They are characterised that way because that is the nature of their character.
Oh goodie - Another in-depth detailed rigorous scientific analysis of the nature of the character of others by someone whom I can only assume to be a totally unbiased dedicated researcher of same (NOT! ) ...
Not too dissimilar to all the twaddle on all those supposed 'overwhelming and totally fundamental differences between cohorts' that I've also started thinking are most likely largely shite of late. More MSM beat up at best most likely ...
Oh goodie - Another in-depth detailed rigorous scientific analysis of the nature of the character of others by someone whom I can only assume to be a totally unbiased dedicated researcher of same (NOT! ) ...
Hi Herbie. Haha, this site is for in-depth detailed rigorous scientific analysis? You got a better answer to b_b's question?
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Not too dissimilar to all the twaddle on all those supposed 'overwhelming and totally fundamental differences between cohorts' that I've also started thinking are most likely largely shite of late. More MSM beat up at best most likely ...
Having done a little bit of reading on the supposed 'theory behind it', I can't see any particular theoretical reason for there to be any great diffs between those cohorts even. In the West anyway. And see very little scientific research that might support such thoughts. Plus don't even personally see any great evidence for thinking there are any great diffs within my own working class family members as I look across those three cohorts.
Just more twaddle. Just more MSM beat up. What sells papers. And to be misused 'n abused by those who do feel inclined to handle 'facts' loosely to their own ends ...
The same argument can be put forward on most shares. I think the average yield of the ASX 200 is 4.2%, US shares less than 2%, versus borrowing rates of 5-5.5% - of course dividends like rents, are expected to grow.
Why do share investors expect their dividends to grow, yet property investors are characterised as only hoping of capital gain. In the same theme, why has negative gearing on shares not made our shares "the most overpriced sharemarket in the world?"
+1. Most people, including the journalist, do not understand the power of increasing dividends. The apartment I bought in 2001 for $120k was getting $140/wk in rent then, but now it is getting $310/week. Even if it I had bought it 90%LVR IO and never returned a cent in principal it would be making good money now.
I wish my broker would lend me money at 5.5%. Even in the US market where CDs are paying well under 1%, the best rate I can get is 6.5% and I have to borrow half a million to get that. Typically it is 8.5%.
Aussiehouseprices
29 Sep 2014, 05:29 PM
They are characterised that way because that is the nature of their character. Having said that, I reckon most share investors buy because of the expected capital gains too. Any dividend is a little bonus.
You wouldn't reckon that if you had a passing familiarity with the various investor boards or you saw what happens to a stock that previously had rising dividends cut its dividend. Most investors are acutely aware that the value of a stock is the NPV of future dividends. *ALL* the analysis and valuations out there work on this equation.
+1. Most people, including the journalist, do not understand the power of increasing dividends.
+2. Exactly my point. Which is why they are primarily interested in capital gains.
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You wouldn't reckon that if you had a passing familiarity with the various investor boards or you saw what happens to a stock that previously had rising dividends cut its dividend. Most investors are acutely aware that the value of a stock is the NPV of future dividends. *ALL* the analysis and valuations out there work on this equation.
Seems to contradict what you just said. Anyway, people on investor boards do not represent the majority of share investors. And it's not the majority of share investors driving the share price after a dividend announcement. Oh well, we can't prove our points so will have to agree to disagree. But I honestly cannot believe that you think that more than 50% of investors are "acutely aware that the value of a stock is the NPV of future dividends". My guess would 5%.
+2. Exactly my point. Which is why they are primarily interested in capital gains.
Nope. Most people are not investors. Investors are directly experiencing (or not experiencing) the power of increasing dividends. If they don't know about it when they buy, they will know about it it within a couple of years of buying. The rest of the population, living in ignorance continues to think it is all about capital gains and perhaps post rubbish about a subject they fail to understand on forums like this. Half the economic return comes from rising dividends. The other half comes from capital gain - but that capital gain is in turn a very good proxy for increasing dividends.
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Seems to contradict what you just said. Anyway, people on investor boards do not represent the majority of share investors. And it's not the majority of share investors driving the share price after a dividend announcement. Oh well, we can't prove our points so will have to agree to disagree. But I honestly cannot believe that you think that more than 50% of investors are "acutely aware that the value of a stock is the NPV of future dividends". My guess would 5%.
You are assuming that since you don't understand the maths behind it, the market does not. The point is really easy to prove. have a look at what happens to a stock when EPS growth misses by even 1%. Does it drop by 1%? No it will often tank by as much as 5% or even more. This is because the actors in the market know very well that the value of a stock is extremely sensitive to the rate of dividend growth which is tied very closely to the rate of EPS growth. The overwhelming majority of transactions on the market are performed by people who understand the equation very well. Pretty-much 100% of the analysts' reports you read are trying to solve the equation, even if they don't specifically say so. It's day 1 of stock investing 101 for heaven's sake. Pick up almost any book on stock investing and it will be close to the front of the first chapter that talks about stock valuation.
Or you could put it another way. If you want to buy any asset, stock, dwelling, factory, business - whatever - and that asset's profitability is projected to grow over time in relation to today's price, then you are going to find you need to buy that asset at a price which makes it have an overall negative return on day 1.
The rest of the population, living in ignorance continues to think it is all about capital gains and perhaps post rubbish about a subject they fail to understand on forums like this.
