Printable View
http://news.bbc.co.uk/1/hi/business/6410629.stm
:mad:
I'm getting pretty hacked off with this now. I'd been putting all my spare money against my offset mortgage for a while but decided it was time to diversify my portfolio (:mrgreen: ) and paid into a share ISA a few months ago. It's lost a total of £350 this past week with more to go on Monday (cos the valuation is always given on yesterday's prices).
SOMEONE MAKE IT STOP :stop:
you really want to get pissed off?
Some of the trading banks (like the one i work for) have been doing rather well off this fall. Rather well indeed!
But don't worry too much, most people are expecting the FTSE too recover over the next 6 months. And anyone reading this, never buy a share ISA as a 'short term' investment, or one that you expect to be able to yoink your money from.
I find trading a peverse kind of fun, like picking a scab, it hurts but when you finally rip it off only too bleed, you feal like you've accomplished something.
As are we at my new job. With the launch of our new Income Fund just round the corner, shares are cheap, we can afford to buy more with IFA's money and so get a better return when things stabilise :)Quote:
Originally Posted by TheAnimus
I might buy some shares for the dividends / long term savings at the end of this slump...
Its quite good fun, where it not for the compliance head ache, i'd be tempted by a little index trading next week.
You think you've got it bad? My parents invested some of their savings in ISAs several years ago, and although they're starting to recover at the moment (slump aside) they lost about 60% of their value over the first six years...they weren't best pleasedQuote:
Originally Posted by JPreston
Yeah my offset mortgage is my short term investment, but it only 'makes' ~6% net return - albeit without any risk at all - so I thought I'd have a flutter on a share ISA. But that still needs to do better than 6% p.a., otherwise I'd have done better to pay off more mortgage.Quote:
Originally Posted by TheAnimus
I came to the same conclusion about buying at the bottom of the trough so thinking in for a penny, in for a pound I've already topped up to my limit for the tax year. BRING IT ON!!!!
Just don't want to think too much about what has happened to my personal pension in the meantime :undecided :rolleyes: :lol:
You sure they were ISAs, not PEPs or whatever it was? I'm pretty sure ISAs are Gordon Brown's idea and they have been doing well pretty much since launch - though obviously there were terrible times under the Tories, so going further back may bring in some horror stories.Quote:
Originally Posted by ibm
Investments may go up aswell as down :P
It's a paper loss until you cash them in, so hang on to them for as long as possible :)
This is why I never bothered with ISAs and the like... I just have a natural suspicion of that kind of thing...
The reason being that you can bet your arse that even though the value of YOUR investment can go down or up or sideways, the company you have the ISA with will always be making money.
The ONLY time I've seen a company lose money on some investment scheme is with an endowment I stupidly took out with my very first mortgage.
The damn thing had underperformed so badly we'd have been better off sticking the money in a savings account.
Fortunately we claimed for the shortfall and got that.. then when we tried to sell the policy to get rid of it we found that no-one would buy it as the original company were paying near OVER the surrender value to prevent hundreds of their endowments being owned by other investments companies...
We were very, very lucky to get out of that one slightly 'up' on the whole thing.
It's my considered opinion that you ain't seen nothing yet. But then of course I am the voice of doom.
Rave, at least if nothing else, we can be sure of your opinion on our economic future :)
Heh, I had a good load of cash invested in the year 2000. 9/11 saw it crash to nearly half of what I invested. Thankfully, the people I was investing with have, since then, managed to give me an overall 50% increase from my starting sum, which is pretty good. In the long term, they generally pay out pretty well.
Roffle. But true. I'll join you in the Doom mongering. :DQuote:
Originally Posted by Rave
Rave, are we talking 5 year or 50 year projections here. I need to know when the best time to buy a house is :) Awwww ****e, i'm about to sign contracts on a place :)
Dude, you didnt provide the link :lol:Quote:
Originally Posted by Rave
:lol: honestly some people, 'don't buy a house', 'don't buy shares', what should I do with it then? And is there a topic in the world that you don't have extensive knowledge and a considered opinion on?Quote:
Originally Posted by Rave
The day Alan Greenspan gets on your bus will be the day a lot of pensioners don't manage to pick up their pensions before the post office closes :p
I don't know do I? I don't actually have any money so I have no need to find out how to invest it sensibly:p.Quote:
Originally Posted by JPreston
If this new regime of inflation being targeted ruthlessly by the ECB through inflation rate adjustments actually holds together, then I think right now you're probably best off with cash in a high interest savings account- inflation is running high, which will trigger interest rate rises, which will dampen economic growth a bit, while your cash is earning plenty of interest.
