Hereby I will prove how the realty boomers arguments are false.

What are the boomers arguments?

1.) Buy today, houses always increase in value in the long run.
WRONG. House prices cannot increase more than incomes in the long run. This is obvious if you think about it. If house prices go up more than people can afford to pay, buying stops, like it has stopped now.
Even Warren Buffett have pointed out that houses don't increase in intrinsic value. Unless there's a bubble or a crash, house prices simply reflect current salaries and interest rates. If a house is 100 years old, it's value in sheltering you is exactly the same as it was 100 years ago. Then came the maintenance as the house didn't renovate itself. It also has taxes, and insurance - costs that always increase and never go away. The price of the house went up about as much as salaries went up.
To put this is simple perspective, vegetable were costing Rs.5-6/kg when 5 digit salary was a rarity.
Today, the prices have gone up by about 4 times but so have the salaries. So, sounds very much like the reasoning people use now when they talk about how much their father's house appreciated "in the long run" without considering that salaries rose a proportional amount.

2.) Renting is just wastage of money.
WRONG. As said before renting is now much cheaper per month than owning. If you don't rent, you either:

* Have a mortgage, in which case you are throwing away money on interest, tax, insurance, maintenance, costs that increase forever.
* Own outright, in which case you are throwing away the extra income you could get by converting your house to cash, investing in bonds, and renting a similar place to live for much less money. This extra income is sufficient for emergency expenses,retirement etc.

Either way, owners lose much more money every month than renters and that's assuming prices don't correct to very high level & everything is smooth in the economy.

3.) As a renter, you won't have any money left as you will spend them on vacations,cars & hence won't have equity/savings etc.
WRONG. Equity is just money. Renters are actually in a better position to build equity/savings through investing in anything but housing. Renters can get rich much faster than owners, just by investing in conservative stocks & bonds.

* Owners are losing every month by paying much more for interest than they would pay for rent. The tax deduction does not come close to making owing competitive with renting.
* Owners must pay taxes simply to own a house. That is not true of stocks, bonds, or any other asset that can build equity/savings. Only houses are such a guaranteed drain on cash.
* Owners must insure a house, but not most other investments.
* Owners must pay to repair a house, but not a stock or a bond.
* Owners lose their money as house prices reduce. The EMI's remain constant in spite of reduction in rates. At the end of loan tenure, they would have paid almost twice than that of current renters who will buy at logical rates. Keep interest rates in mind. Most of the EMI is not principal amount but interest.

4.) There are great tax advantages to owning a house.
WRONG. Many people believe you can just reduce your income tax by the amount you pay in interest, but they are wrong. Buyers may not deduct interest from income tax; they deduct interest from taxable income. And even then, the tax advantage is not significant compared to the large monthly loss from owning.

If you don't own a house but want to live in one, your choice is to rent a house or rent money to buy a house. To rent money is to take out a loan. A mortgage is a money-rental agreement. House renters take no risk at all, but money-renting owners take on the huge risk of falling house prices, as well as all the costs of repairs, insurance, property taxes, etc.

5.) RE is based on local factors, it's not a national phenomenon. RE of Delhi-NCR,Bangalore & rest of the cities has nothing to do with Pune RE.
WRONG. Lending rates remain the same throughout the country. ALL loans are harder to get. This will drive prices down everywhere.

6.) A rental house provides good income. So, you can rent if you have purchased as investment.
WRONG. Rental houses provide very poor income in hyped areas and certainly cannot cover mortgage payments. Remember there is almost 300% difference between EMIs & rent for the same house.

It's pointless to do the work of being a landlord if you can make more money with no risk, no work, and no state income tax by investing in assured good returns bond.

7.) If owning is a loss in monthly cash flow, but appreciation will make up for it.
WRONG. Appreciation is negative. Prices are going down. It only adds to the injury of already high EMI's.

