Energy Security to the Highest Bidder

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–It’s a currency crisis, alright. Only it also looks like a bull market in commodities. Which can cause an uninformed investor to think the stock market is telling him everything is going along swimmingly. In fact, the whole glue that’s held the world together geopolitically for the last 50 years—the petrodollar standard—is coming unstuck.

–The headlines say the stock market’s woes are based on “Libya unrest.” But that is a superficial reading of events. It’s true people are now realising if there’s a protracted civil war in Libya that damages oil infrastructure…there’s some short-term pain. But Libya produces only 1.6 million barrels of oil per day.

–The bigger worry—which no one wants to discuss too loudly—is the whole region has entered a long period of low-level chaos. All hell is breaking loose, but in slow motion. That kind of political instability in the world’s biggest oil kitchen is a nightmare. It means big oil consumers like China and the US lose their energy security…or will have to find it somewhere else.

–The energy aspect of the story—where can you get secure supplies of fuel for your economy—is already creating movement in the share prices of smaller oil and gas companies. This is exactly what happened in 2008. Once oil got over $100 a barrel it made a lot of other conventional and unconventional energy projects economic.

–Of course last time around, it turned out the oil price rise was driven by speculators. When the credit crunch hit and the free money got more expensive, traders deleveraged and the oil price crashed. It’s possible something similar could happen today, although when you add the element of political turmoil in the Middle East, a crash seems a lot less likely.

–A lot more likely is that the higher oil price scares the crap out of central bankers and politicians. They will try to jawbone the price down by talking about higher interest rates, the end of QEII, and exploring for more oil. That might work for a bit. But it won’t solve any of the underlying problems in the Middle East (the unhappy relationship between people and their rulers).

–This means there’s a serious chance for a re-rating on smaller energy shares that have viable projects at a higher oil price. The projects we have in mind (and have written about in the Australian Wealth Gameplan) are mostly conventional and unconventional gas projects, although you could include nuclear. The name of the resource game now is to geographically diversify your supply of energy while you still can.

–And speaking of diversification, the gold and silver markets are telling us that the dollar and the euro are lousy stores of value. Silver hit another 31-year high. The May futures touched $36.11. Gold closed off its highs too. But both reacted well when the dollar index fell.

–Also, in case you missed it, Moody’s downgraded Greece’s sovereign credit rating by three notches. This shouldn’t surprise anyone. But it did remind some people, apparently, that Europe’s banks are stuffed to the gills with government bonds…and many European governments are so far down the debt hole, the only way out is default or restructuring.

–All in all, it was a rousing day for tangible assets and rout of a day for paper money. This leads us to believe gold is about to fall by $50 and oil by $10. You can never guess why. But asset prices don’t go up in a straight line, even in long-term bull markets. Somebody putting a bullet in Gadaffi’s head would probably trigger a big market correction in precious metals and oil.

–However this is the nature of the dangerous game being played by the Fed and the bankers. They have unleashed inflation on the world, with all its unpredictable and undesirable consequences. It can’t be easily put back in the box. There may be a tipping point at which gold and silver and oil go bananas. And we may be getting closer to it every day.

Dan Denning
For The Daily Reckoning Australia

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
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Comments

  1. One of my 2008 winners was ERA that touched 10 and gained what I thought it would. I went off it on world supply and demand and took profit. It has had production problems and it has hit 9.73 this morning. Trouble is I am short of reading time. Maybe someone else is on it?

    Reply
  2. Hi Ross,

    Current price now down to $9.43 from $10.00 today. Research note by Bell Potter published in late January downgraded their 12 month share price outlook from $11.00 to $9.00 with a sell recommendation, based on production shortfalls due to wet weather conditions.
    68% owned by RIO, which I would have thought would make it a takeover target for the remaining shares and possibly more so now the price has dropped. I’m considering buying some on that basis with a longer view that Uranium should be a good investment in years to come if the mop up doesn’t happen.
    Cheers

    Reply
  3. ASX200 closed at lowest level for 2011 and lowest since early December.
    Is this the start of something or just the usual up and down cycle of recent months in a tight trading range?