If inflation can't be controlled though and really takes off, then buy gold- or just carry on paying off your mortgage, which will be shrinking in value in real terms as (hopefully) your wages inflate to keep pace with general inflation.
What, the one in my sig?;) Anyway, here's a good link, well worth a read:).Quote:
Originally Posted by Agent
http://chartingstocks.net/2007/03/04...f-2007-begins/
I knew there was a reason why I didnt have sigs on :D
Whilst certainly true with the ECB in terms of policy, its application (in strictly microeconomic terms) affects growth & interest on the continent. With Germany having experienced periods of 0% growth, it begs the question is the ECB following the correct agenda, or is its paranoia and fear of inflation tainting its outlook.Quote:
Originally Posted by Rave
The Bank of England, on the other hand, has a far more sensible approach of managing inflation, through interest rates. Therefore it is no surprise that our Inflation is slightly higher than in the EuroZone.
Savings is a good choice, investment in inflated assets is not always, but that is the risk you take, especially as the latter has traditionally lead to higher returns.
Put all your cash in high-end PC components. Sure to be a good investment for thr future. :p
Sorry, I meant the Monetary Policy Committee of the BOE, not the ECB. I keep making that mistake; I went on Betfair the other day inteding to take a position on what the MPC would be doing this month, but actually put a fiver on the ECB to raise a quarter point. Twonk:rolleyes:.Quote:
Originally Posted by dave87
:lol:
However....
Edit: Oh, now I remember I bet on them holding rates. I'm not cut out for this betting lark, TBH:(.
A good way to earn interest when you dont have much money
is to use credit cards with 0% interest on purchases.
Tesco at the mo is doing one with 9 months with 12 months for stuff bought at tesco.
So you open a post office account which works out at about
5 % after tax and every time you buy something, rather than pay cash you use the credit card, and the money you would have spent you transfer to the savings account. Then you pay off the minimum each period and then at the end pay it off.
Obviously the more you spend the better, I even buy things for other people and they transfer money to me.
As long as you are not a retard and realise that its not your money you are ok. I got around an extra £250 I wouldnt have got other wise. With the advent of online banking its easy to do.
Spend your money fools. You have 1 brief spark of life, then endless nothingness. Enjoy that spark as much as possible.
Spend it on good food, even better drink, a nice woman, etc.
You can\'t take your money to the grave mate. :D
There is nothing silly about saving money, last night i must of spent £50 because i paid for dinner, but i've also saved £10 ish. So that one day if i loose my job, i can still go out. That does include my pension thou (hardly a liquid asset!).Quote:
Originally Posted by Stewart
Rave, my rock keeps tigers away. There is going to be a fall in the FTSE, a sharpe one, giving no time frame for it makes your advise completely meaningless. If you look at index investment over long peroids of time, its generally a safe way of investing. Its hardly a bad starting place for would be inestors. Been a harbindger of doom is one thing, but the risk is afterall the reward, and there will always be people who want some more reward.
Are you an analyst?Quote:
Originally Posted by Rave
adam mate you have only just started to question this? Rave is the Hexus money advisor. He knoweth all, yet I have yet to find someone to agree with him :) We need Rave to stop threads like this disappearing :)
Bus driver... same thing really :PQuote:
Originally Posted by adamzetec
lol, too funny :)
I'm doing that to i have a 9 month interest free credit card and a savings account at 6% so i transfer a hell of allot of money into this account and use my credit card for all my other purchasesQuote:
Originally Posted by Kumagoro
Jon
I invested back a few years ago when the market was strong - stuck it in a low risk portfolio, thought yeah things will be fine - suddenly some tw*t flies planes into buildings and the whole thing falls apart, still haven't got my initial investment back. Just had bad luck two or three times since then which has halted all recovery. bah :mad:
luckily it was long term so I didn't count on that money for several years, but I am still a couple of grand down - would have been better off just splashing out on something and really enjoying it, or even just having it in a savings account! Ah well, you win some, you lose some.
