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Rubbish - ofcourse it's relevant. How else is afforability in its purest form to be measured?
The point I am making is some people look at the average incomes of a country and compare it to the price of a property they are considering to buy. So my point is - I wouldn't let the average earnings put me me off buying a property.
this has no relevance in determining what position of affordability the housing market is atOk - I know i'm going off topic but i have to respond to teh above.
The point I am making is some people look at the average incomes of a country and compare it to the price of a property they are considering to buy.
They then conclude the multiple is too high.
WHat I am saying is if you were to buy a house worth 500k and compare that to the average income of 35k a person may well decide to back out of the purchase.
However you will not be selling that house onto the guy who is on teh average wage - you will be selling that onto a guy who is in teh higher earning bracket.
So my point is - I wouldn't let the average earnings put me me off buying a property.
ok,but what is the most likely outcome in say..12 monthsThe worst thing that could happen is the whole financial system could be in serious jeopardy? What will a 2.3Trillion USD bond market default cause? What affect will that have on markets? Also as mentioned, American banks are sitting on 120Trillion USD of credit derivatives, if any of these default - Can the Fed just keeping printing its way out of trouble, and rollover and rollover on loans? No, it can’t!
Markets have low p/e valuations, that's the only upside. But until these credit derivative issues have washed themselves thoroughly - I'm sticking to safe haven plays of Gold. It keeps rising as America keeps going down the toilet and is a defensive play/position. The downside is utterly compelling, as credit and recession problems are going hand in hand. Study the facts and face reality, long term things aren't going to be pretty.
ok,but what is the most likely outcome in say..12 months
yes google has fallen from over 700 dollars to 550. its still at very high p/e ratios. whats so funny about that??? do u not remember the dot com boom and the p/e ratios that existed there for a long period of time????
u should read some stock market books. winning on wall street, how to make money in stocks, the book about jesse livermore. they all say the same thing!! stocks that do best have very high p/e ratios
Back it up with some facts. Otherwise you are just blowing hot air.u should read some stock market books. winning on wall street, how to make money in stocks, the book about jesse livermore. they all say the same thing!! stocks that do best have very high p/e ratios
No doubt Livermore would also have been telling us about the new paradigm in new tech stocks, where you don't actually have to make any money for the stock to be worth anything.A contrary view of Livermore's life is provided by Paul Sarnoff. Sarnoff says that Livermore was a hype merchant and that many of his brilliant successes were gross exaggerations. He states that Livermore did not in fact make much money during the 1929 crash as he was heavily hedged. He accuses Livermore, at the end of his career as being little better than a tout.
If you let your winners run, is it not inevitable that you will only sell them at a loss?he is a legendary trader that made and lost fortunes serveral times on the markets. its a great read that basically re-enforces the same comments that all the winners make
1. cut your losses quick
2. let your winners run
as far as im concerned the market runs on psychology i.e. the herd mentality. so if investors think that a stock has great growth prospects then they will buy it regardless of p/e ratio. it will continue going up until an earnings report beings them back to the real world i.e. vmware. a lot of money made on this stock while it went thru the roof (on ver high p/e ratio) , then they missed earnings and everyone sold out
ur prob one of these guys that spends their time trying to find a giant of tomorrow . instead of trading on strong stocks during market uptrends
On page 2:No doubt Livermore would also have been telling us about the new paradigm in new tech stocks, where you don't actually have to make any money for the stock to be worth anything.
That's a bit silly and you'd realise that if you read the book. Livermore was a trader, not a cheerleader. There's little doubt that, were he around at the turn of the century, he'd have been long during the bull market before shorting the life out of the collapsing dotcoms on the way down.
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