Is low interest rate the key to asset bubble?

[chestnut]

Actually there's no right or wrong... For me, I did the other way round. I bought one with very very little leverage. If I've done it like my friends, i would have been owner of at least 3 PCs But I prefer to sleep at ease in the night OR perhaps I'm too conservative
Whether who turns out to be right is the million-dollar question =. On hind-sight its always easy to say

Bro, if u had followed your friends, u now can sell 1 of your condo and sleep peacefully leh. Because your sold unit could have possibly paid for most of the 2 units.

You are rite, no right or wrong. Many say, look on hindsight, should have known better. I have a better suggestion. Look on hindsight and learn. So u know what to do in the future. There will be some similarities in the future. Though not 100%. So when it dips, u know what to do. I hope u got what I mean.

Cheers. At least u slept well and still sleeping well.

[sherlock]

about your risk appetite..

the more greed, the more $$ u will get..

How right you are... be greedy when everyone is scared

[sherlock]

Bro, if u had followed your friends, u now can sell 1 of your condo and sleep peacefully leh. Because your sold unit could have possibly paid for most of the 2 units.

You are rite, no right or wrong. Many say, look on hindsight, should have known better. I have a better suggestion. Look on hindsight and learn. So u know what to do in the future. There will be some similarities in the future. Though not 100%. So when it dips, u know what to do. I hope u got what I mean.

Cheers. At least u slept well and still sleeping well.

Thanks for the pointer bro. I've learnt my lesson well. Waiting for a dip until neck long long Hope to learn from you

[chestnut]

Thanks for the pointer bro. I've learnt my lesson well. Waiting for a dip until neck long long Hope to learn from you

Bro, don't learn from me... Learn from the lesson.... So when the next dip come, evaluate. During dip, minimal risk when u have cash. U had so much cash when it was low, rite. When it is low, how much lower can it get? Already in 2006, it is a 40% discount from peak... The risk of dropping is low... Look at today, when it has gone up, risk higher, rite...

So play when minimal risk. But u need cash. If not u cannot sleep.... So do your sums now and evaluate constantly.. So when it comes, u are prepared and dont Karang kabot...

[Laguna]

One valuable lesson I learnt, which I firmly believe in is

HISTORY IS NOT GOING TO REPEAT ITSELF

if u think the past can guide u to wait for the dip, it is going to be difficult.
Even when the dip comes, u would wait for the price to go lower. But how low is the low, no one knows.

And once u miss the lows, u will find it very difficult to buy even it is 1% higher.

There were many good stuffs were gone for good.

[phantom_opera]

To the threadstarter, just look at how Japan opposition Shinzo Abe motivated the market by talking about "unlimited easing" and "3% inflation target"

Yesterday Nikkei was the only stock market up in this region

Today:

Tokyo stocks up 1.88% by break

[Leeds]

The money market is fruadery and causing movement of money to economies other than the intended. One needs to understand the dynamic of economics to appreciate the harm that it will bring.

Let us pray that the next two years, the economies in the US and Europe can recover or we will all be dead ducks. A prolong environment with low interest rate and high inflation is not sustainable.

When MAS is worried we should get the hint. Invest with your EYES and not with your MIND is the safer bet in this trying time.

[phantom_opera]

The game is not as simple as:

A - recession
B - inflation

there is a 3rd option, 0.5% growth for next 10y for US/Europe, 2% for Singapore

[Amber Woods]

Hi All

Lets say if u have the initial 40%, would you buy now at this current price and current economic situation?

It is very difficult for any responsible person to answer your question. As what someone else pointed out in this thread; if you buy now and can sleep well, go ahead. If not stay away.

Hope this helps!

[auroraborealis]

yay support 3rd option n add
SG inflation 3-5% cause SGD strong range below 1.25
SG property price up 5% each year
SG STI remain ard 3000+/-

only my reason y not into stocks now, cos mayb 5yrs later STI still at 3000 (no opportunity cost if dun buy now) but property different

The game is not as simple as:

A - recession
B - inflation

there is a 3rd option, 0.5% growth for next 10y for US/Europe, 2% for Singapore

[phantom_opera]

yay support 3rd option n add
SG inflation 3-5% cause SGD strong range below 1.25
SG property price up 5% each year
SG STI remain ard 3000+/-

only my reason y not into stocks now, cos mayb 5yrs later STI still at 3000 (no opportunity cost if dun buy now) but property different

just to add .... STI has dividend yield of 3% ... of course not very attractive if after 5y still at 3,000

this option is getting more likely by the day ... and looks like next massive printing may come from Japan - this Japan Shinzo Abe shouting "unlimited easing" and "3% inflation"

black swan to trigger outright deflation will probably be a war

[Leeds]

The money market is fruadery and causing movement of money to economies other than the intended. One needs to understand the dynamic of economics to appreciate the harm that it will bring.

