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March 6, 2012 - 2:07 am

Pat007 wrote:

Any downsides that can be seen

Wouldn’t touch it with a barge pole until the crises is resolved. That could be a decade or two at the current rate. Property in Greece, Spain, Portugal etc is difficult and frought with rip offs at the best of times let alone during a euro melt down.

The Freckle

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March 6, 2012 - 1:10 am

worldinvestor wrote:

Hey Freckle 
LOL……  Lets not scare the hell out of these blokes, we go a couple of High Fives

Calm down WI …. you’ll have me singing the Star Spangled Banner next.

As an aside… Zimbabwe don’t have a currency any more. Being the poorest trillionairs on the planet was not a good look so they adopted the US dollar. That could be a mistake.

The freckle

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March 5, 2012 - 11:37 pm

I know what I’d be doing and it wouldn’t involve lawyers.

I’d collate the debt add expenses and add 30% for good measure. Then I’d find out who the local underworld king pin is.

My next call would be to this rooster and give him a verbal bill with a condition. Pay up within 30 days or I’ll sell the debt to the local thug. You can deal with him.

You don’t do it of course but the threat may be enough to push his stress levels up a tad. Or you could do what all women are good at. Nag the bugger endlessly. He’s bound to cave in.

Its a successful strategy my wife has employed for years!

The Freckle

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March 5, 2012 - 11:20 pm

KnoxOff wrote:

Freckle…..  it sounds like your a Mike Maloney fan ?

Not really. I monitor a diverse range of commentators along with him but he’s actually the least read on my list.

I invest in silver through a pure play silver mining company in Qld “Alcyone” and a few $$$ in a silver ETF. I’m down about $7k at the mo’ Boy have I learnt some lessons about how manipulated PM markets are. When heads roll I want front row seats.

It won’t matter if I loose or make money from silver. It’s a hedge against the likely crash. If things keep rolling on I’ll make good bucks investing in myself through business. If the crunch comes then silver should buffer me against the worst of it.

I need 2 years to clean up and get out. I’m hoping things will last that long but I can’t say I’m confident.

If things get really bad I’m heading back to NZ, buying some gold panning and camping gear then bush for a while. I know of places where I could get 1/2 to 1oz per week. Gold will be well north of $2k if things get that bad. The only potential downside to that is I might end up shoulder to shoulder with other like minded individuals.

The Freckle

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March 5, 2012 - 12:15 pm

worldinvestor wrote:

Freckle, what investment pond do you play in? Despite what you might think I actually agree with most of what you are saying, the addiction to debt has to stop. It didn't work for the Weimar Republic and Zimbabwe has hardly been an economic powerhouse since the Zim $ was devalued… Interesting times indeed.

You are also my hero, can not wait for this one….. BIG MAN HUG…..

You’re starting to scare me man. We don’t do man hugs here amigo. We’re hard arsed outback types. Come that game here and they give you pink shorts to wear. Straight up!!

The Freckle

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March 5, 2012 - 12:06 pm

Alex SC wrote:

I try to be rather optimistic which is hard some days. Looking around me and my immediate circle very few see or hear what you and others are speaking about . Which is the scariest part.

Funny you mention that.

I harangue anyone who’s daft enough to hang around long enough about what’s going on in the big wide world. Predictably many just aren’t that interested. But hey! I live in a booming mining community.

I couldn’t find the exact reference but the following will do. Human nature has a tendency to believe in positive information or what one’s belief system judges as fitting within certain parameters based around that belief system.

We have a preference for believing positive information even if its wrong or inaccurate. There are numerous studies of this phenomenon which has a name that currently escapes me.

http://www.emotionalcompetency.com/distortions.htm

and whole list of cognitive biases
http://en.wikipedia.org/wiki/List_of_cognitive_biases

The Freckle

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March 5, 2012 - 10:54 am

Alex wrote:

Enjoyed both of your all post and this time no arguments..

and i thought we were just having a robust discussion

Kyler wrote:

I am 39 and my wife and I been together 18 years married this past dec for 16 years

Under the “Old Peoples Rules of Engagement” you can’t dis your elders I’m 55 so what I so goes.

Kyler wrote:

Glad we can all have some civil conversations .

Dude you’re going soft on me

Kyler wrote:

.Freckle where are you located if you don't mind

Port Hedland West Australia. The land where the sun shines every day and the flies never rest.

Did you know I’ve probably wasted more time and spent more money killing damn flies in the last 5 years than I care to think about. The West Australian outback fly must be the most persistent, most numerous, most annoying little bugger in insect history.

The Freckle (not me by the way)

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March 5, 2012 - 6:39 am

In Port Hedland there’s currently no accommodation. Downers are flying staff in from Karratha (240km) and flying them home at night. Staff are being located anywhere they can get them in at the mo’. Some are in bush camps and driving in up to 150km.

