.

One guy said that he was going to try to save for a deposit once he has paid of his 0% credit card debts. He then said he was going to stop paying into his pension beacuse he didn't see the point! he would rather have the £120 a month in his pocket.

The reason I mention this is because I find it amazing that people can be so ignorant of financial matters. I don't know what funds his pension is invested in, but I assume it is mostly invested in the UK stock market, which has been consistently rising for the past two years and shows no sign of slowing down. The housing market on the other hand, is on the verge of either stagnation or a crash.

Now is probably the worst time to think about switching from stock market into property!

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Something very similar is going on with oil too. Practically everyone thinks the price rises are temporary and are acting accordingly. At least that's what everyone from politicians to the papers are saying people are doing. If this isn't a classic sign that the rises are NOT temporary then I really don't know what is. Absolute classic ignorance of the new bull market in oil. Same with houses only in reverse.

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Practically everyone thinks the price rises are temporary and are acting accordingly.

I'm not so sure: most people I know seem to think oil will keep going up.. it's the futures market that thinks the price rises are temporary (December 2011 prices are currently $61, for example: surely a bargain if you think prices will continue to rise for the forseeable future).

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I'm not so sure: most people I know seem to think oil will keep going up..  it's the futures market that thinks the price rises are temporary (December 2011 prices are currently $61, for example: surely a bargain if you think prices will continue to rise for the forseeable future).

Very little liquidity in far futures.

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Very little liquidity in far futures.

Exactly: it's mostly driven by producers and consumers, not speculators. So clearly the oil companies aren't expecting huge price rises over the next few years.

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On the train home last night, I heard some guys having a conversation about houses.

One guy said that he was going to try to save for a deposit once he has paid of his 0% credit card debts.  He then said he was going to stop paying into his pension beacuse he didn't see the point! he would rather have the £120 a month in his pocket.

Well, at least the guy has started on the right foot by clearing his debt.

If everyone was that savvy then perhaps we wouldn't be in the mess we are now.

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Now is probably the worst time to think about switching from stock market into property!

Don't expect the stock market to be all rosy if consumer spending falls off a cliff!!!.......you have to be smart when you place assets.

if that happened or there was a major oil shock or war was on the verge of breaking out you would see quite a swift about face in most indices......including property....and in the case of an oil shock it would be long-term bad for profit growth....so stock market would go south accordingly.

what we have seen so far in oil is a demand-led rally,not a real supply shock.

...that's why oil and al major bourses globally are doing well.

if you want to know what a supply shock looks like then think of the trading after katrina for a couple of days.

...now that was just a dummy run.....wait for the biggie when US go into iran!!!.....if things get really bad you may well see a spike at $200+bbl.....and it will persist for a few months!

hyperinflation then deflation will follow.

the only two plays in times of war are bonds and gold.

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Exactly: it's mostly driven by producers and consumers, not speculators. So clearly the oil companies aren't expecting huge price rises over the next few years.

I would suggest you should look at the forward price curve as an indication not of what prices are going to do in the future, but at the current state of the market.

A contango (rising forward curve) indicates an excess of supply in the current prompt market. That is to say that even with excess supply in the market, crude is at over $60/bl.

That tells me that there is a lot of room for prices to rise further, as demand continues to outpace supply growth and refining capacity growth.

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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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