October 2008
October is the time for crashes. The last time we had a horrendous
stock market crash back in 1987 I was chuffed as hell as I was sitting
holding gold stocks, and they were immune to the crash.
This time round I am holding so few stocks it doesn't really matter. I
was going to sell my Japanese REITS a month ago but for some stupid
reason I didn't, so I have suffered a 60% loss there. Luckily I am only
holding two units so the loss is not serious.
What is happening to the property market though?
The UK market is down selectively, but you can reckon on real prices
being down 20-30% before the fallout stops. Now is not the time to
sell. Now is the time to keep your head down. It is certainly not the
time to buy. And we have another year of falling prices before we start
bumping along the bottom.
The American market is still heading on down. However, there are some
intriguing deals around. There are situations where you can buy into
properties and rent out to those people displaced by the flooding in
Florida. After holding for six months you get a rebate. There are other
deals where you buy repossessed property and then offer a mortgage to a
prospective purchaser. You sell on for a 30% uplift in the price and
collect repayments on the loan for the next 30 years. There is an
option to refinance yourself after two years.
These deals are handled by specialists, and I can forward details to
those of you who are interested. However, I still think the USA is very
risky and the dollar cant possibly hold up for long.
The Eurozone is in economic trouble as well. The euro has dropped in
value quite considerably over the past few weeks, and the economic
slowdown may well cause some serious rifts within the single currency
area. This will be an interesting testing time for the single currency.
I'm not taking any bets. This is uncharted territory. In theory the
currency should start to fall apart, but who knows.
I am finding my investments in Eastern Europe are still doing very
well, altho this is not a time to take on any fresh investments in that
area.
If you do want to buy abroad do keep well clear of tourist areas. They
are the zones that are going to suffer. Stick to local markets in
flourishing towns, especially capital cities.
Russia and China are experiencing a spot of bother at the moment.
Brasil's currency and real estate prices have also come back, but I
regard that as a buying opportunity, tho maybe not until next year. And
India is booming despite the stock market collapse there.
What all this shows is that soon we will have some wonderful buying
opportunities in stocks and shares. If you want to make money in the
future, stocks are going to be the place to be, but not yet.
I'm lining up my resources so as to be ready when the time is right.
Meanwhile I think I'm off fishing again while the world blows itself up.
best wishes
john
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