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  4. Davo, I have been a net seller of long positions for some time now, first in hard commodities, and then lately in soft commodities. If I was a trader I would be counting my spanking these past months. I’m hanging onto a few stocks for a lower AUD before intending to sell down some foreign currency earners. My favourite right now is Viterra because it is listed in AUD but effectively priced in CAD. Thanks for your report on ERA, I’m going to trust the market on the production problems and watch the chartists view. I remember being at odds with some when I sold ERA so I am glad to have banked that one at the right time.

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  5. @Davo, good job we didn’t go there eh? 8.25 at close. Having a look at it now. Need to reevaluate the supply side which, combined with the build time on new facilities was the reason i got out last time. DYL was another I was into and out of and it has tanked too.

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  6. Hi Ross,

    ERA at $7.48 at present and Paladin down to $3.41 (was over $5.00 a week or so ago). I look at the Japanese situation with their nuclear power plants, 2 out of 55 are having big problems, which means the other 53 have to maintain output to make up the difference, so they will require uranium still. China is going to build plenty in the next few years, so demand will still be high and going higher.
    The Japanese will ensure that lessons will be learned from the problems with the 2 plants and enhanced safety procedures will no doubt be enforced at other locations.
    From a simplistic perspective, with a view longer than the next couple of months, I’d reckon at the prices these 2 companies are down to that they would be good buying. I can’t see logically why their share prices are being hammered.
    Japan has no choice but to fix their power plants, or they just won’t have enough electricity for their populace.

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  7. Seems Greg is ‘as good as one might expect’ Lachlan. He posted a comment yesterday.

    Reply
  8. In case you have any, erm, doubt about the erm, bloke we were chatting with, Ned:

    “…we’re thinking copper, rare earths, potash and uranium stocks – Aussie oil stocks have, erm, done nothing….

    Everything looks fine as long as it lasts. But the housing sector is already hanging by a thread.”

    ‘Double Bubble’ Kris Skayce, 24th February 2011

    Reply
  9. Yeah, I gathered you thought there could have been a bit more to ‘this’ than meets the ‘average’ eye Biker. But must admit I’m dumbfounded as to why the likes of ‘him’ might bother messing round with the likes of ‘us’ – Or certainly me anyway – ‘Cause as I often say I REALLY AM NOTHING but a numpty? :D

    Not ALL shaven head Brits are nutters mate – I think??? :D

    Reply
  10. Davo, any thoughts on DYL? I’m still looking for the right big picture supply-demand report.

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  11. Ned: “…why the likes of ‘him’ might bother messing round with the likes of ‘us’…”

    Ahh, the Devil makes work for idle hands, Ned.

    Seriously, though, this must be a fairly anxious time for some.
    All that omnipotence challenged and all. ;)

    It’s always easier when one’s stars are in the ascendancy. :D

    Biker Pete
    March 16, 2011
    Reply
  12. I see he’s predicting the property market will be ‘cut in half’, Ned:

    http://www.moneymorning.com.au/20110315/dismal-economists-and-spruikers.html

    Not sure _all_ his disciples agree… . ;)

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  13. Biker,

    AAP report says housing starts for Dec fell by 7.3 per cent annualised in a now steady decline. The main issue here is not the figure itself but rather the separation of rhetoric generated by those just trying to survive another day from actuality. This is creating shocks that is now feeding back into negative market sentiment

    The median market forecast was for a 1.4 per cent rise in the December quarter. This was a dream that ran off inventory build across the economy and retailers late to admit their slump .

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  14. Heard it all before, sorry, Ross. Whenever I read these 50% – 80% crash predictions from property ‘watchers’,
    I have to remind myself that the DRA banner has _always_ been “Australian Houses Seriously Unaffordable”.

    This from spruikers who, a few days ago, included uranium in their top tips… .

