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Realistbear

Experts See 20%-30% Hpc

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http://uk.biz.yahoo.com/051003/244/ftjd5.html

Consensus looking at 20-30% down

"stocks and bonds -- indeed, the whole economy -- are now more closely tied to the real estate market than in the past. Although most experts think home prices wouldn't drop more than 20% or 30% over a couple of years if the much-discussed bubble bursts, even a small drop in prices could do serious damage to equity and fixed-income portfolios, they warn."

"If real estate cools dramatically, there goes half our economic growth," says Barry Ritholtz, chief market strategist at Maxim Group. "There is danger of recession -- and you know what recessions do to the stock market."

Interesting article from the US where HPI is broadly similar in a number of their markets. The UK is in worse shape as our entire economy is house price sensitive. The IMF warned a year ago that sterling was being held up by inflating house prices and a strong dependent economy. What now that HPI is down for the 15th month in a row according to Nationwide and sterling headed in the same direction?

My plan is to stay with cash (having reently STR'd) given that banks are paying in excess of 4% and with house prices now down about the same amount we know it makes sense don't we?

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The IMF warned a year ago that sterling was being held up by inflating house prices and a strong dependent economy.

It was intersting watching sterling on indivdual days - when Halifax/Nationwide or somebody else released an upbeat housing report sterling would jump up on a lot of occasions.

Just another side-effect of the BOE/Govt's bubble economics which have caused massive problems for exporters and a slide in investment (outside of retail and the housing sector).

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"If real estate cools dramatically, there goes half our economic growth," says Barry Ritholtz, chief market strategist at Maxim Group. "There is danger of recession -- and you know what recessions do to the stock market."

This phrase confuses me - so HPs are not part of the inflation figure but, ahem, if HPs fall then half our economic growth goes?

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http://uk.biz.yahoo.com/051003/244/ftjd5.html

Consensus looking at 20-30% down

"stocks and bonds -- indeed, the whole economy -- are now more closely tied to the real estate market than in the past. Although most experts think home prices wouldn't drop more than 20% or 30% over a couple of years if the much-discussed bubble bursts, even a small drop in prices could do serious damage to equity and fixed-income portfolios, they warn."

"If real estate cools dramatically, there goes half our economic growth," says Barry Ritholtz, chief market strategist at Maxim Group. "There is danger of recession -- and you know what recessions do to the stock market."

Interesting article from the US where HPI is broadly similar in a number of their markets. The UK is in worse shape as our entire economy is house price sensitive. The IMF warned a year ago that sterling was being held up by inflating house prices and a strong dependent economy. What now that HPI is down for the 15th month in a row according to Nationwide and sterling headed in the same direction?

My plan is to stay with cash (having reently STR'd) given that banks are paying in excess of 4% and with house prices now down about the same amount we know it makes sense don't we?

This has been discussed quite a few times before. The UK stock market is actually doing well at present (FTSE100 4 year high and FTSE250 on an allltime high). Sure the profitability of quite a few companies are being hit but still a lot of money is being poured into the stock market as an alternative place to invest from property. The property boom was partly a response to the dotcom crash - now the same thing is happening in reverse up to a point.

Mind you i would only invest money in the stock market via an index tracker and only if you expect to hold it for 10 years plus and hold half your money in cash.

Edited by penbat1

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This has been discussed quite a few times before. The UK stock market is actually doing well at present (FTSE100 4 year high and FTS250 on an allltime high). Sure the profitability of quite a few companies are being hit but still a lot of money is being poured into the stock market as an alternative place to invest from property. The property boom was partly a response to the dotcom crash - now the same thing is happening in reverse up to a point.

The more savers save because of the comming crash, the more money the banks will pump into shares, its currently a false market, don't join in just yet, FTSE 5000 year end I reckon.

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The more savers save because of the comming crash, the more money the banks will pump into shares, its currently a false market, don't join in just yet, FTSE 5000 year end I reckon.

Yes but the market is more influenced by sentiment and income flows than fundamentals.

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Mind you i would only invest money in the stock market via an index tracker and only if you expect to hold it for 10 years plus and hold half your money in cash.

Be careful index trackers do well (better than most fund managers) in a rising market, not so well in a falling one or one moving sideways.

What about a fund that concentrates on absolute returns rather than relative ones. I am struggling to find one - but may have a closer look at the Ruffer Total Return Fund that has been mentioned by a couple of people on here. Never heard of Ruffer before though so a bit wary.

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http://uk.biz.yahoo.com/051003/244/ftjd5.html

My plan is to stay with cash (having reently STR'd) given that banks are paying in excess of 4% and with house prices now down about the same amount we know it makes sense don't we?

I like some cash, but have maintained monthly direct debits into equities. My equities grown over 35% in last 24 months, so glad I didnt rely on cash alone. Sold my B2Ls. Investing a modest amount in German land, which is up to 75% down on 1996/7 prices.

Equity markets being flooded with new cash from small investors. The crowd is turning back to equities and this is just the beginning. Speak to any IFA (dealing with investments), and they will tell you theyve had a massive August, which is unheard of.

If you think you might want all your cash to re - enter real estate within 36 months, you are probably best in cash.

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What about a fund that concentrates on absolute returns rather than relative ones. I am struggling to find one -.

New Star are just launching such a fund. Far too cautious for my tastes unless your only investing short term, or you are retiring.

