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Reality prices to crash...

Last updated: May 25 2009
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  • #61

    #61

    Re : Reality prices to crash...

    Dear friend,

    Quite true. May also apply to Share Market?

    ks2071746

    Comment

    • #62

      #62

      Re : Reality prices to crash...

      The famous stock trader Jesse Livermore said years ago that there are only two emotions in the market: hope and fear. The problem is, people hope when they should fear, and fear when they should hope.

      Comment

      • #63

        #63

        Re : Reality prices to crash...

        ]www.investors.com[/url] 4/14/09

        IBD Founder Shares Views
        It’s not ’29, O’Neil says, but could be ’38 again, when a solid move began
        IBD25


        BY KATHARINE STALTER INVESTOR'S BUSINESS DAILY



        The S&P twice peaked over 1500. Perhaps less obvious amid the worst financial crisis since the Depression, the index remains more than 400% higher.

        The recent bear market has tested even the most skilled investors. As we mark the 25th anniversary of the paper, since renamed, we asked Investor’s Business Daily Chairman Bill O’Neil for his perspectives on the current market and how investors should proceed from here.


        IBD: We’ve been in a confirmed rally since March 12, and last week we saw some very strong trade. But as we’ve noted often in IBD, leadership has been slow to emerge. Is that something people should be cautious about?
        O’Neil:Stocks are a little bit like children. You have to be aware of where they’re going, and who they’re with, and how they are acting. In other words, you’ve got to monitor them.
        Most people just need a set of sell rules. And they should not have gotten hurt badly. There’s nothing wrong with being down 5%, 10% or 15% in a tough, tough environment. But if you’re down 40%, 50%, 60%, you don’t have any sell rules and you’re not following a set of principles.

        We did some surveys that showed about 50% to 60% of our subscribers got out of the market. They sold and raised cash based upon what The Big Picture market column was telling them.

        Now you asked the question about the leaders being slow to emerge. You have to consider the fact that we had a 16-, 17-month, horrendous correction in the market — over 50%. That’s abnormal, and it was caused by the subprime situation, which actually government helped to initiate by coercing a lot of the banks into making more and more loans that were subprime.

        It takes time to unravel all the damage that’s been done, but I think that we’re seeing stocks that are performing fine. But it comes down to your ability to select the right stocks. You’ve got to come up with companies that have got a unique product that people really want and they’re buying.
        And when you look at the charts, the stocks should be acting right, and you should realize you’re in an uptrending market right now. That will probably continue for a while.
        One thing I can say is we’re not in 1929. We think we’re in 1938 instead.
        We had our 1929 in 2000 to 2003, when you had three years of terrific correction in the market. I don’t agree with some of the fear that’s going on now — “Oh my gosh, we’re going to create the next Depression!” — because I think the country is much stronger and more diversified, and it can overcome these problems that were partially government generated.

        I should mention why I say that we’re in ’38 rather than ’29 to give you a chance to compare the
        markets on your own. What we did is we took a chart of the Dow Jones industrial average throughout the entire 1920s and the entire 1930s, and we overlaid a chart of the Nasdaq index from the 1990s right up to now. And you’ll be amazed to see that they’re replicating each other just like clockwork.

        The psychology is the same — the wild craze in 1928 and 1929 was very much like the ’90s.

        Our Nasdaq actually went up more than the Dow went up in 1929. So we had a wild, “anything goes” craze going on and it blew up. We had a three-year correction, rallied out of it, and rallied back in the next four or five years, just like the Dow did from 1932 to 1937.

        And now you corrected exactly the same. You had a 50% correction in the Dow back in the ’36-to-’37 period. That’s exactly what’s happened to us here, and we’re now in a recovery phase.

        In 1938, from the bottom, you rallied up 62%, and then you went through some more corrections back and forth. And then, all of a sudden, you had World War II.

        IBD: A lot of people are very concerned about whether this is a bear market rally or something that has staying power. And some of that comes from what they’re hearing in the mainstream media.
        One of the beauties of the CAN SLIM investing method is that it does help you watch the market to see what’s actually going on. So talk a little bit about that. What signs in the market should people be watching for?
        O’Neil: Our whole CAN SLIM method is based not on listening to Wall Street or a lot of analysts or people on TV, but actually tracking the market itself, and learning to read charts so you can track and measure the stocks themselves and how they are acting.