    “…7.3 per cent annualised ..” (?) HORRORS! The ASX has fallen around 10% in a few months… . :D

    “…creating shocks that is now feeding back…?”
    Colourful rhetoric, but topical, I’ll admit. ;)

    Reply
  15. Hi Ross,

    Don’t know much about Deep Yellow, but they have a released a 9 page announcement to the exchange today regarding drilling operations in Namibia.
    Worth having a read, but from my very basic understanding of the processes, it sounds like good news. The stock is at 18.5c today and was as high as 38c in Mid January. I was glad DR covered the Uranium story, as it’s good to obtain their opinion as to whether or not it’s worth “having a punt”.
    Cheers

    Reply
  16. With housing, if the supply side is dropping off and it’s more difficult to obtain financing, if there was an oversupply of housing in Australia, wouldn’t that oversupply be being eroded as the population expands.
    Of course, the contentious point is whether or not there is a oversupply and is there an undersupply in some areas and an oversupply in others, leading to market pricing fluctuations between different areas.
    I reckon you should just be aware of what’s happening in your own backyard, as that’s the only market that is your concern (financially speaking)

    Maybe Kris has been living in Frankston for too long – it’s a pretty depressing place, unless you live on the water or chase single mums.
    Tongue firmly in cheek.

    Reply
  17. Davo: “…if the supply side is dropping off… ”

    Data supplied by Ross suggests this is so: “…housing starts for Dec fell by 7.3 per cent annualised… .” So fewer houses are being built, even as the population steadily rises.

    “I reckon you should just be aware of what’s happening in your own backyard…”

    And within your particular market. Examples Kris cites are all in the upper range, very similar to examples posted by N Fool, in fact(!)
    We know that end of the market was ravaged by ASX losses.
    With the ASX 35% off its high, I’d be surprised to see
    any quick growth at the top end.

    Mind you, I see Peppermint Grove has the highest medians in Australia,
    which may indicate that West Aussies diversified… . ;)

    Reply
  18. Hi Biker,
    I’d be curious to see the same listing of million plus suburbs where units, flats and apartments are excluded from the exercise.
    The website I check out every few months for my suburb here in Brisbane now includes sales for WA, except you have to pay 30c for each listing identified.
    It’s a good research site and costs $5 or so to join up. May help to provide facts about WA prices for you to use in your verbal jousts with your fool mate. Mind you, facts aren’t in his quiver when he’s shooting at you. Truth only gets in the way.
    The site is http://www.onthehouse.com.au

    Cheers

    Reply
  19. Very much appreciated, Davo.
    I’ll join, now.

    We’re about to sell a beach house for <$700K, so it could be a very useful
    site. We used to walk our two suburbs, with notebook and camera, but I'm not quite as focussed these days.

    All this DYL stuff is interesting, as we were 'converted' when Julia Mines delisted. From memory, I think we doubled or trebled our money and bailed at 22c. Mate of mine had an even greater win. His miner bought up Adultshop. His missus was horrified, so they sold, making eleven times their buy-in… . New home, new car, caravan… mostly cash, I think.

    Difficult to know where these present catastrophes may lead us… .

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  20. “I see he’s predicting the property market will be ‘cut in half’, Ned”

    If $10m mansions suddenly become worth $5m I don’t think it’s going to phase a lot of people Biker. And as I’ve presumably said/implied before, I (even as a bear) struggle with the concept of $450K Brisbane places becoming worth $225K.

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  21. For a couple of decades, we bought only properties which the very rich would be able to afford to buy from us, Ned.

    Around seven years ago, we sensed that property was doubling and trebling so quickly it _might not_ be sustainable in the long term. We decided to shift our focus to the sub-$500K market. Then, as we realised the likelihood of the BB generation downsizing, to sell off million dollar homes and bank the ‘downsize difference’ into Super, we bought/built in the $330K – $450K range.

