Cash up for the Crash: Does it Work?

[67910241]

I think OZ is crashing as we type.
Gold coast prices skyrocketed for many years and are currently in free fall.
I heard retail is slowed prior xmas too.

Kind of funny that one. Up to a few months ago, I was nearly convinced that Australian market as a whole (not just including some local fragments ie. WA and SE QLD but not NSW & VIC) could not nosedive before the Chinese overbuilding spree stopped one way or another.

But the events in Melbourne and Sydney right now seem to suggest that maybe I am not quite as prudently paranoid as I'd ideally wish to be.

[Jumpin]

"Prudently paranoid" love it!
I think interest rates are the key in Aus. The booming economy accompanied by hints of inflation have encouraged early interest rate rises. This will release some of that housing bubble pressure before the Chinese bubble bursts. Probably better to start the correction now than keep bubbling until China pops.

[PropertyReturns]

I think Propertyreturns misses the point about parking cash with finance companies - the point is if you sell up, you have to park the cash somewhere, whether stock market, term deposit, gold or elsewhere - and that brings its own risks.

The only safe place in NZ is banks (and not the NZ owned ones) and I was only commenting on NZ.

Timing the market is next to impossible - the slump was on its way for many years, but who knew June 2008 would be it? If you saw it coming in 2005 and sold up, you would have be twiddling your thumbs watching everyone else making cash for 3 years while you were out of the market. I didn't buy in 2007/08, not because I worried about the slump, but because the figures didn't work.

Agree timing the market is impossible but working out what will happen is very possible. History repeats itself. Getting a higher return from the bank than property, and now with the capital cost of a building less than in 2005 means twiddling my thumbs for a few years was very rewarding. The slump was building up from 2003 when it was obvious that Cullen was grossly mismanaging the economy. Economic cycles are caused by man; not some freak of nature.

What about timing the recovery? Is it time to buy right now?

The recovery will happen over a few years depending on how fast government respond in a responsible manner (and most don't) and how fast debt is reduced. The UK will recover quicker than most if Cameron can stay in power. USA also will as has a flexible economy with high productivity. NZ will be slow.

I know 'old-timers' who sell and 'old-timers' that don't.

Exactly. You have to work out your own strategy that is right for you. No one can instruct you what to do. Followers will have an incoherent strategy and will become losers.

[speights boy]

The only safe place in NZ is banks (and not the NZ owned ones) and I was only commenting on NZ.

Both the NAB and Westpac borrowed emergency funds from the US Fed at the height of the GFC.

Are our banks safe? Yes, but our risk free rate of return is related to the Govt Bond rate.