        They’re just like people: They’re acting fine or they’ve got some sort of a problem. If you study charts and spend some time developing your skill with them, you’ll recognize, “This stock’s not acting right and I better get out of it!” There’s no reason for anybody to lose 50% in a bear market.
        Now, you can lose 5%, 10% or 15% in a terrible market because we’re all going to make mistakes. But you can come back from that.


        That is a huge advantage for somebody if they learn to read charts! Because there’s nothing new.
        The patterns are the same — little cup with handles are all over the place. There must be 500 of them that have occurred in the last 100 years.
        IBD: You had a new base in the book called the “square box.” Can you say a little about this?
        O’Neil: I had recognized this pattern off and on for the last 10 years or so. We decided to analyze it and measure it. It’s a pattern where the stock price runs up in a prior uptrend, and then it goes sideways — maybe 10% to 20% back and forth — but it does look like a square. It’s something like five to seven weeks that it goes back and forth in this little square box.
        There are some very powerful moves that have come out of that base. In the book, we show seven or eight of these little square boxes.
        These patterns repeat themselves. We’ll show a little square box that happened in 1960, and then one in 1970, then one in 1975, then ’85 and ’95 and then last year. You begin to see that there’s this repetition that goes on, over and over.
        Now, the second thing is just as important, and that is human nature. Stop and think about it. People don’t change too much. They have their fears and they have their excitement. They have their panics and their hopes, and then they have their disappointments.
        People get excited and carried away when they start hearing everybody’s making money in stocks, then they go out and get a little too much. Then on the other side, when things get real bad, they get scared and panic. They usually vacillate until the last moment, and they finally sell near the bottom. So human nature repeats itself over and over and over again, and we see that in the chart patterns.

        IBD: You’ve given a lot of perspective on the current market. Any final words?
        O’Neil: The famous stock trader Jesse Livermore said years ago that there are only two emotions in the market: hope and fear. The problem is, people hope when they should fear, and fear when they should hope.
        The fear has been enormous. The damage was really primarily instigated by the government starting back in the mid-1990s when they started forcing the banks to make more and more loans. They had quotas. The banks needed to make some percentage of their loans in subprime areas to lower-income groups, and they kept lowering the standards, so you just broke down the entire banking industry.
        Now you’re trying to blame them, and yes, they did some things wrong, and a lot of other people did things wrong. Some of the mortgage salespeople did. But it was really a government program.
        And there was so much fear, probably you’re into a rally that should last for a few more months, and there are opportunities there.

        And if they correct some of the problems that they created themselves — I’m talking about the government — I don’t think we’ll be making new lows, and you shouldn’t see anything like the 1929 period.

        You’ve had a real correction, a real adjustment, and this country’s far bigger than it was in the ’20s, with more industries, more innovation, more technology, more resilience.

        And you’ve got the innovators out there. There are companies that are doing very well with earnings. That doesn’t mean they all are, and there are going to be more layoffs, probably for a while.

        But a recession serves the purpose of weeding out the weaker companies. In other words, Best Buy BBY is still out there, but another chain goes bankrupt. Maybe General Motors GM goes bankrupt, and it would probably be good if they do, because that is probably one way they’ll straighten out all the contracts they’ve got that they’re simply not able to live with — like paying everybody that retires 80% of their top salary forever, and full medical benefits.

        Well, as each year goes by, you have a greater and greater and greater obligation, so after a while, you go out of business.

        And the stronger ones survive. You’ve got a lot of strong innovators and entrepreneurs with great products, great earnings. It’s up to you to learn to recognize them, and then to have rules of how to handle them. And you’re not going to handle them all right, so when you make a mistake you’ve got to correct it, quick, and go on to the next thing.

        It’s a learning process. You need to take a few courses, maybe go to some Meetup clubs, read some books, read them several times, and write out your own rules. Start to educate yourself so you understand what you’re doing, rather than just assuming, “I’ve got to buy some things, and sit back and everything will be fine.”

        Comment

        • #64

          #64

          Re : Reality prices to crash...

          Puravankara slashing!!!

          An interesting Ad in today's (18th April) papers by Puravankara:

          Limited offer only!