Ahh well the UK interest rates have been kept unchanged at 5.25% by the Bank of England's Monetary Policy Committee.
looks like the crash might not happen just yet ;)
Lol.... please tell me you are joking.Quote:
Originally Posted by Funkstar
Rave is just as qualified to comment as everyone else. No one has a crystal ball. Even the proffesionals cant agree when/if a crash will occur soon
Nah... he's rebelled from his middle class office working days and now spends his time happily ferrying the ratrace around in his bus.Quote:
Originally Posted by adamzetec
Good luck to him - if he's happier now than when he was as an office lacky I don't blame him :)
You would have only lost money on this if you need to realise the value of your ISA immediately - this is a slight, and long overdue correction to an overvalued market.
I have an emerging markets fund in my portfolio that was probably hit 15%, this obviously irritates me slightly, but when I put it into perspective it's still a great investment, and it rose 22% in the 6 months prior to this.
I'm not laughing at the fact he is a bus driver - more the economic doom and gloom coming from a bus driver...Quote:
Originally Posted by Lee @ SCAN
I deal with Analysts on a daily basis as part of my job, not sure many of them double up as bus drivers :P
Bus driving is a fairly easy job- you've got to concentrate enough to make sure that you don't take any wing mirrors out, but the rest of the time you've a fairly free reign to contemplate the intricacies of global finance. To be fair, I've missed a bus stop or two pondering the likely next moves of the MPC, but the frantic bell ringing and shouts of "Oi! Driver!" tends to bring you round with a start.
I'm happy to give you a time frame. This year, maybe next year at the outside. My qualifications: bus driver. Also read a few books about markets, sentiments, and how to recognise bubbles. I'm no techincal analyst- but I have history on my side:).Quote:
Originally Posted by The Animus
Over periods of 10+ years, yes it's generally safe. Will that kind of "buy and hope" investing make you rich? Only if you get lucky.Quote:
If you look at index investment over long peroids of time, its generally a safe way of investing.
Warren Buffett didn't make his multi billion dollar fortune by buying shares and hoping for the best. He made it by following the sound advice of his mentor Benjamin Graham and buying when the market was undervaluing certain compainies/sectors- and selling when they were overvalued.Quote:
Its hardly a bad starting place for would be inestors. Been a harbindger of doom is one thing, but the risk is afterall the reward, and there will always be people who want some more reward.
I have to be behing the wheel of a bus in eight hours time so I'm not going to google the specific quote, but I believe Graham said something along the lines of 'markets swing between periods of irrational optimism and irrational pessimism. Money is to be made by buying from pessimists and selling to optimists'.
IMHO, right now, we are at the end of a sustained period of irrational optimism.
My interpretation of the market swinging between irrational pessimism and irrational optimism, is that it isn't one or the other - most of the time it's somewhere in between, i.e. rationally pessimistic, or rationally optimistic (which is IMHO where we are at the moment). It is my opinion that the market has been rationally optimistic for some time because the world economy is doing well, house prices are growing nicely (i.e. doing peoples saving for them), and consumer spending is healthy.Quote:
Originally Posted by Rave
House prices will not crash (demand still far outstrips supply), but the level of growth seen over the last 5 years is unsustainable so they may correct. Wages should increase in response to the rise in prices, in which case one would hope their price growth would slow, while wages 'caught up'.
I believe this will turn to rational pessimism (following correction to house prices) within the next 24 months and there will be more, small, and frequent corrections like the one we saw last week.
Or:
The markets will continue in their growth (which will be slower this year, and slower still next – aligning with economic growth) if wages increase to cover house prices.
(These scenarios assume Greenspan keeps his mouth shut)
Hahaha!:lol:Quote:
Originally Posted by M0nkeyb0Y
Yeah, that's the prevailing viewpoint alright, but it's a complete fallacy. Yeah, so your house is worth more than you bought it, so you've 'made' a lot of money, and so you apparently don't need to save. So, when you actually need the money that you should have been saving, how do you get your hands on it? Erm...by selling your house. "Darling, our boiler is clapped out, and the car is on it's last legs, we need to spend some money this year." "No problem dear, I'll instruct an estate agent right this minute":lol:.
You could remortgage and borrow more money against the value of your home, but borrowed money has to be paid back. It's not free. Your house is not a money tree, unless you really are happy to spend your retirement living in a tent or mobile home.
