hot stock market vs bubble property market

  1. 504 Posts.
    As an observation i would like to opine some observations i have made in relation to stock/property hypothesis that have been made over the last 18 month equity bull we have been in.

    1 Get out of real estate interest rates are on the way up.

    Response Nobody in the equity markets uses borrowed capital ( leverage ) so interest rates are not an issue with equities, Bollocks both travel in the same boat.

    2 Housing market has doubled in 5 years,its overcooked and heading down.

    Response Where i invest (inner city residential with a 70% land component in the property ) the last 18 months ,whilst the bulls have rampaged through the equity market searching for those rising stars my property portfolio has risen a modest 20 % on a median figure.

    3 Follow the smart money into equities and you cannot go wrong.

    Response The same smart money that bought ION,SGW
    FCN @ $ 1.47 et al et al.
    IF PDN can go from 3 to 72 would that not be considered an exponential rise in 12 months,and does that not suggest that "irrational exhuberance " is the main driver.

    I purchased a property about 18 months ago for 300 k.
    Around that time i also bought 100 k SGW @ $3.00.
    I flicked them the next day and made about 5 k,not enough for early retirement but pays the bills for a week.

    Both could be considered blue chip, inner city residential paying about 6 % gross and SGW, 600 k gold production,and ready to recover from the tantalum slump and grow the company with its world class tantalum deposit.( Remember when they were $ 10 in 1987 )

    If you had spoken to a Real Estate "guru" or equity "guru " the same advice would have been offered "buy and hold you cannot go wrong buying quality."

    18 months later,property 400 k tenant in place covering the mortgage, subdued or backwardation forecast in capital growth .

    SGW Attend receivers meetings wait and pray the company folds and you have a realised capital loss to offset those fantastic gains from other equities.

    Moral. unless you are bullet proof in your equity trading strategies ( hindsight and foresight standing in your corner of the ring ),you only have to get it wrong with the above example to wipe 10 years off your capital accumulation curve,and if you do not have adequate
    cover,it could send you off to the bankruptcy registrar whilst your misses looks for a nice renter in the burbs.

    Both of these markets are fluid,and of course there will be winners in both camps,the guy who bought PDN @ 3,and the guy who bought the worst house in the best street and doubled his capital in 3 or 4 years.

    By the wrong stock, SGW by example and kiss your ass goodbye.
    Buy a property and it goes to crap because of flooding, pestilence, rezoning or whatever,at least you will have some residual value.
    What a discourse,apologies to those that have read it all.
    Perhaps i shoulg go and get a real job.
    Not going to happen unless i do somethig stupid though.

    The writer 48 years old,married 3 adult daughters and not seen a pay slip since 1995.

    Reasoned responses welcome.
    Happy trails amigos
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