Next Crisis ...

Er...any chance of giving us a heads up when you're going back in?

 

so far the house price drop has not affected consumer spending. According to one headline.

 

I am interested. Will it be obvious when it happens. I really don't know much about shares at all but I am keen to get in.

 

Sure - It'll be a while yet I reckon.

 

'frothy' is the new popular word I keep seeing everywhere. What do people mean when they say that?

 

I don't know - a crash is obvious, but the right time to get back in tends to only be obvious in hindsight! It takes a bit of nerve to buy when other people are crying about how terrible it all is.

If it's a gentle stagnation it can be more obvious, especially with individual shares/stocks.

 

"likely see standard correction phase of past cycles play out"
What is 'standard' @Redom ? Sydney was flat for about 6-8 years last time wasn't it?

 

Exactly why I asked. I am sure its not so hard to get somewhere 'generally' around the bottom if you read enough and monitor very frequently?

 

Now could be bottom, just saying....

 

sounds risky in this falling market. Maybe you could ask them for 16%?

 

If you look at a chart of the XJO, you can see it may be the bottom of the short term down within the uptrend - I'm not looking for that. I'm looking for a serious downtrend firstly, and some signs of recovery after it to buy bargains.

 

My crystal ball (at least from a Melbourne perspective):

1. Commencements are drying up currently
2. Arrivals at their highest ever on record
3. People scared to buy while media is pumping gloom and markets are going backwards (+ Royal Commission still in play)
4. People worried about impact of ALP NG changes when they presumably win federal election. Peak fear leading up to and during election = minimal demand / continued soft prices.
5. Rents start increasing notably Q2 2019 as investors have deserted the market for some time now (relatively speaking)
6. Rents increase more rapidly Q3/Q4 2019. Rent becomes the next gloom topic of mainstream media ("Rental Crisis Looming!")
7. Q3/Q4 2019 serviceability assessments adjusted to a more sensible model (i.e. stricter then pre APRA changes, but less cumbersome than current). Prices flat (minuscule growth at best)
8. Credit now marginally easier to access (Q1 2020). Start of price recovery.
9. Q1/Q2 2020: with rents rising rapidly, interest rates still low and credit now slightly easier to access, buyers and investors start returning to market in larger numbers.

Assumes NG policy doesn't pass through government due to fears of impact on an already sensitive market.

Shout out to @petewargent for his great analysis (as always).

 

If you don’t understand finance, stay away from property. The first mortgagee is the first to be paid.

 

Yeah I missed that as others explained

 

No I don't Believe it's that easy.
Timing the market is bloody hard

 

Too true.
I always say the profit is made in buying well.
I also believe greater wealth is made in bad markets.

 

If your talking property, it is not that hard.

You look at how much competition you have.

You do not need to know absolutes.

 

During the day and sometimes when I can't sleep I watch channel 95 YOUR Money. I have a laugh watching this channel, especially shows like Mornings with Maria and Varney and Co. They try and explain why financial markets are doing what they are doing. This week it was blame the Federal Reserve for the plunge in US equity markets. US equity markets were plunging before this week's meeting of the Federal Reserve. Here are my forecasts:

• The Dow (DJIA) is going to fall to somewhere between 577.6 and 1051.70 points over the next 2-4 years.
• The ASX 200 will bottom early in the new year between about 5023-5274 points. It will then commence a final volatile journey to its finishing point. It will exceed the 30 August 2018 high of 6373.5 points. It may approach or marginally exceed the 1 November 2007 high of 6851.5 points. After this it will plunge to a level for which I cannot obtain free stock market data from tradingview.com Somewhere pre-1981 levels.
• My early work suggests the ASX 200 will peak late 2020 - early 2021.
  
• Your superannuation return for 2018-19 will be negative if you don't switch/do nothing. It probably has already turned, starting in September. Your best move is to switch to cash. Based upon my advice all of my immediate relatives of working age and brother and sister-in-laws switched to cash before the early 2018 to August-October US and European equity markets peaks. I'm already retired (age 53 this year).
• Residential property prices will bottom and rise in a final push to new highs. The timing is market dependent but the timing of the final high(s) will generally be consistent with the above forecast for the ASX 200, albeit they will lag it slightly. After that expect a fairly large fall in property prices.
  
• Labor will win the election but they will be a one-term government. If they stop negative gearing it will be reversed by the next government.
• Once Labor are thrown out Australia will enter a period of stable government much like the period 1983-2007.
  
• The Australian men's cricket team will continue to perform poorly. The women's team will excel. Women, generally will gain greater influence, position, dominance etc. etc. over the coming years.

This is the road map for the future I'm following.

 

The Dow fell 414 last session so 577-1051 is very possible.
Asx stocks returning to pre 1981 levels, surely not.
We all have a different outlook on things so I respect your opinion.
I however think The opposite to a degree. I think after the next period of, stagnation/deflation will come a once in a lifetime boom that will seperate those who are comfortable middle class, to,either well off or doing it kind of tough.
This time will be no different, there have been cycles, booms and busts, recessions and depressions, wars etc, we seem to land on our feet with more debt then before and just repeat the process, I can't see this ever changing whilst humans still have the fear and greed gene.

May I ask why you take such a dim view?
**no offence intended
Regards

 

Rightly or wrongly, I've been buying like crazy over the last month or so.