I suspect this is only temporary but for how long is any ones guess. I suspect this will be the last big push then we could see a big slow down if China continues to lower growth expectations. BHP are already signalling a slow down in growth projects and the scrapping of others. Some earlier promoted projects are also being scaled back. A projected 6000 man accommodation project was reduced to 4000 now they’re talking 2000. That doesn’t bode well.

My gut feeling is that they’ve over estimated demand and their expansion projects will push them into an over supply situation.

East Coast is predominantly coal though so that’s more an energy demand equation. I haven’t looked at that side of the demand curve as yet but I suspect it will drop on lower ore output.

I personally think mining towns could be bit of a conundrum over the next year.

Personally I see way too much risk (possible equity losses) just to chase rental yields.

The Freckle

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March 5, 2012 - 6:08 am

kylermrice wrote:

 PM's? 

precious metals

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March 5, 2012 - 6:02 am

Kyler wrote:

She said YES! Who could say no to a charismatic gentleman like myself, ha!

Welcome to world of pain and …. sorry marital bliss.

Ignore the twitches.. I’ve been married for 32 together for 41.

The Freckle

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March 5, 2012 - 5:38 am

Kyler wrote:

Heck, i even proposed to my lady last night

and???

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March 5, 2012 - 5:36 am

I wouldn’t describe the US economy as ‘premier’ far from it. While it may be the worlds biggest by shear size it has substantial problems that by most plausible experts is becoming unfixable.

When 70% of GDP is government spending, when deficits climb by $1.3T/yr, when total debt and liabilities exceed $200T, when the economy continues to shift towards a low paid service sector economy then you have a basket case of an economy.

All populations are resilient – matter of having to. There’s nothing unique about americans.

It’s getting to a point where I’m no longer surprised by what poly’s and bankers will do to keep the FIAT ponzi scheme going. The longer it goes the worse the medicine will be at the other end.

Here’s the rub. There’s money to be made in corners of any market regardless of the conditions. The challenge is always the right strategy to match the timing coupled with a risk appetite to suit. The current property market throws up opportunities everywhere. The problem is that this market, along, with all others, will get side swiped by the big correction in coming years. It’ll hit different sectors of different markets at different times. How investors manage this will be interesting. I expect to see everything from; it’s too hard lets bury our heads in the sand to others with complex hedging strategies.

I have no doubt there’s a correction coming. Absolutely none at all. The logic of it is irrefutable in my mind and many others smarter than mine. That’s the least of my worries because it’s relatively easy to develop a defensive position against it. What really worries me is if the correction is bad enough will it trigger conflict?

The war mongers are already beating their drums. I just hope the common sense countering forces can prevail.

There’s 2 possible outcomes for the US (and other countries). They drop the ponzi scheme and let markets correct naturally through default and bankruptcy. Get rid of the debt and get back on a solid footing again could see a reinvigorated US.

Outcome 2 is the worst case scenario. The ponzi scheme continues and draws to its natural conclusion – total collapse accompanied by social disorder and loss of control. War could be a real possibility in this case. That could drag on for years.

Note: Historically economic collapse has always ended badly.
http://listverse.com/2010/08/10/10-great-financial-collapses-in-history/

If people think there is a magic bullet, an eloquent solution to debt on debt then your deluding yourself. The Pied Piper always gets paid!

The Freckle

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March 5, 2012 - 4:44 am

When the big guys and insiders start to worry…..

David Stockman Economy Q&A: Economic disaster in the works

See the full interview here;
http://www.usatoday.com/money/economy/story/2012-03-03/david-stockman-says-economic-disaster-lurks/53339644/1

Capital preservation is what your first, second and third priority ought to be in a system that is so jerry-built, so fragile, so exposed to major breakdown that it’s not worth what you think you might be able to earn over six months or two years or three years if they can keep the bailing wire and bubble gum holding the system together, OK? It’s not worth it.”

If you could make the world rich by having all the central banks print unlimited money, then we have been making a mistake for the last several thousand years of human history.

Q: You sound as if we’re facing a financial crisis like the one that followed the collapse of Lehman Bros. in 2008.

A: Oh, far worse than Lehman. When the real margin call in the great beyond arrives, the carnage will be unimaginable.

DD (aka The Freckle)

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March 5, 2012 - 2:05 am

kylermrice wrote:

I like what the freckle posts, but man, u can be a Debbie Downer. 

My wife says the same thing albeit more to the point LOL

About 10 – 15 years ago I progressively grew tired of the hype, twaddle and absolute BS that people would waffle on about. At a pub a bar a BBQ or whatever. I’m not sure why but I progressively began to challenge people about what they were saying. Most people don’t like to upset others by making them look like a fool. I have no such qualms.

I drew a line in the sand eventually. If what you were saying was illogical, repetition of misinformation or just your regular BS then I’d challenge you on it come what may.