8.) As soon as prices drop a little, the number of buyers on the sidelines willing to jump back in increases.
WRONG. There are very few buyers left, and those who do want to buy will be limited by increasing difficulty of borrowing now that many house owners are near bankrupt as they don't save anything at the end of the month due to high EMI's.
No one has to buy, but there will be more and more people who have no choice but to sell as their payments rise. That will keep driving prices downward for a long time.

9.) House prices never fall atleast in Pune.
WRONG. If you see the RE scenario of 1996, prices crashed by 50% & took a whole 7+ years to recover.
Exact 1996 scenario may not be there today but strong correction is inevitable across the city.

10.) House prices don't fall to zero like stock prices, so it's safer to invest in real estate.
WRONG. House prices won't be zero, but the equity or the principal amount you paid can be zero or even negative. What you will pay as EMIs later in actual terms is not for the principal amount but only the interest as house prices dip. So, you will be only serving the bank.

11.) Prices will soften gradually, won't crash immediately.
WRONG. Prices are falling off a cliff. No one knows exactly what will happen, but it looks like prices will continue to fall for long time. These are just more manipulation of buyer emotions, to get them to buy even while prices are falling.

12.) The bubble prices were driven by supply and demand alone.
WRONG. Prices were driven by low interest rates and risky loans & good returns for investors in initial phases of boom in 2004-05.
Prices went up, interest rates went up & buyers savings went down. So prices are violating the most basic assumptions about supply and demand.

13.) There is lack of land.
WRONG. Ample of land is available & continue to be even in future in Pune. Sales volume are down. Even in Japan (small country with less land), prices went down. Current prices here are the same as that of 23 years ago. If we really had a housing shortage, there would not be so many vacant rentals.

14.) If you don't own, you'll live in a cheap neighborhood later.
WRONG. For the any given monthly payment, you can rent a much better house than you can buy. Renters live better, not worse. There are downsides to renting, such as being told to move at the end of your lease, or having your rent raised, but since there are thousands of vacant rentals, you can take your pick and be quite happy renting during the crash. There are similar but worse problems for owners anyway, such as being fired and losing your house, or having your interest rate and property taxes adjust upward. Remember, property taxes are forever.

15.) There's always someone predicting a real estate crash.
TRUE, yet irrelevant. There are very real crashes every decade or so. Even a broken clock is right twice a day.

16.) Local incomes justify the high prices.
WRONG. The mortgage should be more than your 3 years earning. It is much higher today. Most are already in danger/red zone.

17.) You have to live somewhere.
CORRECT. But that doesn't mean you should waste your life savings on a bad investment. You can live in a better house for much less money by renting during the down slide in RE.

18.) It's not a house, it's a home.
WRONG. Wherever one lives in it is home, be it apartment, condo, bungalow , mansion or house. Calling a house a "home" is a manipulation of your emotions for profit.

19.) If you don't buy now, you'll never get another chance.
WRONG. History proves otherwise.
Here's a beautiful quote from a analyst:-
"The real issue isn't whether you will be stuck being a renter all your life, she says. Its whether you'll get so scared about being shut out that you'll buy at the market's peak and be stuck in a property you can't afford or sell."

20.) It would take major economic recession or a major earthquake that wipes out this area in order for the price to fall by over 50%.
WRONG. Even today, if the prices fall by 50%, there will still be very few people who can buy at this levels due to uncertainty in jobs & most importantly high EMIs. Also, look at the rental rates for equivalent houses. Which loss per month is larger? EMI or rent?

contd....
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  • Originally Posted by wiseman
    Folks,

    Did you see the 1000 point DOW crash? Are you in touch with the Greek Tragedy? Are you aware that (umteenth time I'm repeating this), the excess debt that has fuelled RE worldwide - INCLUDING INDIA - will eventually have to be eliminated? Do you know the consequences of this removal of debt?

    The Doom & Gloom guy is back. As we have been seeing, this fake "recovery" is more-or-less over and the next leg down in the global bear market has started. The bottom of this bear is likely (at least in the US) to be around 2016 as per the Panchang! :)

    And the way markets have started this leg down (violence and sharpness) this promises to be an epic third leg which normally is the most violent and destructive.

