By: ang101000
12/11/2009
12:33 am Yahoo! Profile:
ang101000 Did this message offend you?
Sign in to report abuse |
Reply to this message |
Billy,
Keep it simple - call shares 'capital assets'. Thanks for your profound risk=return and time/value analysis.
I may not comment, it may offend you if I do. |
|
By: almurrie1@y7mail.com
11/11/2009
8:32 pm Yahoo! Profile:
almurrie1@y7mail.com Did this message offend you?
Sign in to report abuse |
Reply to this message |
Not really Fire (queues) because the only way the prices will be that low is if 50% OF THE POPULATION DIED FROM SWINE FLU!! Then there would be about enough houses to cope with the influx of migrants, but even then I doubt prices would have done anything but dipped a bit.
Now whether a dollar then will actually be worth a present dollar is a different matter!
Al |
|
By: firefly_au
11/11/2009
7:29 pm Yahoo! Profile:
firefly_au Did this message offend you?
Sign in to report abuse |
Reply to this message |
Hi Guys:)
We will need to form a queue as anybody with spare cash will be out buying houses under those circumstances he he :)
BYE :) |
|
By: mentawaisurf
11/11/2009
5:21 pm Yahoo! Profile:
mentawaisurf Did this message offend you?
Sign in to report abuse |
Reply to this message |
| And that's exactly when I'll be buying houses too Jay. |
|
By: jaymarcel
11/11/2009
1:53 pm Yahoo! Profile:
jaymarcel Did this message offend you?
Sign in to report abuse |
Reply to this message |
| I agree with you billy, it also applies with house prices, if they half in price then it's time to buy another. |
|
By: mentawaisurf
11/11/2009
11:45 am Yahoo! Profile:
mentawaisurf Did this message offend you?
Sign in to report abuse |
Reply to this message |
| Given debt has been the fuel for the asset mania and that people have reached debt saturation (as evidenced by both declining consumer and bank credit despite all efforts by government and central banks to stimulate borrowing) then the opportunity loss of further asset appreciation is minimal compared to the growing downside risks of severe asset losses going forward. |
|
By: billy.holliday@rocketmail.com
11/11/2009
11:38 am Yahoo! Profile:
billy.holliday@rocketmail.com Did this message offend you?
Sign in to report abuse |
Reply to this message |
The consensus here is that "speculative" = "any risk whatsoever". The share market has returned on avergae 12-14% pa forever....cash is 3-5%. if everyone was as risk averse as you guys, man would never have gone ot the moon, and you certainly wouldnt be enjoying the standard of living that you do today.
Risk = reward....if you DYO research and dont panic when everyone else is too scared to be in anything except cash, you will make significant gains with actually little risk.
This year has been a great year to keep your eye on the long term....we are up 50%+ and back to levels pre-GFC, having loaded up more at the bottom.
As Charlie Munger says: "If a stock has just halved in price, is it more or less risky?" Most people are too scared to do anything and would say more risky, Munger and others would say I can buy $1.00 for $0.50c, wher is the risk in that!! |
|
By: lasty49
11/11/2009
11:24 am Yahoo! Profile:
lasty49 Did this message offend you?
Sign in to report abuse |
Reply to this message |
"Cash safely deposited in a government guaranteed bank earning a regular fixed income v exposure to the largest degree bear market rally in centuries."
The risk lies in your projection of a bear market rally. |
|
By: mentawaisurf
11/11/2009
11:17 am Yahoo! Profile:
mentawaisurf Did this message offend you?
Sign in to report abuse |
Reply to this message |
| Cash safely deposited in a government guaranteed bank earning a regular fixed income v exposure to the largest degree bear market rally in centuries.....hmmm, now just where is the risk? |
|
By: lasty49
11/11/2009
10:14 am Yahoo! Profile:
lasty49 Did this message offend you?
Sign in to report abuse |
Reply to this message |
Jay,
Yup its all speculative at some point.
Doing nothing involves risk just like doing something. |
|
By: jaymarcel
11/11/2009
9:59 am Yahoo! Profile:
jaymarcel Did this message offend you?
Sign in to report abuse |
Reply to this message |
Isn't anything & everything speculation in the current conditions?
Cash (via currency or inflation/deflation), bonds, shares, property, all have an amount of risk attached to them making them speculative. |
|
By: billy.holliday@rocketmail.com
11/11/2009
8:07 am Yahoo! Profile:
billy.holliday@rocketmail.com Did this message offend you?
Sign in to report abuse |
Reply to this message |
(cont'd)
At any one time, investment portfolios in equity can be up or down, depending on the start and end date just like the Super Fund examples, but it changes constantly and the "loss of wealth" is not permanent unless you were in Allco or Babc**k etc or sell. Super Funds are now close to their pre GFC levels, and many equity-only portfolios are already back there, so the same Boston Consulting Group report for 2010 or 2011 will be saying how they are all up on 2008.
