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Dispassion

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About Dispassion

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    Tri-Centurion
  1. Dispassion

    Help! ... about to buy a house, maybe

    It depends upon your perspective. I think too many view wealth as the bedrock of an economy, in reality no matter how you try to store wealth - without production, it has very little value. Many are still clinging to free-market ideology, but it almost destroyed the global economy. The people picking up the pieces will be the working population and those who provide jobs for them - the majority of whom will get very little to show for it apart from the ability to pay the bills. In the meantime, the people suffering are those who would like to be in the working population, but aren't. We're just the people who are trying to profit from this whole mess. Whether we use our profits ethically or not, is a different matter.
  2. Dispassion

    Help! ... about to buy a house, maybe

    Sort of. Condering the data - what I'm suggesting is that there are three distinct possibilities: 1) High Inflation with wage infation erroding the HPE ratio (I don't think this will happen). 2) The HPE ratio, to stay high for 5 years, but not necessairily permanently. 3) House price falls (The futures market doesn't think this will happen). The non-inflationist argument and/or the housing futures market could be wrong, but if we believe that both are correct then a long-term, higher than average, HPE ratio, is the conclusion we should draw. The best advice is to avoid the simplistic arguments that naive investors and home-buyers use. There's no such thing as a sure bet in investment, if there was then the price would already be higher. Balance the factors and work out the areas where you think you know more than the market - if there are none - hold a balanced portfolio and some exposure to property should form part of that. If a whole house exceeds your balanced allocation then gain exposure through managed property funds.
  3. Dispassion

    Help! ... about to buy a house, maybe

    I don't think the inflationist are correct and I don't think the 35% will be cleared through wage inflation. If I'm correct about this and the futures market is correct about house prices, then the HPE ratio will remain high.
  4. Dispassion

    Help! ... about to buy a house, maybe

    It's just a futures market, unfortunately I think it's only available to brokers to trade on, otherwise I'd suggest selling it, if you're confident that you know more than the market. You could ask your stockbroker, who may be able to access the market for you. The SpreadFair housing futures that was open to everyone has closed, now. The commentator you mention, also says that: "US HPE ratio now stands about 15% below its long-run average suggesting that by historical standards, US houses are now cheap. But the UK HPE Ratio is still around 35% above its long-run average" They don't need to fall to correct this, they could wait for wage inflation to catch up, but I don't see the market going sideways for that long.
  5. Dispassion

    Help! ... about to buy a house, maybe

    Prospects for the housing market have picked up significantly recently. Tradition House Price Futures are predicting that we're pretty much at the bottom of the market and that we should expect to see house prices inflate by 2-3% per annum over the next 5 years. Personally, I see no reason to rush in to such a highly leveraged investment when the expected returns are modest, however other people's circumstances are different. If you want to own your own home, then it may be a very good time to buy. http://www.tradition.co.uk/admin/uploaded/...v2%20071009.pdf
  6. Dispassion

    Turning Point in the Dow?

    Interesting - I took a brief lecture course on elliot wave. The main message to take away, was that elliot-wave has some predictive capactity, but can be used as a tool to add about a percent per year, maximum.
  7. I like this idea. I have limited time and want to get more out of my time on here. I'm happy to devote some time to help others out, but so often I see the same cycles of arguments that lead nowhere. Too many threads get dragged off topic, by the same old opinions. I don't like the idea of getting a restricted set of opinions, but I do feel like the broader viewpoints are often in the minority and are drowned out. Whilst there is a lot of merit in the main forum operating as free-talk, optional areas of the site which are more structured discussion groups could be more productive, without people feeling like they need to get involved in arguments which they feel are maintaining the integrity of the community. If we consider these areas, from a market based approach, then if they are under or over moderated then they will fade out due to lack of interest. With respect to personal conflicts - my suggestion is that we all try to ignore them and move on. Everyone else sees, what our 'opponents' have said - let that be punishment enough. If the discussion isn't progressing anyone's understanding of a subject then it's not worth wasting our time on it.
  8. Dispassion

    The end of QE

    - moved to previous post -
  9. Dispassion

    The end of QE

    For the US Try this video article, for example: http://www.ft.com/cms/bfba2c48-5588-11dc-b...00779fd2ac.html or this chart: For the UK, try this chart, for example: It already has done. Over 3 times disposable income, at last count. Yes, much greater. It acted quickly to guarantee deposits and used QE, to prevent the liquidation of major banks, whereas in Iceland all three major banks went into liquidation, about a year ago. Does this help?
  10. Dispassion