    Eliminate debt, save cash, buy some silver and . Take cover.

    India should do better than most of the world.

    Was busy and could not post. More later.

    cheers


    One person was saying instead of Go_ld as reserve invest in Agri related ventures....
    CommentQuote
  • Originally Posted by wiseman
    Folks,

    Did you see the 1000 point DOW crash? Are you in touch with the Greek Tragedy? Are you aware that (umteenth time I'm repeating this), the excess debt that has fuelled RE worldwide - INCLUDING INDIA - will eventually have to be eliminated? Do you know the consequences of this removal of debt?

    The Doom & Gloom guy is back. As we have been seeing, this fake "recovery" is more-or-less over and the next leg down in the global bear market has started. The bottom of this bear is likely (at least in the US) to be around 2016 as per the Panchang! :)

    And the way markets have started this leg down (violence and sharpness) this promises to be an epic third leg which normally is the most violent and destructive.

    Eliminate debt, save cash, buy some silver and . Take cover.

    India should do better than most of the world.

    Was busy and could not post. More later.

    cheers


    hey man...how are you, good to see you back after a long time...keep posting your well researched global economic views...
    CommentQuote
  • Good one man

    Originally Posted by monds
    Friends, read this article...very interesting and true. My apologies for non-marathi readers...

    http://www.loksatta.com/index.php?option=com_content&view=article&id=66736:2010-05-01-19-11-21&catid=127:2009-08-06-07-25-02&Itemid=139

    Very good article man, though it took me 20 mins to understand it:o. I also tried to translate & this is what I got:-

    'Boom-called real Ishtetmadhil ha builder and Political Yoncha खेळलेला Afugavinyassathie money is a game aahe Aasa Berzhyach Jnaancha style. "But Unison Batmeene Alicdeac Alellya are Gela TE J. Lpwoone Teola Uhadkais shelf 0.2006 Madhye Prabhadevi resident Hrancha Sumaare Hagat Rs. 5000 / - TE Rs. 6000 / - Skve. Nantarchaya Aslela Bummadhye sudden burst rate of Rs 2007. 12,000 / - and Rs Tyanantar 2008 Madhye Adh Adh. 30,000 / - Skve. :D


    Anyways, this has again proved the evil nexus of politicos, bankers & builders which is pushing mango man to wall:bab (45):. Good to see that these too say to hold from buying a flat for now.

    * PS:- Loksatta is part of Indian Express Group:bab (34):, hence such news. You won't find such facts in TOIlet paper.
    CommentQuote
  • Originally Posted by wiseman
    Folks,

    Did you see the 1000 point DOW crash? Are you in touch with the Greek Tragedy? Are you aware that (umteenth time I'm repeating this), the excess debt that has fuelled RE worldwide - INCLUDING INDIA - will eventually have to be eliminated? Do you know the consequences of this removal of debt?

    The Doom & Gloom guy is back. As we have been seeing, this fake "recovery" is more-or-less over and the next leg down in the global bear market has started. The bottom of this bear is likely (at least in the US) to be around 2016 as per the Panchang! :)

    And the way markets have started this leg down (violence and sharpness) this promises to be an epic third leg which normally is the most violent and destructive.

    Eliminate debt, save cash, buy some silver and . Take cover.

    India should do better than most of the world.

    Was busy and could not post. More later.

    cheers

    Hey, nice to see you after such a long time. Also post about financial woes of Portugal & Spain as well as it is anticipated that these too will go the Greece way. The use of Euro has also come under question. Anyways, good to see west going bust. Now is the time of East:):bab (34):.
    CommentQuote
  • Have changed views slightly from before ...

    Real, monds, frugal, can, aditi and all you folks on this forum,

    I see that viewership has started jumping sharply on this forum. This points to me that recent events worldwide has started confusing people about the truth in this worldwide "recovery" that was almost guaranteed just a few weeks ago.

    I also means that people are starting to get worried about this rock around their neck called Home Loan. I have absolutely no argument about owning a home. I only caution people about taking on such huge loans at such young age and becoming a debt slave for 20 of the best years of your lives!!!