    You can never be completely sure you’ve got it right until the money’s in the bank, or funneled into Super, but I think we sleep better at night knowing you can’t replace our homes for less. Sayce & The Fool bleat on about multi-million-plus homes losing equity, generalising this to median markets… and we just laugh it off. :D

    You and I are fairly safe unless someone fronts up with development-cost-free blocks in great locations. Having researched development costs on a sixteen acre beach lot (60+ lots) a few years back, I know the real costs involved. We decided against it. Too little return for outlay… .

    As Greg wisely noted a few years back, there’s no ‘property market’.
    There are property marketS… .

    Reply
  22. “We decided to shift our focus to the sub-$500K market. Then, as we realised the likelihood of the BB generation downsizing, to sell off million dollar homes and bank the ‘downsize difference’ into Super, we bought/built in the $330K – $450K range” – With those being very wise decisions I’d say Biker. With my decision dating back about 5 years ago to stay out of QLD ‘fun in the sun’ retirement type locations also just maybe starting to prove to have a bit of justification?

    “generalising this to median markets… and we just laugh it off” – Ditto. Except it that on another level it does worry me that the occasional ‘young bloke’ just could fall into the potential trap of believing them – With that not helping THEIR aspirations re home ownership at all.

    “There are property marketS” – Isn’t THAT the truth! :)

    Reply
  23. Ned: “it does worry me that the occasional ‘young bloke’ just could fall into the potential trap of believing them”

    Too true.

    At one point in the last two years we calculated that medians in our main investment area _had_ actually fallen 1.83%. During that period we could see that developers weren’t selling much, hence our decision to negotiate for a couple of blocks.

    Built on one, just sold the second for an after-costs gain of 20%.
    Had we taken the view that this particular market would fall more than 2%… and done nothing… waiting for a larger fall… we’d have missed out on that nice little win.

    Reply
  24. As Greg wisely noted a few years back, there’s no ‘property market’.
    There are property marketS… .

    What property market”S” are you talking about Biker?

    The ridiculously unaffordable Sydney market?
    The ridiculously unaffordable Melbourne market?
    The ridiculously unaffordable Brisbane market?
    The ridiculously unaffordable Perth market?
    The ridiculously unaffordable Newcastle market?
    The ridiculously unaffordable Adelaide market?
    The ridiculously unaffordable Canberra market?
    The ridiculously unaffordable Darwin market?

    Tell me what any of these markets don’t have in common or are unique from each other than the fact they are all “ridiculously unaffordable”

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  25. Within each of these capitals and regional centres there are numerous markets, Steve. Sometimes they’re recognisable by location, ie., suburb;
    other times by price; infrequently by shift in socio-economic status.

    Opportunities present all-the-time. You’ve probably missed one in the
    last couple of years. That doesn’t mean a second minor correction won’t
    occur. Almost nothing is surer than a fella who does his homework can
    pick up a bargain by knowing what’s happening in a desirable suburb.

    When we were in buying mode, we walked through every street, past
    every vacant block, every home, every apartment block. We took photos,
    notes, telephone numbers. We researched online, studied the property
    liftouts in newspapers, talked to others; yes, even realtors.

    It wasn’t a perfect strategy. I can think of several brilliant
    opportunities we totally missed… and one we foolishly passed up.

    It was, however, a better strategy than assuming a major crash would
    simply bring us huge savings.

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  26. Ned: “…my decision dating back about 5 years ago to stay out of QLD ‘fun in the sun’ retirement type locations also just maybe starting to prove to have a bit of justification?”

    Yes, I think so, Ned. I may not have thought so, prior to visiting.

    I must admit the only vacant block close to the beach we liked in FNQ (which had some difficult access issues, anyway) turned out to be $6.25 mil, after we inquired about the price! Not our scene at that price!!~

    We were talking with our architect last week about a very new beachside subdivision. He claimed that these blocks all had $170K development costs.
    Kind of reassured by that, as our last vacant lot is now on sale for less than $300K and it’s far better than any of the new ones at a similar price.
    Better location, views, parks, the lot. We get three or four calls every week, but no firm offers on this one yet.

