Some Recent Media Headlines
House prices 'to keep falling until March' - NZ Herald (Oct 08)
Recession for longer - NZIER - BusinessDay.co.nz (Oct 08)
NZX hits three-year low after another Wall St slump - NZ Herald (Oct 08)
Are employees taking the brunt of an economic downturn? - NZ Herald (Sept 08)
Boom-bust cycle means a few more tough years - NZ Herald (Sept 08)
Economy is bad. We are heading towards a long recession. Businesses are laying off their employees. US Stock market has just crashed. House prices are falling. Things are looking pretty bleak, right?
Well, it depends. For most people things might not be so good. But there are two sides to a coin and if you will learn to be flexible, and learn to be counter-cyclical you may have a good time when things are going well, but even better off when things are going wrong (well, for most people anyway).
So, let's look at the other sides of the story:
- Economy is bad - Well, in many countries, their economies are doing better than ever! If you look you will find how well countries like Dubai are doing. And even if economy is bad, some businesses are still doing as good as, if not better than, before. People still need to buy food, and they still need to live somewhere. I know many Chinese takeaways are doing great, and some regions that have very strong rental markets.
- We are in for a long recession - In the recession, many businesses, especially those in the Consumer Products Sector, are not doing so good. And what do they do to get people to get into their shops? Sales, 2 Years No Interest Finance, Crazy Trade-In, and some more Sales. So, if you have always wanting to buy, fix, or change some stuff in your household, it is a good time to do if you have the money to do it.
- Business are laying off their employees - Businesses must tighten their belt to make sure they will survive the downturn and stay in business long enough to see the upturn again. If your boss is keeping you, while firing your other colleages, then it is a good sign that he/she sees you as an intelligenec, hard-working employee. With less employees, you should be able to get more hours, receive more responsibility, and a better chance to get promote up when things are great again.
- US Stock market has just crashed - Many stock exchange markets around the world will be impacted by this, and things are very shaky if you have most of your savings in them. But then it represents to invest in many companies at a very good price. That is why Warren Buffet has just purchased a big chuck of GE.
- Hourse prices are falling - Property prices have been fallen off from its peak in Dec 07, and we are very unlikely to see it turns around anytime soon (soon meaning within a year or so). Many property developers and investors, who have been leveraging up to their neck are now struggling, to say the least. However, it is very likely that many of these investors have been paying "overprice" for their properties, and in many cases, the decisions were based on "emotions" (greed), and expectation (hope) that price will continue to go up.
Many years ago, Warren Buffett, the world greatest investor was quoted saying:
"After all, you only find out who is swimming naked when the tide goes out."
The truth is, when the market is booming, it is probably the worst time to buy, be it property or share. Everyone knows that we should "buy low and sell high", but apparently it is easier to say than do.
If everyone knows that the best time to buy is when the market is not doing so well, why has not many people been buying lately? Is it because they believe the market will continue to come down and they want to buy right at the very bottom of it? Is it because they do not know what to buy? Is it because they cannot afford to buy?
Note the words that I highlighted. They are "believe", "want", "do not know" and "cannot afford". Then, consider the following sentences carefully:
What you believe does not make it so. No one will ever know what will happen in the future. It is always a good time to buy a good deal. And there are plenty of those at the moment.
What you want is based on your emotion. Instead, think about what you have to do to change the course of your life today.
You do not know what you do not know. So, get educated. Ask people who have done it. Learn from your mistakes. The biggest mistake is to not make enough mistake to learn from it.
You cannot afford to buy what will change your life for the better? Should not the question be, "Can you afford not to buy", instead?
If you will agree with me that property investment is one of the best investment you can ever make, and that now is the best time to buy property at a discount and one that will provide a good cashflow so that you can keep it for the long haul, then please re-visit this blog again as I will share with you in the coming weeks the ways in which that can be done.
I will end this blog with some of the recent media headlines, that may not be so flash as the previous ones.
Some Recent Media Headlines
Dubai aims to top its own world's tallest tower - NZ Herald (Oct 08)
Dubai ups the ante with $2.2b hotel on Palm island - NZ Herald (Oct 08)
Buffett pours $4.4b into GE NZ Herald (Oct 08)
Food for thought,
Chayot Ing-aram
BBS (Honours) - Finance
Property Investor
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