    Now lets come down to brass tacks. Will RE in India fall 50% to 75% as I have always been maintaining? I have my strong doubts about this happening in the short term. But I do believe that this is a valid target for the long term.

    Why?

    In my belief, based on the projections by some really savvy people over the last couple of years, as Greece has found out, the excess debts of the Govts of the world must be eliminated and a sustainable level found. This will send most countries to declines or flat growth for several years to come. And most of them still think that taking on even more debt is the way to solve a problem of too much debt!! This is not because they are stupid. This is because most people in these countries have become too lazy and think its their birthright to keep getting financial bailouts all their lives. And the politicians keep pandering to them so as to remain in power and make their money.

    Let us take the Greece example. For nearly a decade the greeks have lied to the EU and done all kinds of tricks to take on higher and higher levels of debt. And black money and corruption has reached levels probably higher than even India (if thats possible). Now, when they are forced to clean up their act, the Govt employee unions threaten Civil War! Someone said our Govt employees will be laughing at the rest of us from their balconies. Let us do some comparisons.


    Greek Debt to GDP ratio is 120%. Ours is around 85% and increasing daily. Greek Fiscal Deficit is 14%. Ours is 10% and increasing daily (the oil pool account deficit this year is likely to be 90000 Crores while the budget for it is 2000 Crores).

    So, while we will NOT go the way of Greece today, just imagine. If we want this 9% GDP growth, we will surely need the excess money in the form of borrowings to invest in infrastructure in order to be able to do it. Then again, with Govt income from Direct and Indirect Taxes not likely to be rising adequately to supress our deficits, where will we get the money to keep our income and expenditure in balance?

    The next few years will see most of these highly indebted nations or regions be hit severely and many will see deep recessions or even depressions. I expect US, EU and Japan to be in this state for the next decade (down till 2016 and up to recovery til 2022). China too is expected to take a massive hit around late-2011 to 2012 timeframe.

    Ultimately, it will be job-losses on a large scale as well as salary reductions that will eventually break the India story. Have you seen inflation recently. Even 25% salary hikes will not be sufficient to keep up with inflation. But this recovery story has loads of Indians taking on even larger debt to buy fancy cars and expensive homes and get into slavery for next 15-20 years. When I took a loan in the 1980s we were lucky to have low prices as well as booming world economy (based on excess debt being built up). Today, we are entering a very dangerous 10 years ahead of us where nothing is guaranteed, especially those IT jobs with fancy salaries for poor skills in general.

    If we have that job loss situation, then we will surely see large-scale distress selling of homes by individuals as well as builders which will see predatory and aggressive reductions in prices like you see today in the US. And this poor economic outlook in most of the rest of the world for a sustained period implies significant job/salary hits for us as well.

    One weakness for RE will come from builders themselves. I said last winter that builders did the worst thing possible then. When everyone was believing this "recovery", they should have crashed prices and aggressively moved inventory and reduced debt that has been killing them. Instead they increased prices and scared away many buyers. Now that the markets are starting another leg down for many months going forward, their dreams of fancy IPOs (Nitesh barely managed to squeeze thru at 65 rupees when hey originally wanted 125/-) vanishing and no money coming from anywhere and sales likely to decline, their debts will crush them. This may also lead to a situation of distress selling, which could drop prices rather sharply and force individuals investors also to come to market before their profits vanish.

    Watch out for the job scene. This may take some time as I have said before. Around 3-5 years more for the bottom to happen.

    cheers
    CommentQuote
  • Thanks wiseman for your valuable posts. always looking for your posts.

