Shares or Property- Economic Clock

Hi to all fellow investors !!

Im after opinion on a go forward direction.
Which market ? Im just a bit confused !!

Looking at the economic clock 1 market should follow the other. So with the interest rates high and market dead on the property side of things and the sharemarket crashing to massive lows for years just what part of the cycle are we in or heading for at the moment. Im just not sure where the money should flow to drive markets. They say that history repeats but is the current status quo one of those "yeh buts" ( Tech wreck senario's ). Where to now ?

Cheers

Pete

Pete

I think the economic clock is confused this time around.
We would need either 2 pointers (1 for shares + 1 for property) to show the position of our current economic cycle.
What makes it also harder is the fact that this time around we have multiple property markets.

I believe shares haven't bottomed yet.
Properties aren't the flavour of the month either so I think that the patience of people with high holding costs will be tested this year.

Cheers

I agree with BV ... the property market has become very fragmented, mostly due to localised "external" influences (external to the normal economic cycles) - particularly in the resources states of Qld, WA and SA.

Even within each city, the market is behaving very differently - with some areas seeing record prices still being set for properties, while in others, prices have dropped significantly.

The share market is also reacting to external forces (credit crunch, oil prices), much more than it is to our local economic conditions.

Once the external forces in property and in the sharemarket revert to more normal levels, the economic clock will get back into synch again.

Thanks guys,

It not an exact science is it !!
Im just feeling the squeeze at the moment in both fields and tryin to work out which area to liquidate out of slightly.

Any other comments on this thread would be much appreciated.

Cheers

Pete

There are 3 cycles:

Property
Shares
Cash

I'd have to say we are in the cash cycle at the moment and could well be for the next year or more.

Well it depends on your particular situation and your long term plans.
If it was me I'd liquidate the shares particularly as the selling and buying costs are low and also because I can still possibly buy them back for less.
Also, if I did sell at a loss, I am locking in those losses and can use them to offset future capital gains.
I'd probably hold on to the properties and when the share markets start to switch to recovery mode I'd use the equity in the properties to buy shares.
On the other hand, by then the interest rates should be easing off a bit and I'd be tempted to buy more properties.
Cheers

What in what order does the pattern of Property, shares and cash cycle?

Cheers,
Eddy

In that order.

East coast property peaked out about Dec 03, the sharemarket run started Mar 03, peaked out Nov 07, currently in cash cycle (althrough rates have been rising for some time), some are expecting rates to start coming down next year.

I've only been around for 1 cycle so not sure how accurate it is. I remember watching an old Peter Spann DVD which he made in 98 and he was talking about the cycles. He said they generally last 4-7 yrs, and back in 98 he was talking about how some property suburbs were just starting to take off.

He has also been expecting the cash cycle to come around soon. Although I think it may have come a little earlier than he expected.

There is a bit in the media about property forecasters expecting some growth in the coming years as population increases are expected to create demand.

I think he was saying the cash cycle should come around 2009-2010.. then late last year he revised his view delaying it to 2012... which seems he got wrong..

With the looming housing shortage, I would say we are coming into the property cycle out of the cash cycle soon.

So start to buy up those houses again!!

CRC

With the current housing shortage I'd say that rents will continue to increase
and this is good for us investors but this doesn't mean that property prices will go up.
Property prices are already quite high and the cost of money is very high as well.

We have very high holding costs and we are also threatened with even higher interest rates so from the investor's point of view, property is not looking attractive.

I think that unless the governments offer incentives for people to buy properties we will be in the cash cycle for a long while.

IMHO