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Builders & Real Estate Bulls Theory Proved Wrong

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Builders & Real Estate Bulls Theory Proved Wrong

Last updated: November 1 2016
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  • Re : Builders & Real Estate Bulls Theory Proved Wrong

    Total private ownership of gold by people of India is around 18k tons. But that does not belong to the govt or RBI. So unless GOI comes up with a plan like USA/FDR did in 1930 to seize all gold in exchange for cash, Govt cannot sell all that gold.

    BTW with inflation so high it’s a bad idea to seize gold and give cash.

    RBI needs its reserve of gold for to meet its current account if things go bad, just like they did in early 1990.

    Gold is neither expensive nor cheap since its industrial use is very small, it’s kind of an ancient currency used as an emergency fund. Doomsday preppers in USA buy gold and silver for that purpose when the system collapses currency may be useless(IMO its silly to prepare so much instead of enjoying life today).

    Originally posted by Venkytalks View Post
    Total velue of gold within india is one trillion.

    We import about 50 billion worth every year.

    RBI can definitely crash the gold market in India releasing just 3 to 4 billion worth every year.

    But the best way to discourage gold is to keep its cost high since consumption demand vastly overshadows investment demand.

    Gold will fall because it is unaffordable nowadays
    Last edited by techynt; April 13 2013, 01:18 AM.

    Comment


    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Originally posted by rembrants View Post
      But even then u'll need a place to stay right? if u dont buy one...somebody else will, and then you will keep on paying rent.

      Old vs new properties is a different choice and depends on what u can afford. of course the rent of newer buildings is more then that of old buildings too
      1. Not everyone who lives in a house need to own it.
      2. I'll pay the rent which will be far less than EMI and the flat which is getting older(depreciating in a way) doesn't belong to me.
      3. I do not have any liability related to property( Taxes, loans, maintenance ).
      4. If my income sources are less, I'm free to move to a place with less rent. This is not the case with EMI.
      5. If my income increases, I can choose to move in a luxurious apartment.
      6. I can change my place any time with job change.
      7. I can save/invest my money in assets which are easier to liquidate and maintain.
      8. I can spend my money on other quality aspects which would not have been possible for a person of my income level to afford with an EMI pending.
      9. Life is short. I want to live it fully.

      I've a very wrong habit of not following the herd. Till now I'm satisfied with my strategy in every aspect of life and I'll continue it till I'm proved wrong and I've a good habit to take only calculated risk, so that even if I'm proved wrong, I will not be severely affected.

      Comment


      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Originally posted by mysantoshin View Post
        1. Not everyone who lives in a house need to own it.
        2. I'll pay the rent which will be far less than EMI and the flat which is getting older(depreciating in a way) doesn't belong to me.
        3. I do not have any liability related to property( Taxes, loans, maintenance ).
        4. If my income sources are less, I'm free to move to a place with less rent. This is not the case with EMI.
        5. If my income increases, I can choose to move in a luxurious apartment.
        6. I can change my place any time with job change.
        7. I can save/invest my money in assets which are easier to liquidate and maintain.
        8. I can spend my money on other quality aspects which would not have been possible for a person of my income level to afford with an EMI pending.
        9. Life is short. I want to live it fully.

        I've a very wrong habit of not following the herd. Till now I'm satisfied with my strategy in every aspect of life and I'll continue it till I'm proved wrong and I've a good habit to take only calculated risk, so that even if I'm proved wrong, I will not be severely affected.
        I agree with most of the points provided we have a better solution of return mentioned above.

        Comment


        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Dude you are the man. How do you deal with peer pressure? (wife, in-laws, relative, friends etc think you are not great if you live in rental home)

          Originally posted by mysantoshin View Post
          1. Not everyone who lives in a house need to own it.
          2. I'll pay the rent which will be far less than EMI and the flat which is getting older(depreciating in a way) doesn't belong to me.
          3. I do not have any liability related to property( Taxes, loans, maintenance ).
          4. If my income sources are less, I'm free to move to a place with less rent. This is not the case with EMI.
          5. If my income increases, I can choose to move in a luxurious apartment.
          6. I can change my place any time with job change.
          7. I can save/invest my money in assets which are easier to liquidate and maintain.
          8. I can spend my money on other quality aspects which would not have been possible for a person of my income level to afford with an EMI pending.
          9. Life is short. I want to live it fully.
          I've a very wrong habit of not following the herd. Till now I'm satisfied with my strategy in every aspect of life and I'll continue it till I'm proved wrong and I've a good habit to take only calculated risk, so that even if I'm proved wrong, I will not be severely affected.

          Comment


          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            He said he never follows the herd. Wife, in-laws may not be in the picture.

            PS: Sorry if I am being judgemental here, but statements like these leave a lot for interpretation

            Originally posted by techynt View Post
            Dude you are the man. How do you deal with peer pressure? (wife, in-laws, relative, friends etc think you are not great if you live in rental home)

            Comment


            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Excellent, if you are able to follow it.

              Inflation is huge in India, so people prefer to own a house.

              If u have worked out your finances ok, then its great.

