Deep Singh

Ok, I'm going to come off the fence. This recent rally in equities and property is a suckers rally. Its based on cheap money and sentiment.

We will in the not to distant future see further falls in both (defensive and high yielding stocks may do well)

There are no fundamentals to this rally.

If the above is not true, ie FTSE and property prices lower than they are now in 12 months time I will eat my hat. This will be videod and uploaded to you tube for ebverybody to see

SunnySideUp

I'm not so sure .... plenty are cleaning up on shares ... and SOLD signs are appearing all over the place!

Nah, whatever downturn there was is behind us - from here to the election it is roses ... it cannot be allowed to be anything else!

fatherpierre

ROSES:
BBC NEWS | Business | UK jobless total climbs to 2.4m

what would scooby do

We have another 4 to 6 months and 1/2 million unemployed (3m in total approx) before upswing.

SunnySideUp

Unemployment is a LAGGING indicator - it continues upwards a long time after the Economy is thriving!

what would scooby do

..and if you hit yourself with a hammer it hurts

Deep Singh

The clue is in the title of the thread Pete. Yes there is a rally, but its a suckers rally.

SunnySideUp

Yes, deep, I knew what you were saying ....... you think it will wane.

That's what I thought 8 weeks ago - now I think there is something else there other than cheap money and sentiment.

The deposits being placed on houses are higher than they have been historically - this money is money people have in the bank on deposit.

Cars are selling - at list prices!

People have more money now than they have ever had, yes, they were scared by the press over a non-event ... but they are now coming out all guns blazing and spending!

It's not borrowed money either - debts are being cleared at the fastest rate in a generation.

No, what we are seeing is a release of the massive funds people have saved during the good years .... to continue those good years.

I would love it to be a false dawn - but it isn't - this is the real McCoy, the real deal ....

EddScott

Although I'm concerned about the speed of the market rise I don't believe that they'll be a an almighty "crash part II". All a bit too daily mail for my liking.

I'd avoid quick fix ideas like asia/far east but the corporate bond market is doing well even after the nay-sayers said it would collapse. Index linked might be a safe bet on the basis that although it won't do anything now when interest rates start up again they will begin to perform.

People are spending money - money that should be held on to when interest rates rise. Those that have got used to silly low interest rates are going to struggle even at 6%.

Deep Singh

The discount auction price has widened. This is the difference between what a property sells for at auction to what its valued at on the open market.

It was 11% in May and 18% in July.

Its a good indicator because it tells you what is happening right now, as opposed to sales that happened months ago, or asking prices.

Further evidence that there is more blood shed to come in the UK property market.

Trout

iTrader: (1)

The main weakness of your argument is that the last 'rally' in the market went on for some considerable time and there were no fundamentals then either.

Indeed, tell me a time in the last ten years when the market has been led by fundamentals rather than sentiment?

You may be right, you may be wrong, but either way you are gambling.


The auction to market discount is interesting as it does not reflect at least anecdotal evidence of houses starting to move and properties getting multiple buyers chasing.

EddScott

Where do you get that information from? Out of curiosity.

Steve vRS

Multiple buyers are chasing houses as there are so few houses on the market. What will be interesting is what will happen when prospective sellers react to this and supply increases.

Steve

marky1

I think property will come off hard when rates start increasing. And they will start increasing soon enough.
Stock markets have rallied 50% from their lows - would not be surprised to see them make new lows. I don't believe things are much better than they were six months ago, but sentiment is. I find it hard to understand how we are meant to be in the worst period since the Great Depression, yet FTSE did not break 2003 lows.

hodgy0_2

absolutely bang on Trout -- after the dotcom crash of 2000 it was said that the rally in shares and house prices would collapse -- it did eventually, but only last year

In fact most people were predicting a severe slow down/recession following the 2000 bubble but it never happened – the merry go round just kept on turning and "values" kept rising

It’s the easiest pitch in the world saying it’s all going to crash, that’s inevitable, the real trick is to call both the top and the bottom of the market and keep doing it – that’s not easy

NotoriousREV

We're at the Bull Trap/Return to "Normal" phase.

EddScott

You know what happens when you try to pick bottoms dont you?

Deep Singh

Trout, I never said the rally would be over tommorrow, it has a head of steam, no doubt about that. It WILL go on for some time, obviously I have no supernatural powers to be able to say when.

In my opinion though, its NOT business as usual, which is what many are beginning to believe, and certain vested interest groups want us to believe (banks, estate agents, the government).

Since the bull may run for some time, if you are savvy enough to get in and out in that time then well done, you will make money. My point is, that with the exception of certain high yielding/defensive stocks it is not a time to buy and hold.

Property is also a bad call, as it is illiquid and you can't trade in and out instantly.

Hence, for most of us, it is a suckers rally

Deep Singh

Financial Times, todays edition

EddScott

Thanks

If the rally is built on sentiment alone then something may well be on the cards. The people calling foul on the rise are growing in number and eventually everyone will take note and the market will collapse again.

I would be surprised if there is an almight crash if that graph is to be believed the bottom we saw before is just a taster. A correction sure but not an all out nose dive.

Time will tell.

SunnySideUp

So, maybe 10 years?

About 10 years maybe?

Not instant, as in shares, granted .... but, within a few weeks you can dip in and out.

marky1

How can you dip in and out of property within a few weeks (and make money having paid fees and stamp duty)

Deep Singh

No, NOT 10 years. As I said I'll eat my hat, live on a feed to Scoobynet if thats the case.

As for 'dipping in and out of property' in three weeks, only full on property dealers can do that, and not always. We've had that heated discussion before, you are NOT a property dealer/trader

Trout

iTrader: (1)

Easy peasy (I wish).

Target below market value properties and line up buyers before you buy. If you are good (not my game but a friend of mine made around £20m over the past eight years doing this - and in this market he is getting even better deals on the buy side a people in over their heads are desperate to bail) you will be in and out in a day.

To be fair he mostly does commercial property, but has a sideline in retail as well.


On the auction to valuation gap - is this driven by increased repossessions being dumped at auction?

marky1

Very impressive.

Trout

iTrader: (1)

He owns a landmark building in east London - if I told you the station stop you can see it towering above the station.

He started with £10k when he was 18. He is 33 now and does not need to work.

I wish I had his magic touch

hodgy0_2

dont see him much round these here parts -- bet he dont ride a scooby

Deep Singh

So, as I said this does not apply to 99% of us, including the might Pete.

I know somebody very similar to the guy you mention, worth even more. Question is how does HE get property under valued but manage to line up buyers who want to buy it at more? Simple huge bribes to the agents. No disrespect meant to your mate.

Its dishonest imho.

Back on topic. I assume everybody remembers the stress tests that the banks were meant to be put through? Anybody seen the results? No? Why? Because the govt decided that it would destabilise the economy! There is more bad news out there

Fabioso

I think the word that sums up the property market nicely is volatile...........I have no idea what property prices are going to do in the next 12 months and I actually don't care at this moment in time because I am not moving and have absolutely no need to re-mortgage

Anyone who thinks they know.......start speculating now For every winner there will be plenty of losers...........

I think the main thing is to try and make sure you have got a roof over your head because come October its going to get bloody chilly and looking at the job stats, plenty of people are going to be facing stark choices.