          1. Flat area raised from 1450 to 1610 SqFt - a 11% increase

          2. Flat price reduced from 64L - 48L - a full 25% reduction in one shot!!!

          3. Car Parking included Free - can we add 1 to 2 L for this?

          4. Club Membership included Free - how much can we add for this?

          Even without monetising 3 and 4, we are seeing a reduction of 32.5%. And this is without negotiation.

          Good thing for Puravankara that this is a limited offer. If it were unlimited, they would go out of business soon! Not that they surely will not even at this stage, going by the way the market is headed!!!

          I have nothing against Purva. But a lot of builders are headed that way. Purva has the guts/desperation to drop before they are forced to.

          cheers

          Comment

          • #65

            #65

            Re : Reality prices to crash...

            Originally posted by abk View Post
            The famous stock trader Jesse Livermore said years ago that there are only two emotions in the market: hope and fear. The problem is, people hope when they should fear, and fear when they should hope.
            Dear friend,

            It is quite true. Most people, mainly small investors, tend to sell when their shares are going down fearing further fall. They refrain from selling their shares when the prices go up hoping further increases. Ultimately they only either lose or do not get the gain.

            ks2071746

            Comment

            • #66

              #66

              Re : Reality prices to crash...

              Originally posted by wiseman View Post
              An interesting Ad in today's (18th April) papers by Puravankara:

              Limited offer only!

              1. Flat area raised from 1450 to 1610 SqFt - a 11% increase

              2. Flat price reduced from 64L - 48L - a full 25% reduction in one shot!!!

              3. Car Parking included Free - can we add 1 to 2 L for this?

              4. Club Membership included Free - how much can we add for this?

              Even without monetising 3 and 4, we are seeing a reduction of 32.5%. And this is without negotiation.

              Good thing for Puravankara that this is a limited offer. If it were unlimited, they would go out of business soon! Not that they surely will not even at this stage, going by the way the market is headed!!!

              I have nothing against Purva. But a lot of builders are headed that way. Purva has the guts/desperation to drop before they are forced to.

              cheers
              Even with these reductions, it is not advisable to book in Purvankara. Their windmerie project is cancelled. thye started another project purva cosmo without bothering about the first project.

              So no assurance for completion

              Comment

              • #67

                #67

                Re : Reality prices to crash...

                Originally posted by lovebird View Post
                Even with these reductions, it is not advisable to book in Purvankara. Their windmerie project is cancelled. they started another project purva cosmo without bothering about the first project.

                So no assurance for completion
                Dear friend,

                If there is no assurance of completion with least delay, it is better not to touch the project even at half the price. Apart from the lower rate/sq. ft. one need to consider the large maintanence charge of atleast Rs. 2 per month/sq. ft. which itself will come to Rs. 3220/PM and the rent also may be like this amount only considering that the tenant will have to pay the maintanence charge?

                ks2071746

                Comment

                • #68

                  #68

                  Re : Reality prices to crash...

                  All flats in OMR will have low rental values too because of large supply and low demand.

                  Rents will be in the range of just Rs 6 to 7 thousand pm for these kinds of flats

                  Comment

                  • #69

                    #69

                    Re : Reality prices to crash...

                    Originally posted by nick_alan_76 View Post
                    People who have that kind of money, already know. Plus do not expect anyone to spell it out so openly.

                    Hmm... This is interesting because I am currently residing in the US with excess cash flow. I do not see any opportunity without actually relocating to New Delhi besides investing in real estate or doing FD's.

                    Is there a third option available without either going RE or FD, legal obviously.

                    Comment

                    • #70

                      #70

                      Re : Reality prices to crash...

                      Originally posted by warhound View Post
                      Hmm... This is interesting because I am currently residing in the US with excess cash flow. I do not see any opportunity without actually relocating to New Delhi besides investing in real estate or doing FD's.

                      Is there a third option available without either going RE or FD, legal obviously.
                      warhound, my comment was regarding the black money (the likes of which Obama wants to ban in US).

                      If you have legit money and need legit ways to invest in India, my suggestion is to carefully look at the investment options. Legit options are dime a dozen. Take a pick from starting a business, investing in partnerships, investing in stocks/bonds, forex, precious metals and many more. Just make sure to read between the lines and fine prints.

                      My suggestion would be to first look at your strategy... do you need the money to be in liquid assets or not. Then make all agreements legally. Else there is a high chance you will get burnt.
                      Last edited May 6 2009, 08:58 PM.

                      Comment

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