Not so different nonrecourse, I understand the perpetual true value of gold and silver, I also understand the madness of crowds and what they can do to a healthy normal market place. If gold goes well beyond it's intrinsic historical value I will not waste that free gift, I will sell (not all) and convert the profit into something undervalued. Gold and silver were very undervalued when I found out about them and now I believe gold is at or about it's inflation adjusted true value. If it doubles or quadruples from here there will be no reason in my mind not to convert some of those gains into arable land say. Imagine if you held thousands of ounces of ag back in 1979 and you made a choice to exit when you recognized the bubble topping. You could have sold half or better of your holdings and then bought back 10 times the amount in just a year or two. Gold and silver may be money still but they no longer act like money, they act more like commodities and that is the reality. Silver at $5/oz ? That was the lowest price in all of recorded history and there was no valid fundamental reason for it to go that low. Fundamentals mean very little anymore sadly. Past history must always be tempered with the reality that we live in a world controlled by debt flows, the mass media, big interests and public sentiment. This is my belief for what it's worth.
Another good post notanother. Back in 1979/1980 I had a mature age student grant $3000 that I wanted to use the proceeds on silver futures. At that time silver was around $8-12 an ounce. My father got wind of my speculating and tore strips off of me so I didn't go ahead. A few months later with the Hunt brothers manipulating the market it went to $50 and ounce. I was so angry I went out and blew my grant on a $3000 SLX camera to get up my fathers nose. It was a case of me bitting off my nose to spite myself and for the next two years while in full time study I struggled to pay my way. Of course my father was correct. He despised wall street and all it stood for. Had I speculated and won It would have set in train a mindset that would eventually have brought me unstuck. I still have that SLX OM1 Olympus camera Kind Regards non recourse
I wonder if your father got burnt in stocks in the preceding decade? It seems every generation gets shafted at least once by the big players, you really have to have your wits about you. You were lucky nonrecourse to have had that insight back in the day, it usually takes till middle life to see what's really going on and get in early, if you see it even then. I once had a client who owned 3 small residential unit blocks, still owns two I think? About 4 years ago I showed him some charts and commentary on silver ( I was a PM. evangelist back then, nothing to do do with the work I did for him.) I figured with the RE market topping out he could use some diversification. Anyway he pushed the papers aside and proceeded to tell me a rant about how he had bought a few KG of silver back in the late seventies, right at the top, lol. and how he would never go near it again. The deadly closed mind! He could have tripled his investment by now, all cash, no tax. At his age It would have been a boon too. I have listened to literally hundreds of Financial MP3's nr and one thing stands out in my mind, a comment made by several of the analysts and investors. They said to succeed you need a measure of humility You have to be able to admit when your wrong, and by so doing you will be able to cut your losses and exit a bad investment rather than hanging on like a bulldog until you lose it all. That's why I say I really don't have a clue what the future really holds, perhaps we will come back and be more profitable as a nation as a whole after this mess now unfolding, but perhaps not. Perhaps our day in the sun is over and we ( The western British/American club ) decline like so many other empires have, in fact like ALL empires have before us. Either way there will a core of people doing "OK" thank you very much. I hope I am among them. Don't mind me, I've just had a busy day at work and am feeling morose.
My father was born in 1920 and saw the great depression first hand on the farm.He only ever had three years of primary school education coming from a family of 9 sibblings. But what he did have was street smarts/common sense and an ability to read people. The share market to him made no sense unless you had a controlling interest in the company. His term for lawyers was liars and those who peddled financial products shake down artists. Both my parents despised banks and insurance companies because they saw so many families lose their farms in the Ottawa valley in Canada as the laws of the day were stacked against the honest working people, I'm lucky because I married a girl with much the same outlook. With my property investing whenever I start trying to over reach out over the finacial abyss she pulls me back into line. I'm gruff and straight to the point but I initially trust everyone until they prove me wrong. My wife has all the airs and graces but trusts no one. I'm better crunching the numbers and finding the opportunities while she is the negotiator and teasing out the fine print in contracts. We all have clay feet and my mistakes I call my education fund. The problem with most investors is they hold onto their dogs and sell the winners? Most are really speculators because they can't see past the capital gain. We have sold a few properties in our time but the reason for selling was the internal rate of return or lack of. Fine to start with it negatively geared but the yield has to be such that by the fifth year there is income that can be used to accelerate paying down the debt on the asset. No good having a property that has doubled in value that is bleeding you dry. Cash flow is king. Capital gains are often fools gold because you have costs associated with selling the property, tax, and costs associated with getting into the next property investment. I just shook my head when I saw people back in 2006/2007 selling income producing property that was owned outright to put a million dollars into their super fund with the proceeds then invested in the share market where they had no control. It was a huge tax windfall for the Howard government at the time. Kind Regards non recourse
I think we will go full circle back to your fathers outlook on banks and stocks nr, I personally see a repeat of the 1930's, probably worse since we wont have the dirt cheap oil to rebuild with. That was interesting that business of investors selling their properties to transfer the money into super. It was a real sheep herding exercise, just offer the right incentives and they all bleated their way into the shearers shed. Back of it to I think was a desperate attempt to keep the property markets booming along with all those tax revenues and the pumping up effect it had on the stock markets. What I found particularly humorous was the greedy ones who put the cash into LPOs only to see it all vanish in 08. Seeking capital gain is like shorting stocks IMO, you have to be very well informed on the instrument and have a fairly short horizon. Property investment rarely fits this model I am afraid.
bit of a thread dredge, but Westpac are lending for SMSF at 20% deposit. If you can positive gear a property with your super and you have a long term outlook 15 years plus til retirement why wouldnt you invest? Worst case scenario you own or near own a property when you retire. You choose how much of your super contributions go to paying down the loan more quickly? Couple this with a 10-15% holding in gold/silver and you have a nice little fall back on devaluation