              Originally posted by mysantoshin View Post
              1. Not everyone who lives in a house need to own it.
              2. I'll pay the rent which will be far less than EMI and the flat which is getting older(depreciating in a way) doesn't belong to me.
              3. I do not have any liability related to property( Taxes, loans, maintenance ).
              4. If my income sources are less, I'm free to move to a place with less rent. This is not the case with EMI.
              5. If my income increases, I can choose to move in a luxurious apartment.
              6. I can change my place any time with job change.
              7. I can save/invest my money in assets which are easier to liquidate and maintain.
              8. I can spend my money on other quality aspects which would not have been possible for a person of my income level to afford with an EMI pending.
              9. Life is short. I want to live it fully.
              I've a very wrong habit of not following the herd. Till now I'm satisfied with my strategy in every aspect of life and I'll continue it till I'm proved wrong and I've a good habit to take only calculated risk, so that even if I'm proved wrong, I will not be severely affected.

              Comment


              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Originally posted by techynt View Post
                Total private ownership of gold by people of India is around 18k tons. But that does not belong to the govt or RBI. So unless GOI comes up with a plan like USA/FDR did in 1930 to seize all gold in exchange for cash, Govt cannot sell all that gold.

                BTW with inflation so high it’s a bad idea to seize gold and give cash.

                RBI needs its reserve of gold for to meet its current account if things go bad, just like they did in early 1990.

                Gold is neither expensive nor cheap since its industrial use is very small, it’s kind of an ancient currency used as an emergency fund. Doomsday preppers in USA buy gold and silver for that purpose when the system collapses currency may be useless(IMO its silly to prepare so much instead of enjoying life today).
                I think you missed the point. India is an end consumer of gold, investment share as percentage of total holdings is miniscule.

                While govt is capable of manipulating the market with its 25 billion of gold which is 50% of the total annual imports of gold, it will not affect anything because the gold will only get consumed. So no point in such needless activity.

                Indeed, it makes sense for govt to sell gold when prices are high rather than wait for it to fall (cost of gold production 400-500 dollars an ounce which is the base price to which it can fall)

                I nowhere said that Indian govt will confiscate gold. Instead, market itself will prevent the speculative bubble. Since Indians end use gold and dont invest in it, when prices rise, the end use reduces, automatically curtailing imports.

                This is not the case in other countries where gold is not end used and ETF holdings in gold form a much larger percentage.

                Most Indians have sufficient gold in the form of ornaments bought for end use by the ladies. They dont need to hedge further into ETFs.

                While I am a perma gold bear, I still feel that it is a better hedge against INR depreciating against USD than real estate
                Venky (Please read watch a or before posting)

                Comment


                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  Just simple question :-

                  If everything is good in RE as builders claim, why aren't the contractors of several projects not paid in past 2 months ? The contractors are not only those who are part of construction activity but even labor contractors. Some have taken off their JCBs (earth movers) & dumpers from the site due to non-payments.
                  If you are happy, you are successful.

                  Comment


                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    To Venky & Wiseman


                    We have been seeing FII money flowing into Indian markets to the tune of billions. ( for the past few days it is moving out, and that is different topic altogether).

                    My question is, if FII buy stocks (cash market buying) we say that money is entering into India and it is good for Indian economy. I heard we make day to day purchases (oil etc) only with that money nowadays.

                    I want to know what happens to the money FII's make by trading in derivatives markets? Because the money the make in derivatives is more than enough to cover their cash market buying for the month, given the way they manipulate the Indian equity markets.

                    1. How that money is accounted for?
                    2. If they book the profit and take the money out of India, will it considered as money moving out of India?
                    3. Is there any control for such money like it should be invested in India again like that?
                    4. Will that not affect the currency exchange rate?

                    Comment


                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Originally posted by mangoman2012 View Post
                      To Venky & Wiseman


                      We have been seeing FII money flowing into Indian markets to the tune of billions. ( for the past few days it is moving out, and that is different topic altogether).

                      My question is, if FII buy stocks (cash market buying) we say that money is entering into India and it is good for Indian economy. I heard we make day to day purchases (oil etc) only with that money nowadays.

                      I want to know what happens to the money FII's make by trading in derivatives markets? Because the money the make in derivatives is more than enough to cover their cash market buying for the month, given the way they manipulate the Indian equity markets.

                      1. How that money is accounted for?
                      2. If they book the profit and take the money out of India, will it considered as money moving out of India?
                      3. Is there any control for such money like it should be invested in India again like that?
                      4. Will that not affect the currency exchange rate?
                      FII have brought in 40 billion odd in last 6 +months. They can take it out any time. Any restriction which you considered will have the opposite effect of drying up inflow and exagerating outflow.

                      FII pulling out is very very bad news.INR will crash to 60 and below.

                      Recent changes in bond market by chiddu might mitigate problems. FII might shift to indian bonds and keep money within india. Hope this succeeds. Sbi billion dollar bond placement was also good news

                      FII money is not very good for india unless we also have healthy Ipo or psu disinvestment. Currently both are moribund. Psu should have more fpos. In their absence fii are just providing liquidity.

                      Fii are the main derivative players. Which makes our market liquid and healthier.
                      Last edited by Venkytalks; April 14 2013, 12:20 PM.
                      Venky (Please read watch a or before posting)

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