The endgame in stacking.

All money is created out of thin air. Even with PMs - when ore is dug out of the ground and refined it is worth more than when it was just a rock. When that PM is turned into a Lunar Rabbit - we all know it is "worth" more than the total cost of the PM and it's refining/manafacturing cost. When "Bill's Bullion Barn" buys it from the Perth Mint and resells it to us at a profit - we dont complain at him "creating" money out of thin air yet this is exactly what he is doing - I mean he hasn't added any "value" to it - why is it that we have a problem with the banks creating it out of thin air?

malachii

 

I guess the difference is when "Bill's Bullion Barn" sells bad PM's (debt) he doesn't expect the Public to bail him out so he can protect his bonus for selling bad debt.

 

At this moment in time, that's where i'm at too.

I've used debt in the past to "gain" myself an income. Of which I'm grateful for it.

But, the plan is to use PMs and spare fiat to eventually eliminate that debt, and be left with the income stream.

10 years ago I had no debt, rented house and no real income (by choice).
Today I have large debt, a house and a good income.

It's getting time soon to get rid of the debt. We're trying several approaches.

1. Silver - buy now, then sell it when it's worth more than when we bought it (above inflation) & no doubt there's some other percentages we should be aware of before selling.

2. Purchase paper shares, bits at a time, in the hope of increasing the fiat supply to bring down debt

3. Any spare fiat lying around, which isn't much after 1 & 2, use it to pay down debt.

I don't mind being debt free and have no investments. As long as I have an income stream we can eat, drink and be merry on.

I also don't mind having the debt at the moment, as we can come up with the fiat each month to cover the repayments. Painful as it is to hand that over to the bank, but, we did, afterall, borrow it from them for our own gain.

But, I like intelligencers plan of keeping a 10-20% core investment of PM, just for the long haul and protection.

Very much enjoying the banter. Even Contrarian has valid points about debt. As those "smart" enough to know how to use it can do well with it.

 

There are some that say it cant be done.

There are some that do it unsucessfully.

And there are some that do it sucessfully.

It's up to you which group you belong to.



C

 

Luck has nothing to do with it. We're not playing Russian roulette here. At least I'm not anyway.


Lets say the worst happened. I lost my job tommorow and was unable to get another one and property crashed 30% overnight.

For a start there'd be no panic because I always have an escape plan if the worst was to happen.

I've got 2 years salary stored in silver and cash. That means I've got 2 years to get out of trouble. Let's assume that I don't get another job and property doesn't turn around in that time.

My mortgage is over 3 seperate properties. My PPOR and two parcels of land. My LVR is low enough that I could sell the two blocks (30% under the current market) and have enough left to pay my PPOR out with some cash left over.

If the worst happens then I'll be fine.

I personally made every decision that has enabled me to get into this position. It's not called good luck, it's called good management.

I wont even go into the potential upside of my position over the long term. Most here seem to dwell on the worst case, so I'm happy to play by them rules.

I'm not trying to say that my current postion is all that exciting. I'm saying that it can be done by an average Joe on an average salary.



C

 

Theres still an element of fortune or good luck whether you acknowledge it or not.

You got in at a time that allows you to have your current position. Say you'd gotten in at the top of the market and all your properties still had an LVR of 90% or more. You'd be in a different state of mind I would say.

 

+1

 

+1

 

That's not right at all.

I know it's not wise to enter at the top of the market with a high LVR so I wouldn't do it. That's good management.

You've said you beleive that more people get burnt by debt than benefit from it? There's a lot of unlucky people out there!

Auspm makes me laugh on this topic. The debtors who have done well are just lucky. But those who run into trouble "fall on their own swords".

The concept of luck is used by people to make them feel better about their own situation.


C

 

Well said Contrarian,

Too many people think investment is about luck - that's pure crap! You plan for the worst and hope for the best - but to rely on luck or accuse others of relying on luck is just plain wrong.

There are those who make it happen

There are those that watch it happen

There are those that say "What the F*%# happened".

Your choice - which one you are?


malachii

 

There's definitely an element of luck in investing, however it's about stacking the deck on your favor, playing the odds, and sometimes making your own luck.

 

Do you honestly think you are better at picking tops and bottoms than the average Joe? There is cycles and luck has a certain amount to do with it.