I like various unit trusts. Considering a VCT (Venture Capital Trust) with Close Brothers, or a new Russuian fund (launched by Neptune) Ive read about.

By all means have a percentage in low risk, but to maximise long term gains you need some exotic in the mix. I like to focus on particular geographic areas (Eastern Europe for example) and also commercial sectors such as health or technology.

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New Star are just launching such a fund. Far too cautious for my tastes unless your only investing short term, or you are retiring.

I like various unit trusts. Considering a VCT (Venture Capital Trust) with Close Brothers, or a new Russuian fund (launched by Neptune) Ive read about.

By all means have a percentage in low risk, but to maximise long term gains you need some exotic in the mix. I like to focus on particular geographic areas (Eastern Europe for example) and also commercial sectors such as health or technology.

Yes, I'm a big fan of the Jupiter European Opportunities fund, big weighting in emerging Eastern European and Russian economy.

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This has been discussed quite a few times before. The UK stock market is actually doing well at present (FTSE100 4 year high and FTSE250 on an allltime high). Sure the profitability of quite a few companies are being hit but still a lot of money is being poured into the stock market as an alternative place to invest from property. The property boom was partly a response to the dotcom crash - now the same thing is happening in reverse up to a point.

Mind you i would only invest money in the stock market via an index tracker and only if you expect to hold it for 10 years plus and hold half your money in cash.

The FTSE and the DOW both appear to be doing well and I suspect a lot of it is due to the spare cash (MEWing?) being re-directed from property. Interestingly, I had an email from my Brokers about a year ago (Fidelity Investments) warning against using margin money to buy more equities. They we no doubt seeing something on the horizon that looks ugly and I suspect it is the fact that everything is so over-leveraged right now. The danger the article above seems to sense is the possibility that the ongoing HPC is already undermining confidence in everything else including grossly inflated house prices. Perhaps the reason why the stock markets have been going sideways for over a year? I plan to keep my equities/mutual funds for the long haul but set aside the cash from my STR in cash at around 4% interest and rising. The temptation is to use house proceeds to buy equities but I suspect that the HPC will bring with it a stock market correction of some magnitude. The only clear signal I am seeing is to stay away from property be it in the US or the UK. If we could find out who manufacturers EA's "For Sale" signs, that may be a tremendous growth stock over the coming few years!

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Be careful index trackers do well (better than most fund managers) in a rising market, not so well in a falling one or one moving sideways.

What about a fund that concentrates on absolute returns rather than relative ones. I am struggling to find one - but may have a closer look at the Ruffer Total Return Fund that has been mentioned by a couple of people on here. Never heard of Ruffer before though so a bit wary.

Sorry mate this idea that trackers do worse than active funds in a falling market has been comprehensively debunked. Active fund managers typically take defensive action too late and then miss out on any rebound. It has happened time and time again. The most blatant example is "With Profit Funds" which switched out of equities almost completely at the bottom of the market and have almost completely missed out on the market rebound of the last few years.

I dont understand what you mean by absolute v relative ?

Also fund switching between active funds is often a pain in the ass - with trackers you can just leave them alone and almost forget about them. You dont have to worry about the star fund manager quitting and being replaced by an idiot.

Edited by penbat1

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http://uk.biz.yahoo.com/051003/244/ftjd5.html

Consensus looking at 20-30% down

"stocks and bonds -- indeed, the whole economy -- are now more closely tied to the real estate market than in the past. Although most experts think home prices wouldn't drop more than 20% or 30% over a couple of years if the much-discussed bubble bursts, even a small drop in prices could do serious damage to equity and fixed-income portfolios, they warn."

"If real estate cools dramatically, there goes half our economic growth," says Barry Ritholtz, chief market strategist at Maxim Group. "There is danger of recession -- and you know what recessions do to the stock market."

Interesting article from the US where HPI is broadly similar in a number of their markets. The UK is in worse shape as our entire economy is house price sensitive. The IMF warned a year ago that sterling was being held up by inflating house prices and a strong dependent economy. What now that HPI is down for the 15th month in a row according to Nationwide and sterling headed in the same direction?

My plan is to stay with cash (having reently STR'd) given that banks are paying in excess of 4% and with house prices now down about the same amount we know it makes sense don't we?

Cahoot is paying 5.25%. Just opened an account. Need £15k min for that rate.....no problem...he he!

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Sorry mate this idea that trackers do worse than active funds in a falling market has been comprehensively debunked. Active fund managers typically take defensive action too late and then miss out on any rebound. It has happened time and time again. The most blatant example is "With Profit Funds" which switched out of equities almost completely at the bottom of the market and have almost completely missed out on the market rebound of the last few years.

I dont understand what you mean by absolute v relative ?

Also fund switching between active funds is often a pain in the ass - with trackers you can just leave them alone and almost forget about them. You dont have to worry about the star fund manager quitting and being replaced by an idiot.

did i say that trackers do worse on average than fund managers? don't think so.

but in a falling market do you want to be index tracking as the index goes down ok it will probably go down slower than the average fund managers fund but it will still be going down.

relative returns - trying to beat the market when its going up or down but comparing your performance against the market (i.e. if the market has gone down 20% and you have only lost 15% you have done well?).

absolute returns - getting positive returns regardless of which way the market is going.

I'm a fan of index trackers - low charges - returns better than most fund managers. But they aren't any good when the market goes down - which it will unless someone can come up with a solution to keep the global economy going when consumers esp USA and UK can no longer get further and further into debt.

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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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