    Originally Posted by wiseman
    Real, monds, frugal, can, aditi and all you folks on this forum,

    I see that viewership has started jumping sharply on this forum. This points to me that recent events worldwide has started confusing people about the truth in this worldwide "recovery" that was almost guaranteed just a few weeks ago.
    CommentQuote
  • Originally Posted by wiseman


    I see that viewership has started jumping sharply on this forum. This points to me that recent events worldwide has started confusing people about the truth in this worldwide "recovery" that was almost guaranteed just a few weeks ago.

    cheers



    Welcome back ‘wiseman’. But your timing of arrival signifies there is dark time coming in investing horizon :)
    My opinion about him: he has vanished from pune group after Apr 2009 when stocks started rising, members please look back at the some of his older posts where he was forecasting about go_ld being at $2000 and 'inflation,deflation', 'US power coming to end' , 'dollar demise' 'Indian IT price pressure' et all.

    In one line I can say, Ravi K is biggest bull, wiseman is biggest bear. He is like man Sachs who make money by shorting their own financial instruments/products.

    he is not all wrong but it’s very easy to sensationalize downfalls. I am not expert, but as layman I would suggest to end users who are looking to buy home for own use please think in your context. If you can afford and see value then please go ahead and do the deal.

    Don’t try to time market, its really complicated and difficult thing to do. If you are just sitting on cash down the line you will see erosion due to inflation. All these fundas you will get from all investors. Don’t infer meanings from articles as per convenience never put all eggs in one basket.

    Meantime enjoy ‘wiseman’s talent. He have wealth of knowledge and experience, he will come with mind blowing graphs and numbers most of them may be correct, but his writing will sway your opinions just on negative side. Few days back I had followed Peter Schiff who has predicted subprime, but I have seen that even he was failure to benefit from market beating in 2008.

    No disrespect but I felt scared when I saw wisemans’s post and smelled that something is coming. But someone else have posted today that if we encounter another wave of recession then it will be catastrophic, to delight of most of the members RE will fail 30-40% but then even you and I wont be able to buy as service sector will be in gloom.


    :bab (34):
    CommentQuote
  • Glut of MBAs: Where are the jobs?


    http://business.rediff.com/column/2010/may/06/guest-glut-of-mbas-where-are-the-jobs.htm

    While it may be true that finally most MBAs from the top-10 or even the top-25 ranked institutes find some job and hence they are technically "placed", it is also true that increasingly, many of them are forced to take up jobs that could be easily managed by someone with a basic graduation degree itself.
    The plight of those who do not come from the top-25 institutions is probably worse. Indeed, if the glamour and the clamour for an MBA degree continue to grow as it has in the last few years, and with both public and private institutions creating capacity at the same pace as they have been doing recently, it may be an exaggeration, but just barely, that we will see legions of MBAs in the field sales force of or FMCG companies, on the shop floor of retail outlets, and in different types of BPOs and KPOs.


    Interesting comparison of IIM with Harvard and how ineffective are B-schools in India

    And we see articles in media saying so and so college MBA grad placed with 90L package and RE rates go up:bab (36):
    CommentQuote
  • Originally Posted by wiseman
    Real, monds, frugal, can, aditi and all you folks on this forum,

    I see that viewership has started jumping sharply on this forum. This points to me that recent events worldwide has started confusing people about the truth in this worldwide "recovery" that was almost guaranteed just a few weeks ago.

    I also means that people are starting to get worried about this rock around their neck called Home Loan. I have absolutely no argument about owning a home. I only caution people about taking on such huge loans at such young age and becoming a debt slave for 20 of the best years of your lives!!!

    Now lets come down to brass tacks. Will RE in India fall 50% to 75% as I have always been maintaining? I have my strong doubts about this happening in the short term. But I do believe that this is a valid target for the long term.

    Why?

    In my belief, based on the projections by some really savvy people over the last couple of years, as Greece has found out, the excess debts of the Govts of the world must be eliminated and a sustainable level found. This will send most countries to declines or flat growth for several years to come. And most of them still think that taking on even more debt is the way to solve a problem of too much debt!! This is not because they are stupid. This is because most people in these countries have become too lazy and think its their birthright to keep getting financial bailouts all their lives. And the politicians keep pandering to them so as to remain in power and make their money.

    Let us take the Greece example. For nearly a decade the greeks have lied to the EU and done all kinds of tricks to take on higher and higher levels of debt. And black money and corruption has reached levels probably higher than even India (if thats possible). Now, when they are forced to clean up their act, the Govt employee unions threaten Civil War! Someone said our Govt employees will be laughing at the rest of us from their balconies. Let us do some comparisons.


