Bank lending policy

Do you mean "jugular"?

maybe eh, I don't even know if it's actually related to peoples ages, i just jumped to that conclusion.

fairly interesting talk show on it...

Yes, an excellent book.

You can, but as I said, you can be a decade out long term, and even when things are clearly close to a turning point, they can run on far longer than one might think at the time. Thus while you get a general picture, it's not a great deal of help if you want to get rich by market timing.

That's how I see it. One generation goes bankrupt. They never take out debt again and bring their kids up to save for what they want. The next generation after that see it all as ancient history and repeat the cycle. The vagaries of business cycles, government interference and macro events map onto that and perturb it to a greater or lesser degree, but it is a three generational cycle in economics and psychology.

People are people, and unless they're scared and suspicious, they're all too ready to believe that there's some way for us all to get rich other than working and saving:

Fred: hey Barney, I have a plan that'll make us both millionaires.

Barney: yeah Fred, how's that?

Fred: I sell you my house for a million and you sell me yours for the same.

Barney: But Fred, we don't have a million.

Fred: That's the cunning part Barney. You write me a cheque for a million and I'll write you one. Then we swap houses.

Barney: But I can't pay you a million Fred.

Fred: Well y'see Barney: we both have cheques for a million and we both tear 'em up.

Barney: So?

Fred: Then we'll both have houses worth a million, and we'll both be Millionaires!

Replace "houses" here with stocks, tulips or whatever, and extend the swapping arrangements a little further, and that's all that happens in a bubble. Nothing really changes except the numbers we write on the cheques.

FoFP

That's something that I've wondered.

FoFP

Nope:

Are they directly comparable? They aren't making any more land compared to their ability to split or dilute stock, also a house is somewhat more tangible than a piece of paper and serves as a secondary purpose. A rubbish stock is only good for kindling (assuming you have the certificates).

Of course that may just be some underlying logical sentiment that helps perpetuate the bubble. Wasn't there similar theories in the late 90's leading up to the crash... i.e. that pension funds simply have that much capital to invest going forward that it's impossible for equities to back track on any great scale, I recall such notions.

as buffet says eh, don't try and time the market!

isn't the a 2 generation thing? cycling between banktrupts and spendthrifts?

lol - yes quite

btw, how old are you? Do you own a house? And have you put this into action by buying up gold?

Only joking, but, funnily enough, Google also wondered.

As speculative vehicles they are.

They aren't making any more in Tokyo, but at a zero interest rate, prices fell 90%. Land and house prices have fallen by that much in Britain in previous crashes. They fell by that much in Florida in 1926.

In short, land isn't any less susceptible to being a Magic Money Token because they don't make any more of it. Arguably the reverse is the case.

Most of the stocks in stock market crashes don't represent rubbish, but represent a company producing wealth, just as a house produces shelter. What happens in a bubble though is that because of mass availability of credit, and subsequent speculation, the assets become overpriced. In the end the assets simply return to a more reasonable price (there's usually fairly scant reasons for their sudden ascent anyway). This is only a problem inasmuch as where debt is owed, it doesn't similarly shrink in value.

In short: don't get distracted by the assets (people have speculated in flower bulbs in five bubbles that I've heard of), follow the money, or rather, follow the credit that people imagine is money.

More than likely. There's usually some reason that one asset is chosen rather than another. Tulips were actually rare in Europe when the Tulip Bubble started out.

Yep, some guy wrote a book called "Dow 36,000" based on 'em.

In 1986, I recall someone saying that because Japanese stocks and property were so valuable, and bound to get even more valuable, the Japanese would soon be able to buy all of California just by selling the golf courses in Japan.

When a graph is pointing at the Moon, watch for a crater, not a Moonbase.

FoFP

Older than 40 ;-)

Nope.

Yep.

FoFP

Nice, a man who puts his money where is mouth is.

You'd very much like the property markets and trends board on the motley fool. Just reported on there today that London property has had the first year on year falls this month (according to rightmove)

A good deal is still in cash. Our plan is basically to buy a house for cash when this thing bottoms out.

Hmmmm. I've been wandering into

every now and then but I doubt I have time just now to go further afield. What's the gist of the mood there?

FoFP

very very bearish. it's a mixture of STR'ers (sell to rent) like yourself, and young people who didn't get on the property ladded before the boom. It's because of the second lot that I'm a bit dubious and like to read further a field....as I'm sure your aware, people who want something to be true can look for evidence supporting it and usually find it. can be quite entertaining at times. I've certainly never heard of k-waves as a reason for a property crash there though, that's a new one on me.

"M Holmes" wrote

Which previous cycle showed *four* crashes all within 20-30 years? [Akin to stockmarket 1987, houses 1990-, stockmarket 2000- & houses 20??- ... ]

according to the theory, these are all pin pricks compared to what's coming.

"Jo Reed" wrote

Oh, OK. So, if "what's coming" is a HUGE house price crash, then house prices must have some way to go (upwards) yet, before any HUGE crash could happen!!

why's that? Presumably because you can't imagine the average house price dropping to 15k? This I suspect is a lack of imagination on your part!

Most historical price analyses will show you either land prices or stock prices but not usually both.

As I've said, the 1929 crash was preceded by the 1921 crash which presaged the final blowoff bubble. There's some evidence that in other cycles there have been similar disinflationary crashes preceding the deflationary ones which finished the bubbles.

As for there being both stockmarket and house price crashes in this cycle. Many markets will correlate with a credit bubble because when credit is widely available, people will target assets in general. The art markets for example have often crashed around the times that stockmarkets crashed.

What I've said here is that this time the primary asset in the credit bubbe is housing, because that's what people can buy by putting 10% down. Stockmarkets will rise with available credit though and will tend to track the cycle.

FoFP

"M Holmes" wrote

So that's *three* that time?

"M Holmes" wrote

But have their ever been *four* crashes in the same cycle??