All Topics / General Property / Alarm bells ringing

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  • Profile photo of NobleoneNobleone
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    Hi All,

    Currently investing in the US seems to be the buzz, especially for investors searching for +CF IP’s.

    However the idea of investing in the US sets alarm bells off for me

    (Let me point out here that I am a +CF investor with 4 IP’s in New Zealand and I am constantly looking for more to add to my portfolio.)

    Doing your DD on any IP purchase is essential and more so if you are investing in another country so in addition to your normal DD I would encourage anyone thinking of investing in the US to have a basic grasp of how world events play out.

    I read many on-line articles from lots of sources and as I always point out to people any info you source via the Internet the KEY WORD at ALL TIMES, even from trusted sources, is DISCERNMENT.

    With that in mind if anyone is considering investing in the US researching articles such as this…

    http://www.smirkingchimp.com/article.php?sid=20632&mode=nested&order=0

    …might be worthwhile.

    I’m not in any way bagging anyone who has US IP’s I am just putting forward another DD tool for any new investors to consider.

    Cheers, Nobleone.
    [biggrin]

    “Making mistakes is just another another tool for learning.”

    Profile photo of ANUBISANUBIS
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    DD tool? For conspiracy theories perhaps. ;-)

    Profile photo of NobleoneNobleone
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    I was wondering who would be the first to use the expression conspiracy theories… Congratulations Anubis you won.

    So you are of the opinion that the US economy is not financially unstable… is not overburdened by a huge balance of payment deficits… is not massively in debt that cannot be repaid and that if oil was to change to being priced in Euros that the US$ would not devalue?

    The key point I am hoping that readers of this article (one of many saying similar things) should consider is that the US economy is highly unstable. Any other points made by the article writer should be read with DISCERNMENT

    Cheers, Nobleone.

    “Making mistakes is just another another tool for learning.”[biggrin]

    Profile photo of westanwestan
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    Hi Nobleone

    i’m investing in the US so this is the way i see things

    i agree that it is worth considering the Big Picture when investing. firstly these types of things are not new people have been predicting the USA collapse for decades.

    However we also need to remember that if the USA topples the whole world goes with it ! And Little old Aussie with it. Look what happening in 1929, the world is far more relient on the State now than ever before. Even the Mighty Chinese need the USA to be an economic powerhouse.

    One other way of looking at it is Australia is such small player on the world stage why have all your investments in the one basket? The more i travel the more i realise that i should be spreading my assets.

    Another way to view it is while the US dollar is so week compared to the aussie dollar maybe this is the time to have some of your wealth as US dollars, it wasn’t that long ago that the Aussie dollar was about 46 cents. the aussie dollar is one of the most volitile in the world over the past few years. If it retracted to 50 cents we would be making over 50% just on the currency shift ! But then again if the Aussie dollar strengthened even more then we loose.

    yes there are implications of investing overseas.

    As far as the USA being the Buzz, i honestly believe this is nothing compared to what it will be in a few years time when many more aussie are doing it. Its still so new that people are rightly very cautious. some were slow to see NZ, now everyone wants a bit of Kiwiland.

    regards westan

    We find cash positive deals showing 15-25% Returns in the USA email me at [email protected] to join our database

    Profile photo of ANUBISANUBIS
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    “I know, from reading the comments on this web site, that many Smirking Chimp readers believe as I do, that the economic tsunami planned by the Bush administration is probably only months away.

    No – this sounds like rational economic discourse to me. I agree that the US economy is a ticking time bomb. Two-thirds of the economy is consumer spending, the budget deficit is beyond belief, stock prices have no connection to value, and the country is undergoing a massive cultural and ethnic shift.

    I think you could have made your point using sources that are far more credible though. They would strengthen your argument rather than the message being weakened by where you obtain it.

    Profile photo of NobleoneNobleone
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    Hi Anubis,

    I agree that the source I am referencing is somewhat lacking in rational economic discourse.

    As I said this is just one of many articles I have read which are all pointing in the same general direction. Mainly US economic collapse.

    It just so happened that I read this particular one yesterday and so it was at my fingertips when I decided to post my concerns here.