    Greek Debt to GDP ratio is 120%. Ours is around 85% and increasing daily. Greek Fiscal Deficit is 14%. Ours is 10% and increasing daily (the oil pool account deficit this year is likely to be 90000 Crores while the budget for it is 2000 Crores).

    So, while we will NOT go the way of Greece today, just imagine. If we want this 9% GDP growth, we will surely need the excess money in the form of borrowings to invest in infrastructure in order to be able to do it. Then again, with Govt income from Direct and Indirect Taxes not likely to be rising adequately to supress our deficits, where will we get the money to keep our income and expenditure in balance?

    The next few years will see most of these highly indebted nations or regions be hit severely and many will see deep recessions or even depressions. I expect US, EU and Japan to be in this state for the next decade (down till 2016 and up to recovery til 2022). China too is expected to take a massive hit around late-2011 to 2012 timeframe.

    Ultimately, it will be job-losses on a large scale as well as salary reductions that will eventually break the India story. Have you seen inflation recently. Even 25% salary hikes will not be sufficient to keep up with inflation. But this recovery story has loads of Indians taking on even larger debt to buy fancy cars and expensive homes and get into slavery for next 15-20 years. When I took a loan in the 1980s we were lucky to have low prices as well as booming world economy (based on excess debt being built up). Today, we are entering a very dangerous 10 years ahead of us where nothing is guaranteed, especially those IT jobs with fancy salaries for poor skills in general.

    If we have that job loss situation, then we will surely see large-scale distress selling of homes by individuals as well as builders which will see predatory and aggressive reductions in prices like you see today in the US. And this poor economic outlook in most of the rest of the world for a sustained period implies significant job/salary hits for us as well.

    One weakness for RE will come from builders themselves. I said last winter that builders did the worst thing possible then. When everyone was believing this "recovery", they should have crashed prices and aggressively moved inventory and reduced debt that has been killing them. Instead they increased prices and scared away many buyers. Now that the markets are starting another leg down for many months going forward, their dreams of fancy IPOs (Nitesh barely managed to squeeze thru at 65 rupees when hey originally wanted 125/-) vanishing and no money coming from anywhere and sales likely to decline, their debts will crush them. This may also lead to a situation of distress selling, which could drop prices rather sharply and force individuals investors also to come to market before their profits vanish.

    Watch out for the job scene. This may take some time as I have said before. Around 3-5 years more for the bottom to happen.

    cheers

    UK
    http://www.debtbombshell.com/ even the clock is present :o
    Right now, that debt is growing violently. The Government forecasts it will soar to an eye-watering £1.1 trillion by 2011. To put that in perspective, the UK went bust in 1976 running a budget deficit of 6% of GDP. In 2010 that deficit is going to top 12%.
    Historically, our debt burden was heavier after World War II. But like any loan, if the money isn't invested wisely we end up borrowing even more. When the Government runs up huge debts and produces nothing to show for it, we're the ones that shoulder the burden. This year that burden will grow by £167.9 billion.

    .....

    US
    http://www.usdebtclock.org/

    Total Debt stands at 12 Trillion.....

    The National Debt has continued to increase an average of
    $4.13 billion per day since September 28, 2007!
    CommentQuote
  • Originally Posted by informsantosh
    Welcome back ‘wiseman’. But your timing of arrival signifies there is dark time coming in investing horizon :)
    My opinion about him: he has vanished from pune group after Apr 2009 when stocks started rising, members please look back at the some of his older posts where he was forecasting about go_ld being at $2000 and 'inflation,deflation', 'US power coming to end' , 'dollar demise' 'Indian IT price pressure' et all.

    In one line I can say, Ravi K is biggest bull, wiseman is biggest bear. He is like man Sachs who make money by shorting their own financial instruments/products.

    he is not all wrong but it’s very easy to sensationalize downfalls. I am not expert, but as layman I would suggest to end users who are looking to buy home for own use please think in your context. If you can afford and see value then please go ahead and do the deal.