Yes, because people who haven't considered the above have been borrowing and spending like there's no tomorrow. Even if house prices continue to rise, there's a limit to the amount of money you can borrow against your 'equity' in it, because eventually the interest payments become unmanageable. As interest rates keep rising, that day comes ever closer. When it arrives for a sizeable proportion of homeowners- goodbye healthy consumer spending.Quote:
and consumer spending is healthy.
Reposessions were up 67% last year, and the trend is not downwards. It's already starting.
The difference between a crash and a correction is entirely one of perspective. Both refer to a reduction in value in real terms.Quote:
House prices will not crash (demand still far outstrips supply), but the level of growth seen over the last 5 years is unsustainable so they may correct.
The operative word being should. With the BOE's task being simply to aggressively target inflation through interest rates, and Gordon Brown talking tough on pay settlements, nothing can be taken for granted- although of course I'll be asking for north of 5% this year- it'd be silly not to;).Quote:
Wages should increase in response to the rise in prices, in which case one would hope their price growth would slow, while wages 'caught up'.
Well, to state the obvious, I disagree. IMO the recent rise in prices in all asset classes is a classic bubble and when it inevitably starts to go tits up, rational pessimism is not the likely outcome. Panic is:).Quote:
I believe this will turn to rational pessimism (following correction to house prices) within the next 24 months and there will be more, small, and frequent corrections like the one we saw last week.
Or:
The markets will continue in their growth (which will be slower this year, and slower still next – aligning with economic growth) if wages increase to cover house prices.
(These scenarios assume Greenspan keeps his mouth shut)
Hmmm - thought my post would rile you Rave - sorry about that. I'm just saying things as I see them, and I'm certainly not one of these prats that feels smug because the value of my house has gone up.
It's psychological of course... but the effect is still the same: people are spending more because it's cheap and easy (to get financed). A bloke living in a 400k house, with 50k of credit card bills doesn't feel as strapped as he probably should because he thinks he's free to downgrade to a smaller house, and realise some value. Remortgaging is a pretty cheap way to get cash if debts need to be settled immediately - or if you need a new car/boiler.Quote:
Originally Posted by Rave
Interest rates won't keep rising - they've been pretty well managed by the BOE, I can't see them doing anything too stupid - perhaps one more .25% rise this year.Quote:
As interest rates keep rising, that day comes ever closer. When it arrives for a sizeable proportion of homeowners- goodbye healthy consumer spending.
If you're collecting scary figures regarding house prices: the proportion of post tax income being spend on mortgage repayments is at its highest level for 15 years - but then interest rates were at 11%.Quote:
Reposessions were up 67% last year, and the trend is not downwards. It's already starting.
I disagree - it's a question of scale, not perspective.Quote:
The difference between a crash and a correction is entirely one of perspective. Both refer to a reduction in value in real terms.
More power to you :)Quote:
of course I'll be asking for north of 5% this year- it'd be silly not to;).
Perhaps I'm being optimistic - after all the market is obviously jittery: just look at what happened when Greenspan used the "R word" - but I still stand by the sentiment.Quote:
...rational pessimism is not the likely outcome. Panic is:).
Assuming neither of us are right, and the true position lies somewhare in between - which by the law of averages is a sensible assumption. The danger now is that Grey Tuesday only went some way to correct the value of the market - but investors may see it as an opportunity to invest in oversold stock - but this stock is still overvalued. Then my good man - we'll have a classic bubble.
My dear chap- not at all, it didn't rile me in the least, I was just vigorously defending my position. Two years ago I used to get upset when I saw house prices spiralling further and further out of my reach- then I read this book (which I found in a bin) and then found housepricecrash.co.uk. Now that (IMO) I know what's going on, I'm much happier. I have relatively little debt (£2.5k to the bank and £2k to my mum), and I live in a nice house that costs me less to rent than it would to buy. Whatever happens, my immediate future is secure, and I am optimistic in the medium term. Long term, IMO, Peak Oil could well kill us all, but that's a whole other can of worms.Quote:
Originally Posted by M0nkeyb0Y
No, it's not cheap- because instead of earning interest on the money you should have saved to cover these eventualities, you're paying interest to the bank while you pay them back for it. Eventually, it's the interest charges that will break the camel's back. If/when lots of people decide their best option is to sell and downgrade, all at the same time, what happens to the perennial supply/demand equation?:)Quote:
It's psychological of course... but the effect is still the same: people are spending more because it's cheap and easy (to get financed). A bloke living in a 400k house, with 50k of credit card bills doesn't feel as strapped as he probably should because he thinks he's free to downgrade to a smaller house, and realise some value. Remortgaging is a pretty cheap way to get cash if debts need to be settled immediately - or if you need a new car/boiler.
