Australia's largest stock trading and investment forum Australia's #1 stock forum

XJO

Click for more information

0.74%

8,208.9 s&p/asx 200

Agree 100%, the stock and property market are inexorably linked....

First 16966 Last

Share
Profile

Follow
Load

3,379 Posts.

982

23/08/24

09:55

Post #: 75338064
Share

Originally posted by Baron1 ↑

It does bud no question. If you ask me though it feels more like 1987 is about to happen again but a lot worse. What most traders forget is the housing market. People forget how much of the economy the housing market makes up and the fact the house/home is the biggest investment the vast majority of people/retail ever make.

Why is that important? Because when the housing market goes it makes stock market crashes much much more serve. Think about it recession hits you lose your job what you selling first? The house your family lives in for next to nothing or your stocks for next to nothing. Not to mention who can buy anything either?

And remember many are underwater at this stage the mortgage is worth more than your home your stocks aren't worth half what you paid for them in a crash (if your stocks even survive). "Covid traders" have no idea what is coming with charts that don't tell you what really happened. The only reason they are told "stocks only go up" is to sucker them in.

If you look at the US, the housing market has begun its collapse there is going to be blood on the streets soon enough. Here Sydney is already starting IMO, we won't be far behind the US for a housing melt down. When housing goes the whole economy goes, it wont be pretty I seen it and lived through it more than once.

And for the record the bullish arguments over housing supply etc etc are all the same arguments that are made every time with the same result. Same goes for stocks its always "but this time is different". Think about it, its always the same factors/issues that cause crashes and yet every time smart money tell us while they sell out its different this time.

When its the same causes how do you get a different result? That's why crashes and booms happen every decade or two cause you need a new generation to suck in "thinking" they know better this time than the older generation that already went through it. Anyway sorry was trying to be concise so yes I agree with you it does have a late 1990's feel.

But I would go back a step in time to 1987 and the aftermath I think that is what is coming and another dead decade or two for housing and stocks once the carnage starts. I forgot to mention not only was I in stocks back then I was also a real estate agent for over 2 decades (as I have posted before) and why I am retired today. Good luck bud.

Expand

Agree 100%, the stock and property market are inexorably linked. When either crashes, the other soon follows.

And just think about this in America, many are refusing to move and sell their house because they are locking in a low rate mortgage from 2021 or earlier when they were 4% or so cheaper. Once the fed cuts significantly, and rates fall, the flood gates could open and a lot more stock will appear on the market and drive prices down, as people will then most likely be more amenable to qutting their jobs an transferring out of town. All this could affect the employment and housng landscape.

Originally posted by Ewebute ↑

Here is something I was saying to my friends with a mortgage... I believe there is an 80% loan to value ratio (or similar) within loan agreements. If the value drops below this level, then the banks have the option to request additional money to boost this level. I don't think this was exercised in the 1990s style crash, but imagine if this happened this time.

How many home loaners would need to force sell to make up for this and then be left with a massive debt thereafter. Another friend told me that the Oz banks are now selling their housing debts to foreign companies and removing the obligations off their books. Imagine that these companies start to call in loans.

I am not sure the validity of either, and would like your take on this.

Expand

@Ewebute
What you said there about the LVR for a home is certainly correct. Works like a margin call as the loan issuer scrambles to protect their position. This is another factor than can accelerate a property crash. Then we have the CRE valuation crisis on top of that. This could get way uglier than 2008.

Also , there is one factor in the unemployment figures that Jeff at Eurodollar Uni does not seem to be aware of . Here it is. Only in America, of course. You'd have to wear blinkers at work?

https://tinyurl.com/yr77tkzp

XJO Value at posting: 8,027.0
3 Upvote

1 Great analysis

Reply

Top Stories

ACW

Actinogen Medical ramps up Alzheimer’s treatment trials, targeting fast-track global approvals

RCE

Recce eyes Indonesia for novel anti-infective as Indo-Aus ties grow stronger

ASX Market Open: A weak performance on Wall Street keeps the Aussie bourse flat, as the world watches Iran | October 2, 2024

COD

Coda Minerals (ASX:COD) enters rights issue to further exploration in South Australia

IRE

Iress runs 'hot' for Wealth Within's stock tips

There are more pages in this discussion • 923 more messages in this thread...

First 16966 Last

Add XJO (ASX) to my watchlist

SPONSORED BY