Just because the price or value of an investment can change to reflect new economic circumstances doesn't mean they are "speculative" (=bad)and unproductive. Granted, some individuals can use the same stock market to do lots of unproductive speculation on share prices (or go to Star City;same thing), but that is a very very small minority of day traders and the like, and should not be confused with real long term investment in businesses that make things. |
|
By: billy.holliday@rocketmail.com
11/11/2009
8:01 am Yahoo! Profile:
billy.holliday@rocketmail.com Did this message offend you?
Sign in to report abuse |
Reply to this message |
Thanks to Ang, Lasty, Jay, and Fire on the comments.
Ang, I agree that my comment does sound a bit stupid! Sorry, I meant it to apply to productive speculative assets (e.g.shares), rather than unproductive speculative assets (e.g.gold). (Although a higher gold price does open up new mines and create jobs too).
I guess I baulk a bit at the idea of pointing to so much wealth that is invested in "speculative assets" ( and now I know you mean those that need the price to rise to get an appropriate return) as if it is the same as funding a shipment of heroin. It sounds like it should be bad; after all "speculative" is like the Melbourne Cup, right? Wrong, IMHO.
Providing capital to entrepreneurs, receiving an appropriate risk adjusted return on that investment, and having the value of that investment rise as the success and value of the enterprise increases is hardly speculative. I know that share prices can be very volatile in the short term, which is why you get paid the equity risk premium over the cash return, but in the long run, it is the Warren Buffett weighing machine and does reflect legitimate underlying value. It's what I do for a living, and Super Fund money absolutely should be invested in Australian business for the long term, and not sitting in a bank account at call (so the value doesn't change and it cant be called "speculative") to be lent out to ABC Learning by some idiot at ANZ. This is what drives our economy, allows companies to expand, and creates jobs and wealth for all. Think about how that applies to your own employer. |
|
By: jaymarcel
11/11/2009
7:04 am Yahoo! Profile:
jaymarcel Did this message offend you?
Sign in to report abuse |
Reply to this message |
| Hi Billy, Cash can be added to the list as it does go up & down in value. |
|
By: ang101000
10/11/2009
11:27 pm Yahoo! Profile:
ang101000 Did this message offend you?
Sign in to report abuse |
Reply to this message |
Lasty,
Capitalism is on shakey grounds too.Had it not been for the Chinese opening up towards capitalism I think the world today would be somewhat in a "Menta wishlist".
Today's winners could become tomorrow's losers, I feel 'Menta wishlist' is not an impossible reality. |
|
By: firefly_au
10/11/2009
10:01 pm Yahoo! Profile:
firefly_au Did this message offend you?
Sign in to report abuse |
Reply to this message |
Hi Billy :)
Wow! You are a really impressive thinker and I like your assessment of Keens approach it is brilliant!
Thanks mate:) |
|
By: ang101000
10/11/2009
9:44 pm Yahoo! Profile:
ang101000 Did this message offend you?
Sign in to report abuse |
Reply to this message |
Billy,
'For a subscriber to real world economics rather than delusional ideal world economics, assuming that investment (even speculation) in assets (even property) has no flow on productivity effect is delusional.'
Billy, the above statement is so 'shocking' (call it what you will) that I can't really comment on your comment.... |
|
By: ang101000
10/11/2009
9:37 pm Yahoo! Profile:
ang101000 Did this message offend you?
Sign in to report abuse |
Reply to this message |
Hi Billy,
I can call 'speculative' assets 'financial' assets if you like. It does not make any difference for the concept, you can even call them communist house asset and capitalist share asset. The fact remains; people 'speculate' about the price of those assets.
In regards to investments in the above assets, my point is that; Australia's personal wealth took a big hit from crisis.(Oz personal wealth dropped 27 percent, only UK and Sweden lost more).
Boston Consulting Group's latest Global Wealth Report shows Australia suffered the third largest drop in personal wealth among 62 countries surveyed, because of a high exposure to the share market.
Personal wealth in Australia - excluding housing and self-owned businesses - fell 27.1 per cent to $US1.48 trillion ($1.67 trillion) in 2008, from $US2.03 trillion ($2.3 trillion) in 2007.
Only the UK and Sweden experienced a bigger drop in personal wealth, losing 32 per cent and 28 per cent respectively.
Worldwide, personal wealth dropped to $US92.4 trillion in 2008, from $US108.5 trillion in 2007.
A high exposure to equities was a major reason Australia's personal wealth fell so much during the financial crisis, the report says.
Australians had 53 per cent of their personal wealth invested in shares in 2007.
Boston Consulting Group's Matthew Rogozinski said Australia's loss of personal wealth in 2008 reflected the bigger drop in the benchmark S&P/ASX200 index compared to other country's share markets, and a high number of share market investments in Australia.
Personal wealth includes cash deposits, money market funds and listed securities, but not wealth from investors' own businesses, residences and luxury goods. |
|
By: lasty49
10/11/2009
10:01 am Yahoo! Profile:
lasty49 Did this message offend you?
Sign in to report abuse |
Reply to this message |
ang,
The next push is for this "one world" cr@p pushed from the left as their socialist experiment failed in the 1980's.
