If the stock market continues its decline (already about 7% off its peak and world markets down anywhere from 5% to 20% over last few weeks), does anyone think this will begin to have any bearing on our property market, either up or down? [blush2]
What do you think will happen?
What has happened in the past?
Have you heard of the concept of the investment clock?
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by Mortgage Hunter:Have you heard of the concept of the investment clock?
Which one? This one:
http://www.paritech.com.au/paritech-site/education/beginners/images/investment-clock.gif
Puts us (if this is the reawakening of the bear market for shares rather than a healthy correction) at 2 o’clock, so in order, we can expect:Falling commodities prices
Falling overseas reserves (!!!!)
Tighter money (high interest rates)
Falling real estate valuesThen we hit the ‘depths of depression’.
Then things get better. Gradually.Note, I’m not saying this is my prediction, just interpreting one of the most common “investment clocks”.
Cheers, F.[cowboy2]I actually find it pretty tricky to predict where we are on the investment clock right now. Perhaps we can look back with hindsight and it will be clear.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Its a tough one indeed. Should commodity prices take more of a freefall and oil follows, the logical step is for easing of monetary cycle as inflationary pressures will be alleviated. The govt will not tolerate any sign of depression so wll use interest rates to shore things up pretty quickly. The Boards are all very quick to act these days. This pull back is very healthy for the market thats run in excess of 20%+ returns for over 3 years now. I’m certainly not discounting the miners to keep rallying. BHP @ $25.00 is a steal.
Originally posted by asdf:Its a tough one indeed. Should commodity prices take more of a freefall and oil follows, the logical step is for easing of monetary cycle as inflationary pressures will be alleviated.
Agreed in part, but I don’t see any direct link between metals & oil. Nor do I see a direct link between metals and staples, which are also inflating rapidly.
The recent falls in commodities have all been due to speculation and actual tightening. Last night for example, the ECB & IRB raised their rates, the US Fed is expected to (continue to) do the same. The result – falls in almost all metals & oil.
The only way I can see oil falling significantly (as in below $50) is if the US actually steps up its tightening, causing a slowdown in their economy and consequently in China etc. Oil above $60 and climbing is the result of growing demand.The govt will not tolerate any sign of depression so wll use interest rates to shore things up pretty quickly. The Boards are all very quick to act these days.Regardless of what the government wants, I don’t see easing of monetary policy as an option unless inflation is no longer a problem. And at current world interest rates it is a problem. Lower interest rates would only increase demand.
BHP @ $25.00 is a steal.You may well get that today. I sold the last of mine for around $23!
Cheers, F.[cowboy2]<EDIT> Just noticed that South Korea and South Africa also raised their interest rates last night. In the face of all this, any country that does not raise their rates proportionally should see their local currency collapse. This would result in dramatically higher import prices and = inflation…
Interesting that Britain is steadfastly refusing to admit to inflationary pressure (they’ve held their rates again). Perhaps they’re scared that lowering their rates last year will be seen as a mistake. One to watch though, if they continue to buck the global trend.
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