    I see uranium is the main topic over at Money Morning today:

    http://www.moneymorning.com.au/20110316/are-uranium-stocks-a-buy.html

    Interesting read, but it’s a major stepback from the ‘Uranium is the Buy of 2011’ punt… .

    Biker Pete
    March 18, 2011
    Reply
  27. Now this wouldn’t be you would it Biker?

    Boomers weighed down with debt
    18 March 2011 7:18am

    Higher income and often older (in fact, quite old) households are responsible for much of the net increase in housing finance over the last five to 10 years, analysis by the Reserve Bank of Australia shows.

    source Banking Day

    Reply
  28. Sorry, not me, Ross. Link?

    We’re paid off by April 2nd… Party!!~ :D

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  29. Biker, the day after party? Seriously, a day to celebrate. I noted the downshift on the value of the individual property you sought too.

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  30. Bullshipper Pete

    Can wait till you put all your thoughts into a book!!!

    I will keep a eye out for it in the Comedy or Fiction sections.

    Could I suggest a title?

    “$hit I just make up as I go”

    Not Fooled By Property Spruikers Hype
    March 18, 2011
    Reply
  31. Money morning dispatched another property spruiker in their usual style.

    http://www.moneymorning.com.au/20110318/are-falling-house-prices-%E2%80%9Cvirtually-impossible%E2%80%9D.html

    Keep biting you Neck Biker !

    Not Fooled By Property Spruikers Hype
    March 18, 2011
    Reply
  32. How much of a correction do you reckon you need before the company you work for will be happy to lend to you again Not Fooled?

    Reply
  33. Ross: “I noted the downshift on the value of the individual property you sought too.”

    Sorry, Ross, I fail to understand your comment. The property I sought?
    We seek no more properties at present. Our aim is to sell at least three
    prior to 2012, to minimise our CGT. We’ve already sold one this year.

    N Fool, I enjoy your disbelief. I take it as a compliment, in fact.
    Your incredulity suggests that your own claim of six properties (far less than our holdings) is entirely bogus. Your claims have never really made any sense at all:

    * You have SIX properties;

    * You’re renting five;

    * You’re calling for a 40%+ crash(!)

    * You’re talking rents down(!)

    * You’re talking interest rates up(!)

    Now, think about your position. Is it believable? Does _anyone_ believe it?
    If you believe it, anyone, please a.) tell us you believe it; b.) tell us why it makes any sense at all… . Is N Fool’s statement that he wants a crash to help his kids and yours logical, given his claims?

    Conversely, you’re aware of _my_ stated position. Is it believable? Is it consistent? Please feel welcome to state “Biker, YOU’RE BULLSH*TTING us.”
    Rest assured, every time a DReAder says this, I will feel _complimented_ not aggrieved. In effect, you’ll be confirming to me that we’ve overachieved. I really don’t think we have. Yes, I’m pleased that our plan worked, but it’s no miracle!~ It’s simply a nice, comfortable place to be at the conclusion of our accumulative phase… .

    Finally, do you have a plan? Do you have multiple timelines, each of the secondary timelines a sensible fallback position? It’s trite to repeat that old adage “No-one plans to fail, they fail to plan” but it seems relevant in a forum in which so many appear to hope for events beyond their control to shape their destinies. Is that _really_ your plan?
    Surely not… .

    Reply
  34. Phase 1 of the exit strategy as the resident fraudsters unwind.

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  35. No plan, just eNVy… ;)

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  36. “Does _anyone_ believe it?
    If you believe it, anyone, please a.) tell us you believe it; b.) tell us why it makes any sense at all… . Is N Fool’s statement that he wants a crash to help his kids and yours logical, given his claims?”