Their cagey disguise behind climate change and the environment got traction however cracks are now appearing as science is becoming contradictory to their alarming theories.
Capitalism is on shakey grounds too.Had it not been for the Chinese opening up towards capitalism I think the world today would be somewhat in a "Menta wishlist".
Interesting stage in life as the economic powers of the present are losing their grip on the future.
Im currently going with the flow until such time I see anything different. |
|
By: billy.holliday@rocketmail.com
10/11/2009
10:01 am Yahoo! Profile:
billy.holliday@rocketmail.com Did this message offend you?
Sign in to report abuse |
Reply to this message |
And Ang and Steve Keen, since when is long term investment in the share market (i.e. in productive businesses) a "speculative asset" ? Are you saying, Comrade, that "cash" is the only real investment because it doesn't go down or up in value (as long as your bank doesn't go broke)? Gold is speculative.......providi ng risk equity capital to a productive enterprise is investment.
Lets stop using ideologically driven jargon and talk concepts using English words. |
|
By: billy.holliday@rocketmail.com
10/11/2009
9:59 am Yahoo! Profile:
billy.holliday@rocketmail.com Did this message offend you?
Sign in to report abuse |
Reply to this message |
Hi GoF
Been busy, but got some time yesterday....
I have now watched the Steve Keen video and I thought it was very good. (I am going to have to attend some of his lectures I think). However, I have the same problem with him: after doing a great job modelling an economic system with a Minskian complex approach rather than a linear equilibrium neoclassical approach, he goes on to try to "predict". This typically involves holding everything constant and changing one variable and while it may be better than a linear model it still has "sensitive dependence on initial conditions", so changing another variable ever so slightly will give you a complexly different answer.
This is the reason that he was wrong on housing: because hi model is good, but not 100% accurate and as usual depends very much on your initial assumptions.
In Stevies case, he criticised other economists who put a rabbit into the hat and then expected applause when they later pulled the rabbit out, but did exactly the same thing. His big assumption (check the video) is that debt is increased in a more confident economic phase with no commensurate increase in productivity (the rabbit in the hat), and then miraculously gets the result that it leads to debt induced deflationary economic collapse as everyone deleverages (the rabbit comes out again). For a subscriber to real world economics rather than delusional ideal world economics, assuming that investment (even speculation) in assets (even property) has no flow on productivity effect is delusional. Even if you subscribe to the simplistic view that investment in property only drives up prices, then that of itself encourages more housing to be built, thereby creating economic productivity. That's the reason he got it all wrong. D'Oh.
I also agree with Ang that net debt should be used, and with Lasty that you cant ignore assets (like Super). Steves approach is right, but its far to rudimentary to be using it to predict things and make walking bets. |
|
By: ang101000
10/11/2009
9:02 am Yahoo! Profile:
ang101000 Did this message offend you?
Sign in to report abuse |
Reply to this message |
Hi Jay,
It is a bit overblown, I know. The whole movie is part of a much bigger movement and it is a bit out of context (like looking at one piece of a puzzle), it is to do with Ron Paul's push to supervise the FED.
Anyway, I thought it is interesting to see how different groups are coming up with new developments on the evolution of the financial system. I did not post the original link to the movement (that could be overwhelming).
Thanks for watching. |
|
By: jaymarcel
10/11/2009
8:25 am Yahoo! Profile:
jaymarcel Did this message offend you?
Sign in to report abuse |
Reply to this message |
I enjoyed the link ang (downloaded the whole thing from the website in the end). But isn't it kind of obvious that with a growing population you do have to print more money othewise you would get inflation anyway, similar to the theory behind the value of gold due to its limited supply.
If you remove the conspiracy part the show was good thanks. |
|
By: ang101000
9/11/2009
11:03 pm Yahoo! Profile:
ang101000 Did this message offend you?
Sign in to report abuse |
Reply to this message |
Fire,
'Whether it is based on gold, rum, olive oil, salt, seashells or pure faith makes no difference IMHO :)'
There is a point we agree on! Of course we need a better system than a central bank supervised fractional monetary policy. |
|
By: firefly_au
9/11/2009
10:04 pm Yahoo! Profile:
firefly_au Did this message offend you?
Sign in to report abuse |
Reply to this message |
Hi Ang :)
I had a look at the youtube article and it does more or less describe the mechanics of the fractional reserve system of banking and money supply. But once again it tends to over dramatise the conection between currency and debt under this system as though this is new...
But the reality is all currency under all systems have the same relationship to debt because in fact all currency represents debt or a promise to deliver goods or services to the value indicated or it would not work as a currency!
Whether it is based on gold, rum, olive oil, salt, seashells or pure faith makes no difference IMHO :)
In the past systems based on Fait (faith) have handled the challenges that the real world has thrown at them better than most other systems due to the superior flexibility. In fact this is why it is in such widespread use around the world today. Despite the shortcomings of Fait systems and fractional reserve banking it is likely to remain unless someone can come up with a better system.
BYE :) |
|