    Don’t try to time market, its really complicated and difficult thing to do. If you are just sitting on cash down the line you will see erosion due to inflation. All these fundas you will get from all investors. Don’t infer meanings from articles as per convenience never put all eggs in one basket.

    Meantime enjoy ‘wiseman’s talent. He have wealth of knowledge and experience, he will come with mind blowing graphs and numbers most of them may be correct, but his writing will sway your opinions just on negative side. Few days back I had followed Peter Schiff who has predicted subprime, but I have seen that even he was failure to benefit from market beating in 2008.

    No disrespect but I felt scared when I saw wisemans’s post and smelled that something is coming. But someone else have posted today that if we encounter another wave of recession then it will be catastrophic, to delight of most of the members RE will fail 30-40% but then even you and I wont be able to buy as service sector will be in gloom.




    I liked you post more over wisey post with good sarcasm . Wisey is RE Shani and frug is RE Ketu :D .
    CommentQuote
  • Originally Posted by monds
    hey man...how are you, good to see you back after a long time...keep posting your well researched global economic views...


    I'm not sure how well researched the economic views are when he is quoting events out of the panchang!!:bab (35):
    CommentQuote
  • I always welcome Bull's views ...

    Originally Posted by harshalx
    I'm not sure how well researched the economic views are when he is quoting events out of the panchang!!:bab (35):


    That Panchang thing was a sarcastic once since so many people are always scared of what I say. I look at various types of analysis - Fundamental, Technical - from various people before making up my mind. So there is always a large element of surprise, like it always is in the future.

    The problem with looking at the market when you are already in with a purchase and a loan is that it is too scary to look at the downside. So, we ignore it even when we know that its always better to be "Prepared for the worst, hoping for the best".

    Many loss making situations in the past have made me be realistic about the market keeping my personal fears separate from an honest view of the market.

    Lately I have found that combining a long-term Macro-economic view of the market along with study of cyclicity in the markets (as all human activities happen in cycles due to the mood swings within Human Mobs over time) provides us with an extraordinarily accurate view of the turning points as well as duration of trends.

    For example, I know of some Analysts who have called the March 2009 bottom and April 2010 peak with an accuracy of 2 weeks. I called the Jan 2008 crash on 25 Dec 2007. While they are not 100% all the time, one could have made a huge fortune simply going long in 2009 and closing it in Apr 2010. For example, on Friday the Nifty touched the 200 DMA. Since our market is not yet ready for the crash (as most people believe that we are on the verge of good times), I knew a bounce was likely and so I went long around 5000 Nifty. In just one day I have a 150% gain on that particular option. So, these things are possible and going on all the time. There is tremendous opportunity even in distressing times if only we have the mental strength to keep aside our fears, learn how to take on opportunities and take risks. Becoming frozen due to fear is the worst of all possibilities, so learn to overcome it, though its not easy. You do not learn to ride a bike without a few scratches.

    There is ovewhelming evidence from both types of analysis that there is simply no way this world is going to survive with this level of debt. So, this decline coming up is almost a certainty.

    You need to see how best you can take protective measures. Going forward, nothing is guaranteed!

    cheers
    CommentQuote
  • After recent directive of the RBI to banks to avoid loans to RE, the banks are looking at SBI. If SBI increases interest rates for RE sector including home loan, rest of the banks will follow suit.

    Also, RBI is coming up with Nationa Housing Index (NHI) which will keep a tab on RE alongwith it's prices, completion etc. in 31 cities, all metros & Tier 1 cities will be the first one to get such info.

    The NHI will be updated after every 3 years.
    CommentQuote
  • CommentQuote


  • Why china Govt. is worried like hell ??
    because they are losing their cheap export friendly approach ....
    Its like becoming uncompetitive ...

    now when there are several lakh jobless in US.... US employees can always take job offer in Half price thus stopping the ship from china ...

    Are our policymakers aware of this ??
    CommentQuote