    As I read more I will add links to them in my original post.

    Again I must reinforce that I always point out to people any info sourced via the Internet the KEY WORD at ALL TIMES, even from trusted sources, must be DISCERNMENT.

    Now can we move on with my original point of this post which was asking forumites to air their opinions on where the US economy is headed?

    Cheers, Nobleone.
    [biggrin]

    “Making mistakes is just another another tool for learning.”

    Profile photo of surreyhughes19905surreyhughes19905
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    So from this article what I read is:

    Wait for about 3 years to the end of the Bush administration and then buy up big in US property as it should be cheap as chip by then and being sold off left right and centre to international companies (like mine?).

    Also, buy up Euros as they will become very valuable if/when oil is traded using them.

    [biggrin]

    BTW: “the sky is falling” has been uttered pretty much like mantra continuously since mankind has been able to talk.

    Profile photo of westanwestan
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    hi guys

    an interesting story in the Paper a few days ago, seems like i’m not the only one who’s shifting assets off shore.

    Watch your wealth soar overseas
    April 18, 2005
    The Sun-Herald

    Page Tools
    Email to a friend Printer format
    Investing offshore is a sound strategy and easier than it sounds – David Potts shows how it is done.

    When the going gets tough, the tough get going. Somewhere else. It seems rather sudden how Australia morphed from one of the fastest growing developed countries to a “has been”, but there it is.

    Not that you’d want to put the home on Toyota shares, American real estate or a bar of gold at the Bank of England, but there’s something to be said for having some overseas investments.

    Imagine all that extra diversity that everybody says you need plus the bonus – or the risk, depending on how you look at it – of exchange rate changes.

    You can even invest offshore without having to leave the couch.

    Just buying shares in News Corporation or Rio Tinto gives a foothold in the global economy with only a currency risk. Or, in the case of News Corporation, which has officially left our shores, perhaps Rupert risk as well.

    Outlook

    But then you’re still investing in a media or resources company which, let’s face it, Australia has no shortage of. Why not spread your wings?

    Before the tech wreck of 2000, international shares were leaving the Australian stockmarket for dead.

    More recently, as the Australian market seems to have peaked, Europe and South-East Asia have been picking up. Just as our market might be getting pricey, others probably still have some bargains lurking within.

    Investing might begin at home, if not in it, but that’s not where it should end. More than one-third of the Australian sharemarket is made up of bank, insurance or other financial stocks.

    And good luck to them. Only it’s somewhat limiting, considering they depend heavily, in one way or another, on the local property market.

    If you take into account the size of the listed property trusts, then closer to two-thirds of the Australian sharemarket relies on real estate for its health.

    I could say our market depends more on the value of dirt in the right spot as digging it up. But I won’t.

    Just settle for the fact that technology stocks, almost non-existent here, comprise about one-third of global markets.

    Wall Street

    New York’s Nasdaq exchange is tech central.

    “Technology shares are coming back,” said Rick Steele, chief executive of TechInvest, which runs the Sydney-based Technology Investment Fund, investing in stocks such as IBM, Dell, Pfizer, Johnson & Johnson and Motorola. It trades on the stock exchange until the end of the month, when it will become a managed fund.

    “And the Australian market is extended.”

    Not to mention the peaking of the dollar supporting overseas investments. Since it has also outstripped the returns of most global technology funds, this suggests Australian fund managers are no slouches at investing in international stocks.

    In selecting a global fund, you have to decide whether it’s the country or the stock you’re after. It’s a similar problem to investing locally: do you pick a manager who follows broad economic trends? Or one that kicks tyres, picking the company irrespective of the broad picture?

    You could argue either way, and probably the best solution is investing a bit in both styles. But if you’re like me, you don’t have that kind of money to throw around.

    In which case go for the tyre kicking. Besides, if it is a true global success, it shouldn’t matter what country it starts in.

    If you don’t want to be at the mercy of fund managers and their fees, then you could always buy international shares yourself.

    It’s easier than it sounds.

    The leading mums and dads broker, CommSec, will buy shares for you in the US, UK, Europe, Japan, Hong Kong and South America, among other places. You can even do it on the internet. Brokerage rates vary, but for the US it’s $US65 for an online trade.

