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.
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.
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.
Property speculation is a type of gambling... But everyone knows that in gambling, the house always wins in the end.
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.
spot on Sunder... looking @ that bank share price / house price index chart from another thread it's obvious that share price sways quite a lot with even stagnation of house price index.
You could be right Sunder with the luck that bears did not try and short the market... I guess some did in the way that they sold their PPoR(s) or IP's between 2003 and now with the hope of buying in cheaper.
The common belief is that many bears will be bearish right through any downturn also and miss the bottom... even miss the ride back up.
It's possible.. however it's also possible that many more will give up waiting and just buy... in fact, many have already.
The most common play to profit from the bust are Put options, pick the bank you believe has the most exposure to property. Bank balance sheets will be vulnerable to a slide in property because their lending is leveraged, my pick CBA. The main concern is how will the federal govt bail these banks out will they protect the shareholders, depositors or creditors?
Enjoy The Ride!
Enjoy The Ride!
The case for individual freedom rests chiefly on the recognition of the inevitable and universal ignorance of all of us concerning a great many of the factors on which the achievement of our ends and welfare depend. It is because every individual knows so little and, in particular, because we rarely know which of us knows best that we trust the independent and competitive efforts of many to induce the emergence of what we shall want when we see it. Humiliating to human pride as it may be, we must recognize that the advance and even the preservation of civilization are dependent upon a maximum of opportunity for accidents to happen.” ― Friedrich A. von Hayek
"I, on the other hand, am a fully rounded human being with a degree from the university of life, a diploma from the school of hard knocks, and three gold stars from the kindergarten of getting the shit kicked out of me." Blackadder.
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.
most of bears are not in this story to earn money - they earn their money with hard work
they are here to alarm people that this is going wrong way that will cost us our future
the obvious way to short the property market is to simply hold on to your cash. the problem is that if there is a crash, the economy crashes, and the likelihood of you being able to get/service even a small loan decreases as well.
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.
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.
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.
“You Keep Using That Word, I Do Not Think It Means What You Think It Means” - Inigo Montoya
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.
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