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Hallucinating Bears

Last updated: August 5 2009
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  • #41

    #41

    Re : Hallucinating Bears

    Our Hallucinating bears dont seem to know some basic truth about markets in general. There are two things which are very different but these folks confuse them or rather use those terms incorrectly.
    One is Price. The other is Volume. Price is as all folks know a function of Demand. Volume may or may not be related to Demand in a generic way. So in Chennai or for that matter in most places in India, lots of Volume was created in the past few years in UNKNOWN PLACES, read that again UNKNOWN PLACES by the ITES industry. This industry filled with many CLERKS of today who use an XLS for double entry book keeping calling themselves SW literate were paid a bit more, not for their Software (SW) skills but because they knew some English the only language Americans knew. So when Americans have gone under, these guys are in trouble. So volume of RE in India (I will use Chennai to be specific) has dried up a bit. However where did these ITES guys buy? Anywhere where it was Affordable. So they made UNKNOWN PLACES, known. Sholinganallur was some offbeat place, these guys bought there. Sriperumbudur is famous for Rajiv and Dhanu, not for RE but today that is booming or should I say was booming.
    Now these places will be in trouble, especially the flats there as the ITES guys are in deep trouble or potential deep trouble.
    Now demand is another thing. Has there not been any demand before 2003? Even then price of land in Mylapore was around 40L to 60L per ground. Now at that time in Sholinganallur land might have been sold for acres, it was 5L for acre in ECR in 2003-4! Now city centre prices are dictated by a different set of buyers not the ITES types. So they may not fall because of ITES fall but OMR prices are set by ITES and they can fall easily.
    So dont confuse Demand for RE in CHennai. It existed, it exists and will exists. After all where will people go and live ... not in the Vayal (agricultural land) unless u r a farmer.

    Comment

    • #42

      #42

      Re : Hallucinating Bears

      Bears are continue to hallucinate even after YOY growth in Vehicles sales in Feb 2009. Think of it, anyone will a car with lesser preference to a first house. So if cars are getting sold dime a dozen why wont RE get its deal?

      Comment

      • #43

        #43

        Re : Hallucinating Bears

        Originally posted by Natarajg007 View Post
        Bears are continue to hallucinate even after YOY growth in Vehicles sales in Feb 2009. Think of it, anyone will a car with lesser preference to a first house. So if cars are getting sold dime a dozen why wont RE get its deal?
        Arvind Saxena, senior vice-president, marketing and sales, Hyundai, said February sales this year are high because customers did not cars in the same month last year as they expected duty cuts in the Budget. As a result, sales were deferred to March, which saw impressive numbers.

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        • #44

          #44

          Re : Hallucinating Bears

          Originally posted by Natarajg007 View Post
          Bears are continue to hallucinate even after YOY growth in Vehicles sales in Feb 2009. Think of it, anyone will a car with lesser preference to a first house. So if cars are getting sold dime a dozen why wont RE get its deal?
          Dear friend,

          You will agree cars are not investments but for convenience or even for pleasure or status symbol for a few years. RE are invesments mostly for long term and of heavy value with one's life time savings or on huge loans. RE will get its deal, may not be in the present juncture, but surely sometime later. After all, most investments in RE are bound to appreciate in the long term perspective and only the rate of return may vary depending on the time of purchase, the time of sale etc.

          ks2071746

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          • #45

            #45

            Re : Hallucinating Bears

            Sorry, we do know about markets ...

            Originally posted by ks2071746 View Post
            Dear friend,

            You will agree cars are not investments but for convenience or even for pleasure or status symbol for a few years. RE are invesments mostly for long term and of heavy value with one's life time savings or on huge loans. RE will get its deal, may not be in the present juncture, but surely sometime later. After all, most investments in RE are bound to appreciate in the long term perspective and only the rate of return may vary depending on the time of purchase, the time of sale etc.

            ks2071746

            ks,

            There is research done on the kindof investments we make during our lifetime. The biggest investment is a home. You will be surprised that its the car which forms the second biggest investment during our lifetime (a close one is Gold, but how many of you have bought gold worth 1 crore?).