One sentence, two things for me to argue with- I like it:). For a start- well managed. I disagree- I think that the rate cut in August '05 was a serious mistake, and caused a reinflation of an already overinflated bubble. What could have been a relatively orderly correction will now become a fairly devastating crash.Quote:
Interest rates won't keep rising - they've been pretty well managed by the BOE, I can't see them doing anything too stupid - perhaps one more .25% rise this year.
For a second, I think you misunderstand the MPC's remit. They adjust interest rates to try and keep inflation as close as possible to 2% p/a. Their job is not to prevent a crash in any market- Mervyn King has said as much: "House prices are only a matter of opinion, whereas debt is real". If inflation continues to rise, they will continue to increase the interest rate, and house prices be damned. At least, that's the theory. The Chancellor (whoever that may be) could well bottle it and order a devaluation, or whatever, if things get really hairy. Who can say? I can't, I can only say that I think the next five years are going to be 'interesting':).
Yep, that's pretty scary alright, especially since I don't think we're through with the interest rate rises:).Quote:
If you're collecting scary figures regarding house prices: the proportion of post tax income being spend on mortgage repayments is at its highest level for 15 years - but then interest rates were at 11%.
/Me bides his time.
The only exposure I have to the markets is my pension thats worth very little anyway. The rest of my money's in savings accounts and a cash mini ISA as I think the markets are far too unstable right now and have almost peaked.
With the savings I have, the average person would have bought a house without even thinking about it, but I'm not going to buy the most expensive thing i'll ever buy at the highest price it will be for 15 years. I'll wait a couple and get it dirt cheap.
Well I figure we are all exposed to the markets whether we know it or not. I haven't read 'The Grapes of Wrath' but I bet they weren't poor because they all lost their capital speculating before the wall street crash of 1937 or whatever :mrgreen:
I'm of a similar opionin as you Badass. I have a mortgage, but it is about a third of what i'm able to get based on my earnings.
When the market does correct itself, that is when i plan to take advtange and either get a bigger place or move down south :)
I'd say it'll be 5-7 years, maybe even 8-9 before the next bottom of the cycle. Last time the bulk of the drops happened from '91-'94, with smaller drops the following two years, with the bottom being in '96. This time they have further to fall. The housing market is far less liquid than the stock market, and prices are sticky downwards.Quote:
Originally Posted by badass
Sure a recession is a bad thing, but if you know it's coming you can take steps to protect yourself- pay off debts, sell risky assets, look for a job that's likely to be secure etc. My own personal thinking is that in a recession more people will be forced by straightened circumstances to sell their cars and take the bus, hence a continued demand for my services:).Quote:
Originally Posted by JPreston
It wouldn't take much for me to be certified and licensed as an insolvency practioner - beat that :lol:Quote:
Originally Posted by Rave
if 5-7 is realistic then thats a bit far out for me, i would be looking at the next couple of years to be honest. :)
It will most likely be that long here before prices start rising after the correction, I'll just wait until they start actually rising and things look like thats the new trend for them. None of my plans are set in stone, either time wise or the plan itself.Quote:
Originally Posted by Rave
The other thing is once you've reduced your debts, even made some savings, you can invest the money in the type of investments that make moeny when shares go down in price.Quote:
Sure a recession is a bad thing, but if you know it's coming you can take steps to protect yourself- pay off debts, sell risky assets, look for a job that's likely to be secure etc. My own personal thinking is that in a recession more people will be forced by straightened circumstances to sell their cars and take the bus, hence a continued demand for my services:).
I invested in death, and it's going rather splendidly I have to say.
Slow and steady wins the race.
It's starting again:
http://news.bbc.co.uk/1/hi/business/
As I post, the DOW is down 242 points, or approx 2%. Batten down the hatches, because FTSE could well take a battering tomorrow.