So yeah I may be a Debbie Downer but if you come to me you get the real deal not hyped up window dressing so I can be one of the crowd. I’ve got enough mates and we don’t back slap each other or p!$$ in each others pockets for the sake of friendship or to impress one another.

The Freckle

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March 5, 2012 - 1:15 am

lawsjs wrote:

Freckle. One property as an example, and only chosen because the time line fits. Purchased for $720k with a 70%LV loan of $500k in Oct ’06. I just got an $800k loan on it, 70% LV again. Therefore on the banks estimation (i.e: very conservative) the price rose from $720k in late 06 to $1.1 in Jan 12. That represents around a 50% price increase in my books, which makes up for the loss in the $AUD and don’t forget it has been happily spinning off cash since I bought it. Total repairs/maintenance in that time would be around $25-30k, so the price increase is not due to renovation or sweat equity. My other buildings are either older or much newer purchases which makes the numbers rubbery, but they are in the same area and are the same ‘type’ of property so I think it is fair to say this one example would be indicative of the whole.

Ok so we have 7% compound growth with an inflation rate of 10% and depreciating dollar. To me although you’ve made dollars over the last 6 years the returns are pretty low given the amounts invested and the risk environment. You’re leveraged to the gills so any down turn poses significant risk.

To me it’s a gamblers market. Reminds me of the guy who kept doubling up.

But people like yourself probably thrive in very risky low return markets. Alls good until you get blindsided and I’ve seen a lot of those in my time.

In the investing world less than 3% make truly big money. The next 15% do fairly well to very well. Around 20% sit in a kinda grey are from break even to doing fairly well. The remaining 60% are fodder for the successful.

What I often see on forums like these are people reporting top line figures. I don’t recall anyone justifying their bottom line in a meaningful way. The bottom line always tends to be embellished by not including all the overhead. It’s convenient to leave out things like inflation and exit costs and of course substantial rounding also helps make things look good.

Laws I’m guessing you’re in the top 10% like a few others here. I hope you can retain that positioning over the coming years.

The Freckle

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March 4, 2012 - 12:36 pm

lawsjs wrote:

Development is far more laissez-faire in the US than Oz,

You’re kidding right???

The US housing market is one of the most manipulated in the world with probably the exception of China. Have you not heard of Fannie Mae and Freddie Mac, the Federal governments ham fisted attempts to resuscitate the housing market coupled with the Fed Res manipulative monetary policies.

The Poly’s and their corrupt banker mates have their finger prints on every layer of the housing market. Australia is the same.

The Freckle

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March 4, 2012 - 12:14 pm

lawsjs wrote:

My (albeit far from extensive) US RE holdings have not slid in value in the last 5 years, they have actually climbed. Only one property I own in the US has stayed stagnant since 07 – and that is stagnant, not a fall. The rest have increased. The increase has also been sufficient to cover the $US fall vis a vis the $AUD in that time, though obviously I would prefer it to be at $0.70 than $1.07.

The US dollar has depreciated around 25% (against the AU) over the last 5 years while inflation has averaged around 9 – 10%. Numbers like these would generally mean you’re on a hiding to nothing. You’re going to have to elaborate some more to convince me you’re on a winner here.

The Freckle

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March 4, 2012 - 11:53 am

crusty wrote:

Feckle,  I invested in   US property  18 months ago including commercial/retail  over that period it has been my best performing investment , with a net yeild of 8% and CG of 4% in the first 12 months . And I am not sharp or nimble.

Don’t be too hard on yourself. A bit more experience and your results should improve. If you can get those yields up a tad more you’ll be able to keep pace with real inflation.

The Freckle

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March 4, 2012 - 4:57 am

worldinvestor wrote:

Those who are selling will be relieved to hear you're in the market to 'load up'

Freckle

You bet, that's exactly what I did when GFC hit, loaded up in Melb, all the cr@p areas 10-15 km from Melb, where the developers were jumping in, put the DAs together and sold off prior to  slow down.

Worked a treat. When others are listening to the noise I look at what is happening on the ground. Not too interested in all these charts, stats etc. they don't make money, as I said before most stats are rubbery at best.

WI

I think you’ll find this a completely different can of worms. You did ok because it was pure luck not because you understood what was going on. Punts like that are always 50/50. In fact all investment bets are 50/50. You could look at an investment, toss a coin and you would probably have little difference in potential outcomes. The trouble with 50/50 betting is that statistically you never get ahead in the long run because statistically you will win as many as you loose.

While investing is always a gamble of sorts the informed investor is trying to make their wins bigger than their losses over the long run even though their win loss ratio may be evens.

The next GFC will have completely different characteristics to the last one. I think you may find that ignoring relevant information around you is a precarious way to invest.

The Freckle

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March 4, 2012 - 4:44 am

KnoxOff wrote:

 Backpedal – To distance oneself from an earlier claim or statement; back off from an idea.

ROFL

and to distinguish it from poly’s who do backflips

One needs to be multi skilled. You never know when they could come in handy

The Freckle