davede

14 Apr 2011, 06:33 PM

Hi all,

I'm quite new to forums and all.

The more I peruse the various threads and posts around the property forums the more I come across a dedicated hard-line base of property crash advocates.

They make some compelling and interesting cases for their arguments and I am always happy to read and to learn.

What I thought may be more useful or to provide a bit of help to investors is providing some means or advice to make money if a crash were to occur.

This topic is not meant to incite any rioting etc.

I think it would just be genuinely helpful to discuss ways to profit from a property crash and what instruments, securities or methods any crash advocates have set up to help them do so.

Again, I don't intend to incite any controversy here.

Sunder

14 Apr 2011, 06:53 PM

Notoriously difficult to short property directly.

Perhaps short banks as a proxy?

Listed property trusts, or developers if you think commercial and large development residential will go down with it?

It's probably a good thing that it is difficult to short property. Most the bears here couldn't afford the internet connection if they had put their money where their mouth is since talks of a bubble started around 2003.

Sunder

14 Apr 2011, 06:53 PM

Notoriously difficult to short property directly.

Perhaps short banks as a proxy?

Listed property trusts, or developers if you think commercial and large development residential will go down with it?

It's probably a good thing that it is difficult to short property. Most the bears here couldn't afford the internet connection if they had put their money where their mouth is since talks of a bubble started around 2003.

Catweasel

15 Apr 2011, 05:27 AM

Catweasel say a idea not a make a money from a crash, but to not a lose money from a crash. Even the now, it expect that a many already a losing money from a investment property. A further the more, many a mouse buying the house as a insurance for its "old age." Financially, it could be a horrible the decision for variety the reason. For the example, mouse buy on expectation that increase by a value it see in a past (this single the big threat) so it commit too many the resource to join a mouse herd. Big a problem with a property is that mouse (or even expert) cannot quantify the extent of irrational exuberance in a market. Therefore, there the big gap in a perceived and a real (in a monetary term). Bank and white shoe will talk about "the market value" but mouse need a remember that a market value is a sum that a include all a interference, rigging and emotional confusion. All this need to be a included in a risk management, except a mouse have no the ability to quantify it. Therefore, when it play with a mouse in a property market, it not the matter how a smart it is or the how good it is with a Excel, a market value still determined by the irrational mind of the masses. There your risk.

Shorting a bank is the direct a way to make a profit. But it need a remember that bank share price also the very distort and it not operate in a free market. Bank cannot the fail. We a already see that. It a too big to do the fail. Banker man always have a get out of the jail a free card because can always blame on a "unexpected" and "external" and a taxpayer will pick up a bill. So why a logic say it a good idea to do a short of a bank if believe a be a crash, in a reality, it not the so simple.

barns

15 Apr 2011, 06:57 AM

Wow, that was readable and a positive contribution - well done.

You may be right about the irrational exuberance in the market but why might it change? Property is always going to have an emotional buying and owning component that is absent in other assets classes (the yield on your bhp shares or term deposit return is just boring in comparison). If you can't measure this why not treat it as a constant while current Austalian economic conditions prevail? I know this might be over simplistic for some but it might be the only way to get on with life instead of trying to plan life. Don't take this as meaning I think you need to own property to have a life, only if you want to own you should just do it.

Catweasel

15 Apr 2011, 07:21 AM

barns

15 Apr 2011, 06:57 AM

Wow, that was readable and a positive contribution - well done.

You may be right about the irrational exuberance in the market but why might it change? Property is always going to have an emotional buying and owning component that is absent in other assets classes (the yield on your bhp shares or term deposit return is just boring in comparison). If you can't measure this why not treat it as a constant while current Austalian economic conditions prevail? I know this might be over simplistic for some but it might be the only way to get on with life instead of trying to plan life. Don't take this as meaning I think you need to own property to have a life, only if you want to own you should just do it.

Catweasel laugh. It the very not a often that it breakthrough skull with communication. Most a Catweasel idea the very obvious, but cause a big emotion among a most. It the true that a most mouse credit its skill and good decision a making when a market go the up, but it blame another or a bad luck/unexpected when it go a down.

It say that it should treat a unknown as a constant. Big the problem with a that is that it not know how a mouse behave in a future, so any the purchase is gamble on a mouse behavior. Good a luck. Further the more, as in a any the asset market, when a price at a historical high relevant to most a objective a benchmark, it can be the same that absolute risk at its a greatest. Right a now, it just a big argue about a benchmark. Un the fortunately, it need to look at a messenger and motivation as most a benchmark created by model with a fixed parameter. Information gap a too large for mouse to make informed a decision.

Catweasel see big a potential of more a stress-relate illness related to property spinning wheel that its master create for it. Mouse have to run even a faster on wheel while anxiety attack membrane on its skull. Master will try to relieve a stress by "feel good" propaganda but a Catweasel think it have limited effect.

barns

14 Apr 2011, 10:48 PM

If you give me $100,000 tomorrow I will give you back $300,000 in 5 years time if the value of my house has decreased by 20% or more.

raveswei

15 Apr 2011, 08:59 AM

barns

14 Apr 2011, 10:48 PM

If you give me $100,000 tomorrow I will give you back $300,000 in 5 years time if the value of my house has decreased by 20% or more.

20% in real or nominal terms?

15% in nominal terms could mean 35% in real terms

barns

15 Apr 2011, 08:39 AM

I recoginise that to do this you need a certain confidence in your own abilities and the gumption to ride out bad times and perhaps start again if the worst should happen - not for everyone I suppose.

Catweasel

15 Apr 2011, 10:26 AM

Catweasel laugh. It a "recognize it" only a because a education system, master, and a media force it a down its throat. In a reality, it not a "recognize" a anything until after the fact and a "abilities" have a more to do with fate than a anything else. Also a "ride out the bad times" is also part of the mantra but it as fluffy as it is a pragmatic. It's an emotional blanket to comfort itself about a future.