The big one is coming say preppers

[kathryn d]

Freckle has been making some good points.

Personally, what I am trying hard to do is getting my financial house in order.
It would be very simple, if I could actually get all of our tenants to pay their rent... (we have evicted 4 this month)..

Instead it is a 2 steps forward and a 1 step backwards every month.
I'm just hoping I can accomplish it in time...

In these economic times I need 10 years, and then I can breath a sigh of relief.

if I don't have 10 years...I will still survive...but it would mean working a lot harder.

The closer we get to paying off the properties, the harder it is getting, because we are decreasing our mortgage interest deductions...but our mortgage payments are staying the same...which means we need to pay more income income tax...

We have options to get around this...which we are just starting to utilise.

 

[Freckle]

Until then all sensible investors will continue to invest, take reasonable risks in return for reward, and mitigate them as appropriate.

Been saying that all along. You guys take any comment that is wary or pessimistic of developing market conditions, label it doom and gloom and anyone even discussing the matter as an obsessive pessimist.

The objective of the discussion is to understand risks better, how they're developing and what may be done to mitigate any serious threats. The problem is that the more vociferous responses aren't interested in anything remotely negative. It's bang the drum and wave the flag.

If more than a handful of extreme pessimists thought this, then wouldn't you expect the price of gold to have hit $10,000/oz by now ? As you will be aware it's been falling for a while .

Obscuring the discussion again with off tangent subjects. PM's are a whole other discussion. You bump my posts for being OT. Different rules for mods though eh?

 

[keithj]

Until then all sensible investors will continue to invest, take reasonable risks in return for reward, and mitigate them as appropriate.

Been saying that all along.

But back in post #101 you told us you were cashed up & waiting for opportunities.....

I disagree. Being prepared means that something else must be neglected or suffer.. usually investments.

I don't need to play 24/7. I'm cashed up, cashed out and just watching and waiting.

...so which is it ?

The objective of the discussion is to understand risks better, how they're developing .....

Back in post #95 you told us

There's nothing much for markets to react to at the moment.

.. which is it ?

Obscuring the discussion again with off tangent subjects. PM's are a whole other discussion.

I believe PMs and especially an increasing gold price will be a precursor to a GFC-like event. When this occurs it will be the time to rebalance away from risk assets. I'm a little surprised that you're expecting the GFC type event, especially when so few others in the market are.

You bump my posts for being OT. Different rules for mods though eh?

If anyone has any problem with moderation they are encouraged to use the Report Post link.

 

[landlubber]

It's called "collapse anxiety"

Freckle has been making some good points....

Sorry Kathryn, but I cannot agree. This thread is a disappointment because, as I see it, the originator has failed to "make some good points". I reckon Freckle's suffers from "collapse anxiety". ( Fear or scarcity, shortage .."there is no tomorrow" etc.) The view was first documented by an Englishman Thomas Malthus. TM wrote "An Essay on the Principle of Population" which proposed that the world's expanding population would result in starvation. Etc. That was in 1798 !! To be fair to TM he did make some long term predictions that are still to be proven one way or the other. But we can say (mostly) obesity, and not starvation, is generally the problem thus far. LL

 

[hobo-jo]

I'm a little surprised that you're expecting the GFC type event, especially when so few others in the market are.

When does "the market" ever expect a crisis before it smacks them in the face?

IMF "Policymakers and markets need to prepare for structural higher market volatility." http://www.imf.org/external/pubs/ft/gfsr/2014/02/

G20 "We are mindful of the potential for a build-up of excessive risk in financial markets, particularly in an environment of low interest rates and low asset price volatility." http://www.bloomberg.com/news/2014-...excessive-risk-in-markets-amid-low-rates.html

BIS "Indeed, research at the BIS has found that when private sector credit-to-GDP ratios are significantly above their long-term trend, banking strains are likely to follow within three years. And right now, a number of emerging economies, as well as some advanced ones, have reached this point in the financial cycle." http://www.bis.org/speeches/sp141114.pdf

Greenspan "What probability would you give to the Federal Reserve being able to exit these challenges without creating another financial crisis? May I -- if I can use the substitute term "turmoil"... I don't think it's possible." http://www.cfr.org/financial-crises/alan-greenspan-central-banks-stagnation-gold/p33699

So how do you see it playing out ? If we get hyper inflation, then do you think those who fled to cash will lose the most, and those the kept sensibly leveraged hard assets will win the most ?