            There is one more thing. In a post in this thread, Nats would have you believe that some of us "do not know markets". I assume he means RE markets.

            Then he goes on to say how price is different from volume. And how we are confusing volume decline with price decline.

            Now I will show you that not only do we know markets, we also know a little bit more about markets than him and that it is in fact he who does not know markets at all!!!

            If you refer to one of my ealier posts (several, in fact) I have made it very clear that the peculiarity of RE markets is as follows:

            1. The RE markrt first declines in volumes. From a level of say 100, volume takes around 1 - 1.5 years to decline to around 10 (a 90% drop). These are indicative figures.

            2. Once volume declines are completed and cannot go down anymore, prices start declining and take another 1 - 1.5 years to hit its bottom. In the last fall, the average was between 50% - 60%. The peak fall was around 80%.

            I also gave the reason for this. The home being the largest investment that any person makes in his/her lifetime, there is extreme pressure (both from within and society) to NOT sell at any cost. This is tied to concepts like, "once you lose it, you will never get it back" and so on - he very same scare-mongering techniques Nats is so cleverly playing on you guys to sell his property or to keep prices up.

            Second, the investment alrerady made into these is so high that, if a person sells at a disadvantage, he'she is in real danger of losing all their lifetime savings.

            But remember, the longer you wait to sell in a downturn, the harder it gets (volume crash) and the lower the price (greater the loss). Since these are non-recourse loans (meaning you are on the hook for the loss all your life), you will lose a substantial part of your lifesaving.

            Finally a lesson in basic economics to a person who points fingers at others about their knowledge of economics.

            The Price/Voume or indifference curve in Economics looks at the relationship (the curve) that relates price as well as volume with the basis that at every price point there is a specific demand, tending to zero at infinite price - an asymptotic curve.

            So much for you economics knowledge, Nats. And your knowledge of markets!!!

            cheers
            Last edited March 8 2009, 12:22 PM.

            Comment

            • #46

              #46

              Re : Hallucinating Bears

              predictions and modern art

              Originally posted by wiseman View Post
              ks,

              There is research done on the kindof investments we make during our lifetime. The biggest investment is a home. You will be surprised that its the car which forms the second biggest investment during our lifetime (a close one is Gold, but how many of you have bought gold worth 1 crore?).

              There is one more thing. In a post in this thread, Nats would have you believe that some of us "do not know markets". I assume he means RE markets.

              Then he goes on to say how price is different from volume. And how we are confusing volume decline with price decline.

              Now I will show you that not only do we know markets, we also know a little bit more about markets than him and that it is in fact he who does not know markets at all!!!

              If you refer to one of my ealier posts (several, in fact) I have made it very clear that the peculiarity of RE markets is as follows:

              1. The RE markrt first declines in volumes. From a level of say 100, volume takes around 1 - 1.5 years to decline to around 10 (a 90% drop). These are indicative figures.

              2. Once volume declines are completed and cannot go down anymore, prices start declining and take another 1 - 1.5 years to hit its bottom. In the last fall, the average was between 50% - 60%. The peak fall was around 80%.

              I also gave the reason for this. The home being the largest investment that any person makes in his/her lifetime, there is extreme pressure (both from within and society) to NOT sell at any cost. This is tied to concepts like, "once you lose it, you will never get it back" and so on - he very same scare-mongering techniques Nats is so cleverly playing on you guys to sell his property or to keep prices up.

              Second, the investment alrerady made into these is so high that, if a person sells at a disadvantage, he'she is in real danger of losing all their lifetime savings.

              But remember, the longer you wait to sell in a downturn, the harder it gets (volume crash) and the lower the price (greater the loss). Since these are non-recourse loans (meaning you are on the hook for the loss all your life), you will lose a substantial part of your lifesaving.

              Finally a lesson in basic economics to a person who points fingers at others about their knowledge of economics.

