What baffles me is on a day like today - and possibly the next year or two if the pundits are correct we are going to see continued turmoil in the credit market and as a result the world stockmarkets.
First reaction by the media is whaaaaaa get out of property. Where is the real connection folks?
Yet some posts on this site have advocated shares in such turbulant times as the means to wealth creation. Despite a massive drop in values in many sectors. I trade on the sharemarket and there is no way I would take a buy and hold position with any stock. Name one that is as safe as ... yes... houses!
Then we have the Einsteins saying money in the bank is safer - at a true inflation rate of more than the benchmark, fully taxed at your marginal rate , and absolutely no growth, why would you want to be there longterm unless positioning for sharemarket, risky at the best of time, no leverage there unless riskier options considered.
Then these rocket scientists in the media bag real estate where the real problem originated in the financial sector on contrived securities backed by real estate.
We have not had the wholesale slaughter enjoyed by the stockmarket, even then super and other areas battered but don't panic folks it will get better - take a long term view. But why not this logic with real estate. In Oz the values in real estate have held up better than any other asset class.
Yet even now I can go and buy in a good suburb, heavily leveraged - say up to 80% of the value of the house, negotiate the price and get a return on my outlay that has distinct tax advantages. My house can't be shorted etc etc. Not at the mercy of anybody on a computer selling short but only my good or bad research. I can even fix my interest rate, try that with a margin loan, and I can call for greater rental, try and get CNP to oblige if you need more income.
Hell what am I missing? Talk about double standards and loosing the plot.
With real estate I sleep well even if its worth a million, I can sleep in it for that matter. Pity the poor buggers who sold their million dollar house last year and shoved it in super. Super has its place but invariably is an extension of the financial sector. Had I a million in the sharemarket I would now be sleeping very lightly, and if it was leveraged I would not be sleeping at all.