    The end of QE

    It seems that the consensus amongst economists is that US and UK unemployment figures are close to the peak. I'm interested in any serious article that contradicts this.
  11. Dispassion

    The end of QE

    UK is my primary consideration, though it applies equally to any country, with a monetary expansion policy. The UK does export, but has been running at a trade deficit. The UK exports a very high percentage of finanical services and complex manufactured goods. With a weaker pound, these become more competitively priced for foreign importers and it also becomes more feasible to balance production with more basic manufactured goods, which it traditionally imports. Figures for 2007: exports: $442.2 billion, imports: $621.4 billion Inflation in Iceland was caused by deregulation of the banks leading to an explosion in household debt. The rest of the world has already been through this cycle. Though the increase in household debt wasn't of the same magnitude and neither was the rise in CPI/RPI. Iceland was too slow or incapable od supporting the banking sector which lead to the collapse of their banking system, which has lead to far greater ongoing economic problems. Correct, it's all jobs and production. As the emerging economies grow, the developed world may find it difficult to maintain the competitive advatange in this niche. Take a look at EM indices compared to major indices to see how fast these economies are growing. This is my primary area for investment. It's important to remember that whoever makes goods, the primary consumer is the developed world, so without strong major economies, the emerging economies struggle to grow.
  12. Dispassion

    The end of QE

    Are you predicting further large scale job losses causing large scale defaulting on debt? If so, what do you think will lead to this?
  13. Dispassion

    The end of QE

    Whatever definition you use for inflation, a problem only arises when CPI and RPI are out of control. QE can weaken the local currency, and increase import costs. The flip side is that anything produced locally is more competitively priced at home, more profitable for export, offering profit, more business opportunities, jobs and re-balancing of the trade gap. If we have a rise in CPI and RPI, it is likely to be caused by wage inflation - which isn't too likely while we have a high unemployment figures. While people have jobs and can repay debts, I don't see a mechanism for this happening. What mechanism do you see causing the banking sector to fail again? You seem to be struggling with your defintions and coherency. Here, you correctly surmise that the state hasn't failed and that QE has prevented it. ...whereas here you seem to be, falsely, claiming that the state has failed and QE is evidence of it.
  14. Dispassion

    Turning Point in the Dow?

    I agree. I don't see an economic recovery being easy. Though the policy of smoothing out the ride is the right one to take, it does come with a future cost. I think it could be years before we reach full employment again. I don't think we'll see runaway house prices again anytime soon, though Tradition Hosing Futures indicates that they've pretty much bottomed in the UK. A shift from piling cash into property, is likely to bolster stocks as people start to understand the reality of saving for retirement. I really can't see any of this resulting in sentiment reaching the same lows as it did during the panic of the banking sector collapse - which is why I'm thinking a low risk entry point will arise for stocks in the next few months.
  15. Dispassion

    Turning Point in the Dow?

    My point was related to plays based upon timing the top and bottom of the economic cycle and that gold hasn't perform at all well in either the move down or the move up. Though as you rightly pointed out, since 2000 gold has offered good performance relative to the DOW. We've got to be very careful which time window we select here. Did you deliberately select that time window to give the most positive picture of the trend in gold/DOW ratio, or was it just a random time window? The bigger picture is here: Long term stock markets outperform gold for a good fundamental reason: innovation. This is why stocks post average returns of around 10%. It's important to note the logarithmic scale and that gold price has been highly volatile compared to the DOW, which is much more representitive of the balanced portfolio, varying by up to a factor of 40! Anyone who was fully exposed to gold in 1980 would have been wiped out by 2000. With repsect to correlation, gold is traditionally negatively correlated with the stock markets, which is what gives it its safe haven status, but over the last few years it's been strongly posivitely correlated with stocks, which means that it's not a good way to spread risk and has a much higher risk associated with it at the moment. If the gold price were to collapse by a factor of 5, back to where it was in 2000, relative to the DOW thenthe gold bugs take a big hit, but nothing bad would follow. If the DOW were to collapse by the same factor virtually everything else would be expected to follow. So in terms of relative wealth, you wouldn't have do too badly and you'd be much more concerned about the fact that the global economy wasn't producing anything anymore! Any wealth that was preserved would be chasing a small amount of goods. But this thread isn't about gold, it's a small thread in a sea of gold threads that's about the wider markets. Perhaps we can move the posts to your gold thread and discuss it there.
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