However, with that said I honestly believe that we all are given the same 'luck' persay, it is good management that strikes while the iron is hot and can capitalise on the situation. No doubt in 10 years people will be calling us 'lucky' for investing in Precious metals when silver was still less than $50. I admit it is a certain amount of luck. It was lucky that I am in the position to be able to invest in some PM, lucky enough to read the right articles and 'take the red pill'. However it was good management that has enabled me to (hopefully) recognise a profitable opportunity and invest accordingly.

 

i agree guys my saying is winners make it happen losers let it happen or losers only want to win on saturdays not the other 6 days of the week. Great advice.... plan for the worst & hope for the best . to many go into things with only plan A i dont go into anything without plan B & C. A few times plan B has fallen on its arse for me so now i have 3

 

No - I dont believe I am better at picking tops or bottoms (very smelly - dont try this!) but I do believe that I can limit my loss and maximise my gain. Investment is not about picking tops or bottoms (there we go again) but about positioning yourself to take advantage if things go in your favour or to be able to cope with and manage things if they go against you. No one can see the future but we can all make decisions to allow us to take advantage of probable scenarios and outcomes.

You plan for the worst case, hope for the best and manage it either way!


malachii

 

Luck - Labor Under Correct Knowledge

Its about being educated enough to see the opportunity, whether it's an increase to first home owners grant starting a housing boom or changes in tax rulings affecting mining shares. It has nothing to do with luck.

 

I don't beleive I can pick tops or bottoms. I do beleive that I can pick the overall trend of cycles by thinking differently to the average Joe. The fact that we are all here means that we can see what the sheeple can't.

Did you win the lotto? If not, then you probably made a decision in the past that has enabled you to be in a position to buy PM's.


C

 

Actually, what I said was...

I think people around these parts (especially those who did well in the property market) don't quite realise just how lucky they were.

Government to back your investment with tax payer dollars & maintain a captive market to realise your profits?

That's the sort of 'no lose' environment most investors can only dream about. 'Skill' my arse!

Any moron with a pulse and the ability to sign their name could have made a fortune in that environment and honestly, it looks as though many did.

 

Your jerking my chain aren't you

malachii

PS If the morons are the ones who made the money - you're saying it's the smart ones that didn't take advantage of the "no lose" environment?????? Doesn't seem that smart to me.

 

Over the last 10 years I've made just as much money out of shares as I have from property. I suppose that was just luck too.

When your silver investment pays off I'll be one of the first to say well done because It's obvious how much research you've put in and how much sacrifice you've made to make it happen. I wouldn't suggest for a second that you just got lucky.

C

 

Different investment though mate.

Government isn't backing my silver purchase.
Government isn't manipulating the market in my advantage either, in fact, it's arguable that the wider market is manipulating it down so I don't realise a profit.

But we're discussing apples and oranges here.

Do you honestly believe that the Australian property market was anything other than completely artificial?

That the collusion between the lending market, government and media/lobby groups who all had a vested interest didn't completely rig the market so that it wouldn't lose?

Let's be realistic here for a moment realise the virtue of the business accumen behind property investment in this nation!

1 - Lenders were willing to lend for property almost without restraint. Even 105% loans were common for a period there, no cash down. No security other than insurance. Some were even no doc loans!
2 - Lobby groups brought the government into the fold with Tax deductions & financial incentives via FHOG to invest, further reducing barriers to entry and increasing profit margins for existing stake holders.
3 - Media groups were let off the leash with propaganda running without restraint on the virtues of property investment, without discussing the pitfalls. Further encouraging more investors into the market.

I don't think people are willing to properly acknowledge the fact that for nearly 20 years the entire property market in this country was a rigged market ponzi scheme, deliberately manipulated so that it didn't crash.

Whether you're looking at it from an economic perspective, political perspective or investment perspective is irrelevent. We're talking about a market that was rigged to always succeed and any losses to be realised on the public purse.

Our government will BANKRUPT this country before it allows property to fail and we're even questioning whether it requires a shred of intelligence to invest in it???



Our Silver and Gold investments are not supported like that in the slightest, so an attempt to draw any parallel is really stretching the integrity of the arguement I believe.

Whilst it's absolute common sense to bet on a sure thing from an investment perspective, to assume that it bears out a shrewd investor ideology is probably stretching things a bit far.

I stand by my rationale on how much business accumen was required to see the value of investing in Australian property over the last 20 years.