              The Price/Voume or indifference curve in Economics looks at the relationship (the curve) that relates price as well as volume with the basis that at every price point there is a specific demand, tending to zero at infinite price - an asymptotic curve.

              So much for you economics knowledge, Nats. And your knowledge of markets!!!

              cheers
              what you say wiseman is based on incidents or scenarios happened hithertho and the effects on the economy.these are extrapolated and fitted in the current scenario.
              the predictions are relative and may follow the if.... then logic.
              my point is the ifs do not match fully and therefore the 'then' would not match.
              can we apply the pure economist's parameters and ignore other factors which are exclusive to nations and their economies.
              the banks and their regulators,for instance.
              the basic needs of the population,their passion and obsessions.
              their way of thinking,their priorities.

              the predictions are like modern art. once a kid went to the art gallery.
              he stared at an exhibit for a long time.an art lover walked upto him explained
              "son, that is supposed to be a mother and child"
              the kid replied "then why is nt it so ?.
              Last edited March 8 2009, 02:21 PM.

              Comment

              • #47

                #47

                Re : Hallucinating Bears

                What you say is true ... and

                Originally posted by abk View Post
                what you say wiseman is based on incidents or scenarios happened hithertho and the effects on the economy.these are extrapolated and fitted in the current scenario.
                the predictions are relative and may follow the if.... then logic.
                my point is the ifs do not match fully and therefore the 'then' would not match.
                can we apply the pure economist's parameters and ignore other factors which are exclusive to nations and their economies.
                the banks and their regulators,for instance.
                the basic needs of the population,their passion and obsessions.
                their way of thinking,their priorities.

                the predictions are like modern art. once a kid went to the art gallery.
                he stared at an exhibit for a long time.an art lover walked upto him explained
                "son, that is supposed to be a mother and child"
                the kid replied "then why is nt it so ?.

                abk,

                You are right. And yet, there is considerable validity in the kind of assumptions one makes to try and predict the future.

                Take the case of marketers who can predict to a good level of accuracy the specific ing patterns within specific age groups. So, for example we can surmise that in the 20s single people employed in specific industries will have the following spread of expenditure - of course there will be exceptions but exceptions always exist in all cases. Then when people get married and have kids, we can predict, again with a fair level of accuracy, the kind of spending patterns and spread across categories among this age-group (profile includes other parameters) of people.

                This is because, not only do researchers use mathematical formulae but actually derive these formulae by trying to fit them to actual patterns seen in the data - as you say looking at past behavior and trying to predict the future simultaneously applying constraints to match real world conditions.

                So, how well you match the changing conditions in the real-world with the model you are using determines how accurate you are going to be.

                So, I'm not talking about this particular house number so-and-so on such-and-such street will decline by yy%. But that is not my attempt in the first place.

                I'm trying to get a range and then design my behavior based on which range is hit. So, I will say that if price declines 60% I can 2000 SFt flat and if it comes down only 40% I can afford only 1400 SFt. The idea is to figure out a ballpark figure and decide your strategies.

                Life is itself a moving target. How many times have you waited for exact situation to happen before taking action. If you did that, you would forever be paralysed.

                cheers

                Comment

                • #48

                  #48

                  Re : Hallucinating Bears

                  Originally posted by wiseman View Post
                  abk,

                  You are right. And yet, there is considerable validity in the kind of assumptions one makes to try and predict the future.

                  Take the case of marketers who can predict to a good level of accuracy the specific ing patterns within specific age groups. So, for example we can surmise that in the 20s single people employed in specific industries will have the following spread of expenditure - of course there will be exceptions but exceptions always exist in all cases. Then when people get married and have kids, we can predict, again with a fair level of accuracy, the kind of spending patterns and spread across categories among this age-group (profile includes other parameters) of people.

                  This is because, not only do researchers use mathematical formulae but actually derive these formulae by trying to fit them to actual patterns seen in the data - as you say looking at past behavior and trying to predict the future simultaneously applying constraints to match real world conditions.