    It seems potentially logical enough to me now Biker:

    A property speculator who believes he can talk markets into doing what he wants. Whose vested interest is in seeing a correction now. As:

    He’s taken his profit on his 4 Karatha apartments
    While he’s stuck with the DHA house (for a bit longer maybe) he figures he’ll still do quite well on it regardless
    Who is particularly interested in upgrading his $700K home to a $2m home

    If he gets what he’s currently angling for, he’ll be able to buy back in on leverage and do it all again. With him popping up again after having bought back in under a name like “Not Fooled By Property Bears Rants” or somesuch presumably.

    A speculator who figures he’s ‘smarter than the average bear’ (or bull) and wants to see volatility so he can trade both the ups and downs; And then trade the ups and downs again some more; While spruiking the market into going whatever way suits his current play.

    Yep, I was wrong when I suggested he mightn’t have a plan. Because he does. A pretty elaborate one which he is devoting a huge amount of spruiker type energy to trying to ensure it comes off. With that also explaining his past insistence on sticking to the (current) issues (as he’s trying to present them) rather than anything particular about how he is planning on playing it all.

    And I also doubt he’ll be stupid enough to truly be hanging out for 40% drops before making his moves. Though at the moment it suits him to convey the impression such large drops are likely.

    Well that’s my current best take on where he’s coming from anyway.

    Reply
  37. Ned: “He’s taken his profit on his 4 Karatha apartments”

    Must have missed that, Ned.

    If you’re correct, why hasn’t he converted his $250K – $750 capital-gains-free win on the Woodvale property? Half a mil in bankable profit… .
    Illogical to be talking Woodvale properties down (as he does on PerthNow) without first taking CGT-free profit on that one.

    You may be right, Ned. Maybe there is some kind of strange logic there.
    Seems a helluva lot of effort… and a baffling strategy (bragging about your own highly successful property holdings)… to crash a market. :D

    Biker Pete
    March 19, 2011
    Reply
  38. Nah, sorry mate. I don’t buy it.

    Why the (cut’n’paste) attacks on SA property, through AdelaideNow?

    This is bigger-picture. ;)

    Biker Pete
    March 19, 2011
    Reply
  39. ” “He’s taken his profit on his 4 Karatha apartments”
    Must have missed that, Ned. ”

    I’m haven’t seen him claim he has taken that profit. But it would reasonable to assume he has; Given his expressed unhappiness at the fact he can’t “dump” the DHA property yet. :)

    “If you’re correct, why hasn’t he converted his $250K – $750 capital-gains-free win on the Woodvale property? Half a mil in bankable profit… .
    Illogical to be talking Woodvale properties down (as he does on PerthNow) without first taking CGT-free profit on that one.”

    Selling Woodvale could very well be putting his home ownership at more risk than he’s prepared to. (He’s obviously pretty fond of property as a asset class!!! So is presumably quite fond of being a homeowner as well.) And he presumably realises he could be wrong. And property prices just mightn’t fall at all. Nope, there’s no need to take that risk with his home ownership – Given that if a $750K Woodvale property goes down by 20% ($150K) and a $2m Sorrento property goes down 20% ($400K), guess who figures he can save himself/potentially make himself $250K (ie the diff between $400K and $150K) on an upgrade.

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  40. Why attack SA? Why not attack SA – And everywhere else. Including the US and the UK and Spain and Ireland etc. With all of it potentially helping and none of it potentially hurting. Then again his brother might be a SA property speculator he’s helping out????? Who’s to actually know eh? :D

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  41. He laid the guts of the plan out for us a while back. With the PerthNow link you provided that mentioned the Karatha units and the DHA house making it possible for me to connect the dots:

    Re ‘the plan’, specifically on 15 Feb on DRA he wrote:

    [I’ll not give the link as the last time I did, my comment became MIA]

    “Ned….. why would anyone sell if they don’t have to ?

    Well the price of your house or my house is determined by what people paid for a similar house in a similar area.

    Let look at the house behind me. Same House Same Builder Same floor plan, they have a pool we have a pool , Landscape different but both of a similar standard. You get it same same but different.

    That house was bought in July for $703K so I have a pretty good idea that my house is going to be around $700K.