I think hyperinflation is an unlikely event. In modern(ish) cases such as Zimbabwe or Weimar Republic, the countries mostly faced the problems they did in isolation. The problems we face today such as an excessive build up of debt and the structural decline in working age population is something many countries are facing at the same time. In my opinion we'd be more likely to see debt restructured and/or changes to the monetary system this time before hyperinflation was able to play out in any major economy. Hyperinflation in a major economy today would likely put the entire financial system at risk.

I don't think we'll see the type of collapse that some 'preppers' are readying themselves for (e.g. all fiat currencies failing, breakdown of society, etc), but do think further financial 'turmoil' (as Greenspan puts it) is likely in the near to medium term (putting a date on it is difficult).

 

[Freckle]

the originator has failed to "make some good points".

You might want to talk to Keith about the origins of the thread. He likes to bump my posts into the void or in this case a new thread whenever it suits his whim.

 

[Freckle]

But back in post #101 you told us you were cashed up & waiting for opportunities.....
...so which is it ?




Back in post #95 you told us
.. which is it ?


I believe PMs and especially an increasing gold price will be a precursor to a GFC-like event. When this occurs it will be the time to rebalance away from risk assets. I'm a little surprised that you're expecting the GFC type event, especially when so few others in the market are.

If anyone has any problem with moderation they are encouraged to use the Report Post link.

Good attempt at misdirection. Either that or your level of comprehension is sadly lacking.

 

[perthguy]

In reality the 08 collapse is still unfolding. All they did was hit C+P to stall/delay the collapse in the hope of recovering the situation. To date that hasn't occurred. The structures and conditions that support the global financial system continue to deteriorate. Absolutely nothing got fixed.

I agree with this. I watched Margin Call the other night. Interesting movie. I don't think that the financial systems that led to the GFC have been "fixed". Perhaps the impact will be lessened somewhat in Australia because of our stricter lending criteria. A couple of interest rate rises should sort out some of the borrowers who have overcommitted.

Picking the "top of the market" is fairly difficult though. I did a lot of research 3 years ago and was convinced that the market was running out of steam in the City of Belmont. I still picked up an IP for $465,000 because it was a good deal at the time. The bank just valued it at $725,000. So I'm not that great at picking the top of the market.

I feel like there will probably be an economic slowdown/recession in 2015/2016. However, I am in a financial position where I wish to continue investing in real estate by developing the properties I already hold. My risk mitigation is to keep my LVR as low as possible, have a cash reserve as a buffer in case of problems and to make sure I have enough income to cover repayments if all my rental properties are empty. I'm not a very aggressive investor.

 

[Freckle]

Looks like GFC 2 has hit another gear. Oil crashing, EM FX crashing, credit starting to freeze up.... hmmmm

At the current rate of decline it looks like around mid 15 unless they can get this thing under control which doesn't appear likely.

Good luck if you're mortgaged to the eyeballs.

 

[willair]

Looks like GFC 2 has hit another gear. Oil crashing, EM FX crashing, credit starting to freeze up.... hmmmm

At the current rate of decline it looks like around mid 15 unless they can get this thing under control which doesn't appear likely.

Good luck if you're mortgaged to the eyeballs.

You know if one has the time to read a bit,plus one does not need high academia skills to read,then it opens the minds to people like mega-high-investors like "SOROS" who from my simple understanding never thinks about the final unfavourable end outcomes without pre testing short term
his own framework of analysis,or as he tells everyone on the various boards,"HALF OF YOU SITTING HERE WILL NOT BE HERE NEXT YEAR"
that simple one liner tells the story in black and white..

 

[HeadsOnBeds]

When does "the market" ever expect a crisis before it smacks them in the face?


I think hyperinflation is an unlikely event. In modern(ish) cases such as Zimbabwe or Weimar Republic, the countries mostly faced the problems they did in isolation. The problems we face today such as an excessive build up of debt and the structural decline in working age population is something many countries are facing at the same time. In my opinion we'd be more likely to see debt restructured and/or changes to the monetary system this time before hyperinflation was able to play out in any major economy. Hyperinflation in a major economy today would likely put the entire financial system at risk.

I don't think we'll see the type of collapse that some 'preppers' are readying themselves for (e.g. all fiat currencies failing, breakdown of society, etc), but do think further financial 'turmoil' (as Greenspan puts it) is likely in the near to medium term (putting a date on it is difficult).