                  So, how well you match the changing conditions in the real-world with the model you are using determines how accurate you are going to be.

                  So, I'm not talking about this particular house number so-and-so on such-and-such street will decline by yy%. But that is not my attempt in the first place.

                  I'm trying to get a range and then design my behavior based on which range is hit. So, I will say that if price declines 60% I can 2000 SFt flat and if it comes down only 40% I can afford only 1400 SFt. The idea is to figure out a ballpark figure and decide your strategies.

                  Life is itself a moving target. How many times have you waited for exact situation to happen before taking action. If you did that, you would forever be paralysed.

                  cheers
                  Well Wisey Madey, I think ABK told you precisely how stupid you were. Now you talk from your silly management background about data collection. What else do you guys do anyway? Other than collecting some data and interpretting it anyway you choose whether scientific or not, and mostly illogical to the core.
                  Now Wise clown, think of it. You were talking all this based on what happened there (for you it is always USA) but not what happens here.
                  In India there is hardly any LIVEABLE AREA beyond the cities. I might live in a suburb of US city and live comfortably. To name a few I have lived in Coriapolis in DC area, a small town, in Beaverton in Oregon (all these for short time frames) and in houses. These are like living in a village in Chengalpet. However quality of life is fantastic.
                  In TN can you do that. NH4 diversion (is it called NH45, I forget) that runs to Hosur from Vellore is a beautiful road. However will any one choose to build a house and live beside it, unless you have a vested interest in that locality.
                  In TN you can probably live in Chennai, Coimbatore and a few other cities. Again in Chennai you cant move beyond a central area of Adayar and its suburbs, TNagar and it suburbs etc. So even Tambaram looks like JUST GETTING DEVELOPED though the suburban train existed since very long ago and I have used it since 70s.
                  So what does that mean to our so called Economist who talks about Price/Volume curve without even knowing what he is talking about.
                  a. Value of RE in these DEVELOPED LIVEABLE areas may never shrink.
                  b. Non developed areas dont develop fast unless there is a boom. So Urapakkam plot of ours which I have never seen till 2004 has become a saleable proposition. Now if it has reached a level of maturity it wont crash again.
                  c. Even though our Mylapore appam will think only that is madras, Saligramam and Palavakkam are NO LESS DEVELOPED.
                  d. In effect I am talking about RE in such developed places.
                  e. As for useless land like your chela Chats talks about for 600sqft, patta in some corner of Porur, which was and will always be non usable, prices can change drastically.
                  Finally Wiseman, I am yet curious to know if you managed to sell your land in RK Salai. If you got a seller than you are wrong as you were desperate to sell! If you did not get a seller then did you reduce the price is my next question?
                  Finally if you think I am rising price of RE, you are mad. I am just trying to analyse price of RE in a SANE way which I am sure wont fit your brains!
                  Remember HOUSE IN AMERICAN sense is different like the WIFE! In India how many times have you changed your wife for you to change your house?
                  Think and talk Wisey Moron! Dont just write because you get paid Rs 15 per post!

                  Comment

                  • #49

                    #49

                    Re : Hallucinating Bears

                    Originally posted by Natarajg007 View Post
                    In TN you can probably live in Chennai, Coimbatore and a few other cities. !
                    Oh! what a great discovery!!

                    In TN people are living in hundreads of towns. This guy says one can live only in 2 or 3 towns.

                    Because he wants to sell his land in chennai (saligramam) he argues people can not live in other places

                    Comment

                    • #50

                      #50

                      Re : Hallucinating Bears

                      Originally posted by Nataraajg007 View Post
                      Oh! what a great discovery!!

                      In TN people are living in hundreads of towns. This guy says one can live only in 2 or 3 towns.

                      Because he wants to sell his land in chennai (saligramam) he argues people can not live in other places

                      Dear friend

                      In TN if Mr. Nat goes out of Chennai jurisdiction automatically he will lose his life. Again If his body enters in the areas of Bangalore he will get life again.

                      Thanks

                      chataara

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