    When you sell, you can get your money in Australian dollars or leave it in an American account CommSec sets up for you, opening up a little sideline of speculating on the currency if you’re looking for an extra financial thrill.

    Fortrend Securities, which charges $US60 brokerage for an online US trade, also buys and sells stock in the more exotic markets such as Hungary, Russia, Korea, India and China.

    It offers a 10 US stock portfolio, with shares such as Disney, McDonald’s, Pfizer, Dow Chemical and Energizer, one way of avoiding managed funds but still getting some diversification. It’s been returning an average 14 per cent a year.

    Technology and pharmaceutical stocks are the most tempting for an Australian investor.

    The high price of oil – and analysts Fat Prophets estimate global demand exceeds new discoveries ninefold – also suggests it would be worthwhile considering the big US refiners.

    Stocks such as BHP Billiton give you exploration and production, but the refineries are where the real money is made. Mind you, if you’re nervous about investing overseas, there’s always Caltex Australia, our only listed refinery stock. But most analysts think it is expensive right now.

    Incidentally, persistently high oil prices are the most obvious threat to global growth, which could well put you off international investing.

    But don’t forget an international slowdown would be magnified in Australia because without the commodity price boom, we’d be in a recession.

    Other markets

    The so-called emerging markets, including China and India, are investment hot spots. Strangely, India has stayed off the radar of fund managers, who aren’t usually slow to spot an opportunity.

    Perhaps they just think of it as the world’s biggest call centre when, in fact, it’s a high-tech and software powerhouse. An exception is the broker CommSec, which recently offered an Indian index fund.

    Still, emerging markets funds have some Indian stocks. Mum and dad offerings include funds from ABN Amro (Emerging Markets Equity Fund), Deutsche Bank (Global Emerging Markets Fund), ING (Global Emerging Markets Shares) and Macquarie (Emerging Markets Share Trust).

    China, on the other hand, has spawned a few funds on its own merits. AMP launched one last week, while HSBC says it will shortly reopen its fund to mum and dad investors.

    The AMP fund tracks an index of the top 25 stocks traded in Hong Kong, while HSBC’s invests in specific stocks.

    Both are long-term investments and in AMP’s case there’s a money-back guarantee after six years, although you get nothing in the meantime.

    The other way to invest in global shares is to choose strong brand names and, better still, monopolies. Many American and European companies are household names, but Petrobas and CVRD, two Brazilian resource giants aren’t, though at least you would have heard of South Korea’s Samsung Electronics.

    You can tap into stocks such as these through emerging markets or Platinum and Macquarie international funds.

    Property

    We weren’t alone when we had our property boom, even if we seemed to take it further than most.

    With global interest rates on the way up, buying an overseas property, even if you could afford it, isn’t likely to bring immediate gains. Besides, the exchange rate could go either way.

    But what’s true of the residential market doesn’t necessarily apply to commercial property. Indeed global property securities funds are the flavour of the month.

    Little wonder; there are entire categories that are ignored by the listed property trusts.

    Global property funds will invest in anything from container terminals to car parks and sewage plants. Sure, you wouldn’t go out of your way to visit them, but they can make a lot of money.

    Funds open to mum and dad investors include AMP Capital Investors and Deutsche Asset Management.

    Bonds

    Just as you miss out on some of the biggest corporate names by sticking to only the Australian sharemarket, the same is true of bonds.

    And a shortage of government paper makes it virtually impossible to invest for longer than 10 years.

    Yet swelling super funds as baby boomers reach retirement will put longer-dated bonds in greater demand everywhere.

    “There just aren’t enough bonds to go around,” said Stewart Cowley of the leading UK fund Newton Investment Management, which is sold by Advance. As the population ages, super funds will have to put less in shares and more in bonds to guarantee a fixed income.

    “There will be a natural tendency towards bonds over time,” he said.

    And apart from any capital gain, an international bond portfolio will boost your annual income since it’s bound to include high-yielding corporate as well as emerging-markets securities. Most of the big-name fund managers offer global fixed interest rate investments, but check whether they’re hedged against the dollar.