Haha, what makes you think I fail to understand it or that I think it's all about capital gains?
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You are assuming that since you don't understand the maths behind it, the market does not.
You are assuming (incorrectly) that I don't understand the maths behind it. Where did you get that idea from?
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It's day 1 of stock investing 101 for heaven's sake. Pick up almost any book on stock investing and it will be close to the front of the first chapter that talks about stock valuation.
You're preaching to the converted. But I would bet the vast majority of stock investors have not done a full day of stock investing training or read a full book on the topic.
Well, I said "people". Not "investors". You should read more carefully. I'm quite willing to accept that many - even perhaps the majority of people when they first get into the game do not understand the full importance of increasing dividends on day one. That ignorance gets cured fairly quickly in most cases though. And even the ignorant ones understand the concept of yield.
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You're preaching to the converted. But I would bet the vast majority of stock investors have not done a full day of stock investing training or read a full book on the topic.
The vast majority of people who own stocks own them through funds managed by people who understand this very well. The ones who go their own way and manage their own stocks would mostly be well aware of the power of dividends. Transactions made by people with no clue amount to a very tiny portion of the market, and they take their price from the people who do understand.
The main difference between the stock market and investment housing market would be that a bigger percentage of those investing in housing are newbies. Also even the ones who know something may be less aware of the internals of the equation and good analysis is harder to find, hence arbitrage is much easier to find. The market is still pretty efficient though.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
I thought they were only planning on removing it from existing build, I don't get how it would increase rents if investors stopped buying existing builds. Somebody somewhere would still own the house and I don't see why they would rather it be empty than to keep renting it out.
With all respect Pete that thinking only works for a time, if the losses of running the "business" are not tax deductible it is a small but important part of the overall equation.
You just can not get a positive outcome.
So over time if a business is making a loss it has to show up, at some point if you are using more fuel than you are replacing in your cars fuel tank you will find yourself walking.
John Maynard Keynes once wrote, agreeing with Lenin, that when governments debauch their currency by inflating it, they are destroying, in a secret and unobserved way, part of the wealth of their citizens.
He wrote that sentence in 1919, after the squalor of the negotiations over war reparations.
But the kind of phenomenon he was describing – where you think you're seeing one thing when something deeper is going on – is everywhere in modern economies.
Take the problem of housing affordability.
For years the federal government has provided first home buyers with grants worth thousands of dollars to make houses more affordable.
It sounds like a good idea, but if you look at the policy long enough you'll see that it doesn't help first home buyers one bit.
It pushes up the price of houses by the same amount as the government grants and leaves first home buyers in the position where houses are no more affordable than they were before the grants were handed out.
It makes the grants necessary just to stay in the race. What a dumb waste of resources.
One consequence of wanting to see beneath the surface of economic activity in this way is that you have to be prepared, if you want to be intellectually honest, to follow the logic of economic theory to its conclusion.
You may feel that a first home buyers' grant is a beneficent thing, but if the theory says otherwise and you believe the theory can be trusted, then you ought to be prepared to drop your emotional support for the policy and adopt a position you find counter-intuitive.
I've had to do that recently on a different topic.
I was asked by a friend if I thought we should be able to use our superannuation to buy our first home. I said we should.
Why should we be forced to put a sizeable proportion of our wages into a super fund while also saving and borrowing to buy our first home?
Wouldn't it be better to use our super to buy the house and then spend the rest of our life saving for retirement in the comfort of our own home?
That was my emotional reaction, but it was wrong.
I'd twisted into a confused mess my reservations about the super system with my frustration with the state of housing policy.
Those things should be untangled if I want to answer the question properly.
So, to have a second crack at it, I'd say that my real concern is with housing affordability, and the depressing rate at which house prices have been growing in recent years.
If we want housing to become more affordable then, no, I don't think people should be allowed to dip into their super to buy their first home.
Why? Because in a supply-constrained housing market – such as we have in Sydney and Melbourne – anything that allows people to spend more on housing than they otherwise would will only result in house prices rising further, and perhaps faster, than they otherwise would.
In this sense, there's no difference between allowing people to dip into their super to buy their home and handing them a first home buyers' grant. Same thing with stamp duty concessions, or allowing mortgage interest as a tax deduction.
Given the supply of housing is barely moving, all those policies will do is increase the demand for housing, thus pushing up prices.
If we want housing to become more affordable in a supply-constrained world – and it's likely to remain supply-constrained for the considerable future – then we have to try to reduce the demand for housing.
Saul Eslake, an economist at Bank of America Merrill Lynch, says one of the best ways to do that is to get rid of negative gearing for new investors.
Negative gearing is a tax regime that allows investors to buy an asset and write down the interest costs against other income.
When it comes to real estate, negative gearing occurs when the costs of owning a property – such as the interest on the loan, or repairs and maintenance – are more than the income the property generates for you.
In normal circumstances it doesn't make sense to enter a financial arrangement like that.
But it does make sense if you expect the value of the property to increase by more than the losses you're making.
And that's what a lot of people have been expecting this year, with good reason – national house prices have risen 10 per cent on average over the past 12 months. In Sydney (15 per cent) and Melbourne (12 per cent) they have risen by much more than that.
But the combination of our capital gains tax rules and negative gearing has been artificially increasing the demand for investment housing and pushing up the price of surrounding homes.
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