Thread: Investment Property Advice

All good advice there from Prozac. There is a real risk of a market collapse, well actually more of a readjustment. People seem to be buying on the bigger fool principal. The notion that it will go up forever and some bigger fool will buy from you at an even more inflated price. I think it is all bit excited at the moment and there will be a correction to take the heat out of things a bit. Then it will all start going again.

Studley

Beware the long slippery slope. Time to sell down your shares.

I hope that no one has been burnt with margin calls.

Shares are starting to look cheap, but don't get caught buying into these little rallies. I think that there is a lot more downside in prices before the dust begins to settle.

prozac

In one way I would disagree with Prozac. The Share Market is a good place to invest provided you have a good strategy. This includes a lot of reading and keeping up with things.

BUT most of all if you say I am an investor and am going to buy companies that make profits and pay dividends over time you will come out in front.

Speculation is a different issue. If you speculate you are buying on the premise that something will happen to boost your stock and you can sell at a big profit. It can be done but you will take a lot of haircuts as well.

Warren Buffet has become the second richest man in the world on the premise of buying stock based entirely on the company's profitability compared to it's share price. He bought stocks that had good profits compared to their listed price. Eventually the market woke up and he made a gain on the price but even if it never happened he would get the dividends and a fair return on his investment.

Studley

Studley, I agree with you completely. The stock market like real estate should be viewed as a long term strategy. There are times when both markets become overheated, and now is one such time in the stock market. Whereas stock prices on many shares have been pushed beyond their real value, in the current market expect to see these shares pushed down below their real value as institutions try to limit losses, and also try to meet their weighted levels of exposure.

My comments last year were in anticipation of a market rout. Now that it has started all I am saying is that it is time to stand aside and wait until you see fair value or even shares that are oversold. And they will get oversold, but not yet. When historical prices tell you that a share today is worth less than it was 2 years ago, BUT that profits have not been downgraded and the assets are intact, then "fill yer boots". It may take 12 months or more to turn around but you have bought some nice blue chip shares showing solid yields you never would have expected to achieve. The underlying value of the share has not diminished so this is what you have been waiting for, a good quality share with a better than expected yield. Then sit back and wait for everyone else to realise that this is still the same company it always was.

I cashed up last year waiting for just such an opportunity. I am not suggesting you do not invest in shares. I am merely stating my belief that the market still has a lot of downside risk and that now is a good time not to be putting any more of your hard earned savings into it.

Be patient and you will be rewarded.

prozac

Prozac I totally agree with you on the share market at the minute and i think property is not the best option at the moment either.

i think with the sub prime problems in USA and the more than likely interest rate rise in Australia, the huge increase in house prices over the last few years i think property is where you said shares were. I think property over the next 6 months or so will also have an "adjustment"

Just a gut feeling i could be wrong but the signs are there.