Any thoughts on Russia seems the inflation there might be getting close!


http://www.dailytech.com/Apple+Aban...25+Inflation+in+a+Single+Day/article37003.htm

 

[kathryn d]

Preppers could learn a thing or two from this Las Vegas family of 9.
Also anyone, wanting to cut down on costs, overall.
You may not be able to reach her low numbers, but there is always room for improvment, if that is what you are looking for....should the economy actually downturn.


http://www.theprudenthomemaker.com/about


"Our income continued to decrease each year, with 2011 being 70% less than what we made in 2006, and 2012 being 75% less. Those two years, we made considerably less than 2007, where we had gone 8 months without income. At that point, we lowered our grocery budget to $100 a month (for 9 people). You can read how we ate for this little in my Eat for 40 Cents a Day series.

In 2013, it looked like we would lose our home. Five months into the year, our income started to increase. We lived as frugally as possible and put every penny we could towards getting caught up on our mortgage.

In 2014, we were blessed to be able to do a loan modification on our home. Our income increased to being half what we made in 2006. Because of the cuts we had made to our expenses over the years, combined with a lower mortgage payment, we had a little breathing room for the first time in 7 years. We started building back up our savings. We raised our grocery amount to $275 a month, including toiletries.

As we look to 2015, we are already seeing another slowdown in the housing market. We expect things to get tighter again. I'm working hard to make my garden more efficient and to collect seeds from my plants to plant again each year. We continue to live very frugally. We know that the cuts that we made to our already frugal budget kept us in our home ."

 

[Silent]

People need to chillax...it might slow down next year down under or even the world but for a total collapse to happen not that easy.

Keep building wealth people, equity is king.

 

[MTR]

I think end of the world was GFC??? take a deep breath the world survived.

Even US property market with collapse of banks, record high foreclosures with as much as 70% drop in property values in various markets have all bounced back to prices of 2007.

Will always be bumpy roads along the way, and nothing new here one has a choice to continue to thrive and make money or sit in a little hole harping on what may never happen, but that would be a serious waste of time.

MTR

 

[Freckle]

I think end of the world was GFC??? take a deep breath the world survived.

Indeed however for the bottom 90% survival is considerably different to pre GFC days. Survival went from a reasonable home in the burbs to no job and living out of your car.

The market recovery was simply a sugar hit that is starting to wear off. Guess what? There's no where near enough sugar left for another GFC and what there is will have little to no effect.

But what gives me hope that I will do OK is that there millions of optimistic MTR's out there who will soak up the hit for those like me. Somebody has to pay the piper. Rather you than me

 

[datto]

I don't think the Sydney market has peaked. Might go buy another IP at 95% LVR. Wanna go halves Frecks?

 

[HiEquity]

Will always be bumpy roads along the way, and nothing new here one has a choice to continue to thrive and make money or sit in a little hole harping on what may never happen, but that would be a serious waste of time.

I think this is potentially irresponsible. We could easily get another GFC and printing money is a great response until it doesn't work anymore and it turns into hyper-inflation instead. Nobody knows how much money printing is enough to cause that to happen.

But I don't espouse sitting in a corner and sucking your thumb.

So instead of being leveraged to the hilt on property, I believe we should be focussing on how to improve our robustness to the unknowable events coming around the corner. We can do this by:

- Keeping some decent liquidity buffers for a rainy day.
- Diversifying income streams, not just property or shares but also business too - in different countries as well as markets if possible.
- Buying insurance, even if it's just options against a big fall in the ASX / S&P500.

For those of us who have some capital, protection of that capital base needs to be paramount. A lot of people have had their wealth confiscated by putting the whole shooting match into something they thought was "low risk". Taking big risks with small amounts of the portfolio while taking next to no risk with the bulk of the portfolio is a great strategy to both make money and be robust against the unknown future.

 

[datto]

There's a good chance that rates may drop next year. This could push house prices higher. I think anyone who sold out early waiting for a crash are probally searching through the net looking for forums where they can spew their doomsday message lol

 

[Lord Shanghai]

There's a good chance that rates may drop next year. This could push house prices higher. I think anyone who sold out early waiting for a crash are probally searching through the net looking for forums where they can spew their doomsday message lol

A few years ago it was Hobo Jo, full of gloom and doom about property and bullish about gold. He/She seems to have gone a lot more quiet after he/she bought property in the last year or so.

 

[datto]

Well everybody is entitled to change their mind. Who knows maybe one day I'll stop taking my medication and start believing the sky will fall in lol