    We find cash positive deals showing 15-25% Returns in the USA email me at [email protected] to join our database

    Profile photo of foundationfoundation
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    DebtBubble has a few fascinating articles by a very credible (IMHO) financial wizard. Somewhat relevent too.

    Profile photo of glen irishglen irish
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    If you want to read another viewpoint I recommend http://www.thedailyreckoning.co.uk (the UK site is better in my view).

    Whilst they do tend to exaggerate and hype, their writing entertains some thoughts.

    D

    “The biggest problem encountered while trying to design a system that was completely foolproof, was, that people tended to underestimate the ingenuity of complete fools.” – Douglas Adams

    Profile photo of foundationfoundation
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    Then again:

    a recent survey of buyers in Los Angeles indicated that they expected their homes to increase in value by a whopping 22% a year over the next decade

    Perhaps LA is the best place in the US to invest?
    Source: The Economist

    The article is a very good read (as you’d expect) relating to the state of the housing market in the US.
    Cheers, F.[cowboy2]

    Profile photo of AUSPROPAUSPROP
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    10 years for 22%… hardly whopping! I’d be looking for 100% in 10 years.



    http://www.megainvestments.com.au

    Extensive list of ‘Off The Plan’ property available for sale in Perth.

    John – 0419 198 856

    Profile photo of Alistair PerryAlistair Perry
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    The statement was 22% per year for 10 years, not 22% over 10 years.

    Profile photo of foundationfoundation
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    Of course 22% pa compounded annually over 10 years is roughly 630% growth:
    Year 0 = $100k
    Year 1 = $122k
    Year 2 = $149k
    Year 3 = $182k
    Year 5 = $270k
    Year 7 = $402k
    Year 10 = $730,460!
    The US has some of the world’s greatest minds, eh’ superman?
    Cheers, F.[cowboy2]

    Profile photo of AUSPROPAUSPROP
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    Oh yes I see. thats not whopping, its idiotic. i would like to see this survey – who did it, the sample size, the survey questions etc.



    http://www.megainvestments.com.au

    Extensive list of ‘Off The Plan’ property available for sale in Perth.

    John – 0419 198 856

    Profile photo of foundationfoundation
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    Yale apparently.

    In a recent Yale University survey of home buyers in Los Angeles, for example, respondents said they expected their homes to increase by an average of 22 percent annually over the next decade, while more than two thirds said they feared being left out of the boom if they didn’t buy now. Recent buyers in Boston and San Francisco were similarly exuberant, expecting 13.2 percent and 17.9 percent in annual appreciation, respectively, while also saying they had been anxious to get in before prices rose further.

    Source
    I can’t find the original paper, but The Economist are generally very thorough.
    Cheers, F.[cowboy2]

    Profile photo of 1Winner1Winner
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    Mm, interesting possibilities….. I wonder if anyone factored in his investment strategies the possibility of a super eruption in Yellowstone? I mean, according to the TV show I saw the other day it is overdue….[cigar]

    http://www.chosen4u.com/?ace

    “What you want in your life occasionally shows up…
    what you must have… always does.”
    . . . . . Doug Firebaugh
    May God Prosper you.[biggrin]
    Marc

    Profile photo of ANUBISANUBIS
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    They certainly are an optimistic bunch those West Coast home buyers. Of course they have no facts to back it up with, but shucks they are enthusiastic.

    Now what was that latest Green Day album called again….?

    Profile photo of techhowsetechhowse
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    I don’t understand how the economy is structured and how it works. what is this about oil prices in euros?

    Anyway although a bit off topic,
    theorically speaking, how would the oil crisis respond to a introduction of an alternate method of fuel?

    In other words, what if someone came up with a very reliable electric/solar/renewable energy car/vehicle that would make fuel/petrol obsolete? how would the fuel giants or anybody involved respond?

    Profile photo of foundationfoundation
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    Originally posted by 1Winner:

    Mm, interesting possibilities….. I wonder if anyone factored in his investment strategies the possibility of a super eruption in Yellowstone? I mean, according to the TV show I saw the other day it is overdue….[cigar]

    It’s always doom and gloom with you isn’t it![biggrin]

    F.[fear]

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