Let us pray that the next two years, the economies in the US and Europe can recover or we will all be dead ducks. A prolong environment with low interest rate and high inflation is not sustainable.

When MAS is worried we should get the hint. Invest with your EYES and not with your MIND is the safer bet in this trying time.

The ironery is that should the economies in the US and Europe recover in the next two years, interest rate would go up that could trigger the catalyst to ignite. We are kind of in a catch 22 situation.

We just need to be careful.

[phantom_opera]

The ironery is that should the economies in the US and Europe recover in the next two years, interest rate would go up that could trigger the catalyst to ignite. We are kind of in a catch 22 situation.

We just need to be careful.

if economy confirmed recovering to 2-3% GDP in the US/Europe, they will not tighten so fast one, end up CCR will chiong and widen its gap with OCR

the chance of an outright recession / depression is very slim and central banks of the world are on ultra-easing tone

[Shanhz]

The ironery is that should the economies in the US and Europe recover in the next two years, interest rate would go up that could trigger the catalyst to ignite. We are kind of in a catch 22 situation.

We just need to be careful.

indeed, i have been thinking about this catch 22 situation.

the mitigating factor is that with economies booming, sentiments will improve, stock mkt will cheong, industries will be manufacturing at full speed. when that happens, interest rate up will be mitigated by all these feel good factor.

inflation will also set in (crude oil up, commodities up) when boom time. so ppty will appear to be cheap by then.

[Leeds]

indeed, i have been thinking about this catch 22 situation.

the mitigating factor is that with economies booming, sentiments will improve, stock mkt will cheong, industries will be manufacturing at full speed. when that happens, interest rate up will be mitigated by all these feel good factor.

inflation will also set in (crude oil up, commodities up) when boom time. so ppty will appear to be cheap by then.

Interesting discussions!

The ironery is that Europe and the US by their current state are not ready to climb within the next 2 years. Most economists think they need much longer.

Should they start to recover, the flow of funds back to the west and the increase in interest rate will have serious implications to the highly geared and inflationery economies like ours. As global investors, they would take profits and invest in cheaper assets with more growth potential.

Just my thoughts!

[Shanhz]

Interesting discussions!

The ironery is that Europe and the US by their current state are not ready to climb within the next 2 years. Most economists think they need much longer.

Should they start to recover, the flow of funds back to the west and the increase in interest rate will have serious implications to the highly geared and inflationery economies like ours. As global investors, they would take profits and invest in cheaper assets with more growth potential.

Just my thoughts!

that is true. in all likelihood, the worse the economy, the better for sgp becoz funds flow here to safe haven. when things pick up, funds outflow. the angmos go home. etc etc..

anyway, everything points to 2015/6 as a critical year. low interest rates expire, huge housing supplies come on board. even election also in 2016.

[Leeds]

that is true. in all likelihood, the worse the economy, the better for sgp becoz funds flow here to safe haven. when things pick up, funds outflow. the angmos go home. etc etc..

anyway, everything points to 2015/6 as a critical year. low interest rates expire, huge housing supplies come on board. even election also in 2016.

I like your take.

However, the longer it takes for the west to recover, the slower will be our economy to the extend of entering into a recession since the world still depends on the west for consumption.

It is really a catch 22 situation.

[auroraborealis]

US anything is possible at least for current generation; silicon valley was discovered "overnight", so was Lehman crisis

EU I'm not so optimistic, they took 10yrs to settle monetary union n EUR thingy
another 10yrs to discover it's flawed
will prob take another 10yrs to sort out banking & fiscal union
when that's done, they'll prob power up the world
but until then, mayb just muddling along with GE support
the bloc is basically balance n self sufficient but rich subsidizing poor

Interesting discussions!

The ironery is that Europe and the US by their current state are not ready to climb within the next 2 years. Most economists think they need much longer.

Should they start to recover, the flow of funds back to the west and the increase in interest rate will have serious implications to the highly geared and inflationery economies like ours. As global investors, they would take profits and invest in cheaper assets with more growth potential.

Just my thoughts!

[Shanhz]

I like your take.