Heh and why's it down? US housing problems :p
World market will get pulled down by this, they'll stave off any interest rate rises and UK house prices will remain high:mad:
As far as I can tell there's no correction at all. Everyone keeps saying one *has* to occur, but it's just not happening. I think it'll take something like what's just happened in the states for there to be any big effect on the silly prices at the moment.
Damn, my work sharesave scheme just finished this month.... and I decided to take SHARES and not cash. D'oh!
I'm back up, £100 in the black! TOP OF THE WORLD, MA :mrgreen:
Yo Rave that rubber-faced pundit with animatronic eyebrows - Evans or something - presented quite a good programme on Radio 4 this morning about house prices, maybe you'd like to 'listen again' on the BBC website. Turns out they are a bullet-proof investment after all ... :mrgreen:
House prices keep rising, bank will rise interest rates again to try and keep this housing inflation under control as its crazy. We keep going this way interest rates will get to the point were we will break the camels back so to speak.
Soon as repossesions start on mass it will break the market, in my opinion it is getting crazy out there and its going to blow up sooner or later, that much i am now sure about.
TiG
I don't think they will increase interest rates - they'd rather the prices kept going up than have what happened to the US :p
No, I say again- it is definitely not in the bank's remit to target house prices. They target the CPI rate of inflation, which does not include housing costs.Quote:
Originally Posted by TiG
I'm not sure whether interest rates will continue to rise- opinion is divided, although I tend to think they will- but I don't think that'll matter, as house prices will crash anyway. It's well underway in the USA, Ireland is now definitely going awry, we are next:).
Crash to what level though.
What I'd like to know is what happens if an underwriter for some of this huge amount of debt that seems to out there decides they need to get their hands on some capital?
Is it all just promises and IOUs? Where does it stop? Do they just on making money to cover the increasing debt? If some major name wants to get hold of ten billion quick, and suddenly can't find anyone to give them it on credit, and they actually have to recall some of the money THEY are owed, what happens?
The crash in the US was 'prompted by concerns over the US sub-prime mortage market' i.e. lending money to people who couldn't afford to borrow it...how much of the debt in the UK is the same 'sub-prime' type?
'Crash' to where they were about four months ago...Quote:
Originally Posted by Kumagoro
Jusging by the totally irresponsible way your average UK person is getting into deeper debt, I'd say we have our fair share of those.Quote:
Originally Posted by ibm
The way the mortgage market works now (especially in America, though I assume it's much the same here) is that a company grants a load of mortgages to homebuyers, then bundles a large number of them into a bond, which they sell to other financial institutions on the open market. If everything goes to plan, the people who have taken out the mortgages make their payments and the bond holders get their capital back with interest. The lender is simply a middleman taking a small percentage cut (on a vast amount of money, hence decent profits).Quote:
Originally Posted by ibm
The bonds are sold with a number of conditions attached- one being that if a sufficient number of the mortgagees fail to make their payments in the first month (or maybe two?), the bond buyers can force the company that sold them the bond to buy them back. This is what has caused the current problems in the market. The second largest Subprime lender, New Century, has been asked to repurchase a billion or two worth of bonds. They have around $32m of liquid cash. They are, not to put too fine a point on it, insolvent. Barclays hold something like $2bn of New Century bonds. All the uk banks have taken a hammering in the recent selloff.
So, after the waffle, to answer your question about how the banks would lay their hands on quick money if they needed it- well they'd simply sell on the bonds they hold. If those bonds have become much less valuable because people have defaulted on their mortgages though.......:eek:.
It depends how you define 'sub-prime' (sorry to state the obvious, but it's true). There's no defined cut off point, I suppose a 'sub-prime' loan is one made at a slightly higher than average level of interest to someone who's less likely than average to be able to repay the loan. Some of the real doomsayers say that any interest only/more than 4x multiple/90%+ LTV martgage in this country is subprime, and they make up a sizeable proportion of the mortgages granted in the last couple of years. If people lose the ability to make their mortgage payments, then the banks have problems. If interest rates rise, or unemployment increases, then obviously more people can't make ends meet every month.Quote:
The crash in the US was 'prompted by concerns over the US sub-prime mortage market' i.e. lending money to people who couldn't afford to borrow it...how much of the debt in the UK is the same 'sub-prime' type?