However, the longer it takes for the west to recover, the slower will be our economy to the extend of entering into a recession since the world still depends on the west for consumption.

It is really a catch 22 situation.

thanks.. you have a very great analysis of the situation too.
yes, either way, we are F-ked.
so how? buy or dun buy?

[Laguna]

The fundamental difference is the value between the East and the West.

The West, more of party human, spend the earning of futures in today...
The East, work day and nite, and save every cent...

[Leeds]

thanks.. you have a very great analysis of the situation too.
yes, either way, we are F-ked.
so how? buy or dun buy?

I think for the pros, the decision to buy or sell is not difficult. They look at cash flow. For the average investor, it is much more difficult. They often look at yield and capital gain so decision is more difficult and often get caught by the market.

[Shanhz]

I think for the pros, the decision to buy or sell is not difficult. They look at cash flow. For the average investor, it is much more difficult. They often look at yield and capital gain so decision is more difficult and often get caught by the market.

don't agree... although decision point may be different, variables are the same. even for pros, when mkt falls, cashflow gets hit. i know of cases in 2007 when rental tanked by >50%. so, it is always back to how much buffer you have. comfort zone in my view is always 50% LTV with some spare cash for buffer for low rent or no rent period.

[Leeds]

don't agree... although decision point may be different, variables are the same. even for pros, when mkt falls, cashflow gets hit. i know of cases in 2007 when rental tanked by >50%. so, it is always back to how much buffer you have. comfort zone in my view is always 50% LTV with some spare cash for buffer for low rent or no rent period.

No worries!

For pros, they buy low (buy resale with immediate yield), sell high (when target met), take profit and enter market again when is conducive.

For the average, they often buy high (buy new or late stage), hope to sell higher (TOP) and hope for profit.

[Shanhz]

No worries!

For pros, they buy low (buy resale with immediate yield), sell high (when target met), take profit and enter market again when is conducive.

For the average, they often buy high (buy new or late stage), hope to sell higher (TOP) and hope for profit.

agree. interestingly, i have taken position in pro (buy resale for immediate yield), but took profit and went into average (buy new). but buying for own stay now, rent out HDB. bad investment decision, but good for the heart.

would you choose investment decision as the topmost priority (ie: forever stay in HDB) and collect PC rental, or is a nice house that you like a bigger priority?

[Leeds]

agree. interestingly, i have taken position in pro (buy resale for immediate yield), but took profit and went into average (buy new). but buying for own stay now, rent out HDB. bad investment decision, but good for the heart.

would you choose investment decision as the topmost priority (ie: forever stay in HDB) and collect PC rental, or is a nice house that you like a bigger priority?

When one is young, better to choose investment and live modestly. By the time you are older, you should be able to live in a bigger house and still have your investments growing.

Somehow, it is difficult to try to live modestly in todays' competitive world especially when your "value" is measured by where you live, which school you came from and what car you drive

[condolisa]

For me, if I am over 45, I'd choose to enjoy my PC first. If I am under 45, I'd delay gratification and live in Hdb

[roly8]

When one is young, better to choose investment and live modestly. By the time you are older, you should be able to live in a bigger house and still have your investments growing.

Somehow, it is difficult to try to live modestly in todays' competitive world especially when your "value" is measured by where you live, which school you came from and what car you drive

well said.

[indomie]

Few years back I was active in buying properties. I was an optimist then... Still I couldn't believe the rate of increase of property prices today. Even I could afford daily expense, still I couldn't believe they increase so much.

When I though I was having a home run, I was merely had a narrow escape. I had imagine all the gains and passive incomes would be a significant boost in quality of live. The truth is I just maintaining.

[chestnut]

Few years back I was active in buying properties. I was an optimist then... Still I couldn't believe the rate of increase of property prices today. Even I could afford daily expense, still I couldn't believe they increase so much.

When I though I was having a home run, I was merely had a narrow escape. I had imagine all the gains and passive incomes would be a significant boost in quality of live. The truth is I just maintaining.

Bro, sorry, I really catch no ball?

If u had not a few, u were maintaining??? You already beat like crazy... That's why I say I catch no ball?

[indomie]

Bro, sorry, I really catch no ball?

If u had not a few, u were maintaining??? You already beat like crazy... That's why I say I catch no ball?

I was hoping to be able to retire young, but I still need my day job to keep up with inflation. My children now grown.... They probably need their own place, so the properties will goes to them one day. So all the achievements of today will probably be tomorrow necessity.