    Fast Fwd to say Jan 2012 house prices have had a Steve Keen moment & top end property in Sorrento has gone from $2million to $1.5 mil only a 25% fall. I am keen (no pun intended) to buy but the price of my house has also gone down 25% in this market & I would need to sell it for $175K less than what I could have got for it in July 2010.

    But I am still in front $325K with savings on the Sorrento house.

    So I sell & the house behind me is now worth? thats right $525K.

    The people behind me then need to sell (Any reason divorce / health / new employment / extra child born need a bigger house / mother in law moving in due to ill health etc etc)

    What can they do they paid $700K & stamp duty & selling fees , the house needs to get $750K to break even?

    That close to 50% more than a identical house behind them sold for last week?

    Half the sales of property is for these reasons , if they cant sell they cant buy another place , there are fewer buyers , less turnover , problem is compounded fewer buyers vendors have to drop prices to attract a buyer, etc etc etc

    In this example is say I drop my price 25% to save $325K on the Sorrento house, but I might be happy with a $200K saving on the deal, I dont want to miss out on picking up this Sorrento house at this low price & seeing my house in Woodvale is not selling @ $525K because there are no buyers I decide to drop the price to $400K (I will still be in front by $200K after all)

    So the guy behind me is in a house worth $400K that he has paid $700K for 18 months earlier?

    … ”

    Then again I could be wrong. But my suggestion is a pretty good working hypothesis for now at least I reckon! :D

    Reply
  42. @Ned S
    “A speculator who figures he’s ‘smarter than the average bear’ (or bull) and wants to see volatility so he can trade both the ups and downs; And then trade the ups and downs again some more; While spruiking the market into going whatever way suits his current play.”

    I very much trade on the volatility of the share market Ned. (do alright at it as well ;) )
    As much as there are different real estate markets (as I have said in this forum in the past ) There are also different markets on the stock market.

    As much as some like to harp on about the “Share” market dropping 54% Some Stocks have still performed very well indeed.
    Some real estate markets have dropped that as well.

    I track the world economy and sentiment (fear and greed are and always will be drivers of the market) and base my investment decisions into sectors that will perform best in the short term, whilst keeping an eye on what sectors will be performers next.

    This strategy has allowed me to consistently out perform the property market over the last 8 years.

    @Lachlan Did you hang on to thos F’s through the dip? Recovered quite well on news of the next mine starting production.. 12% or so in a week is not too bad if you held, considering what the market did on news of the disaster in Japan.
    Should be more (hopefully) good news in the next couple of weeks. Next mine to start soon plus drill results expected.

    Stillgotshoeson
    March 19, 2011
    Reply
  43. Shoes: “I very much trade on the volatility of the share market Ned. (do alright at it as well ;) )

    And with you never for a moment having pretended anything else Shoes! It would be nice to have the skills. But if I was ever capable of developing them, suspect that time has simply passed me by – With ‘old age’ having made me much too risk averse now. :)

    Reply
  44. But all is not lost – I’ve been cleaning the mould off the ceiling of my front porch – And in the process it dawned on me how I can effect some renos to it cheap. And add a bit of value to this property that way. So even an old dog who doesn’t feel too hopeful he might be able to learn lots of new tricks, can at least continue to make use some useful ones he’s got for a while yet I guess! ;)

    Reply
  45. Hi Shoes. Yep still holding the Fs and hoping for a higher high this time. 8c was one good support though I was watching close. I still think the break out move could have gone higher so watching keenly this week on their progress to unload a part.
    The markets are obviously on a bounce here with the good support levels reached late in week 4500 (SP200) and 11500 (Dow). Just wondering whether we’ll rally back into selling pressure now and then go lower or whether we’ll have a push higher..hoping latter but staying neutral until the market breaks previous high. The push lower would look healthy on the charts but who knows.
    Seen a few people sell off on the down draft this week and regret it minutes later Shoes. Arghhh I say.. buy/add on the dip, not sell. Sound like a shares spruiker ;)

    Gold sector has pulled back into support now….hopefully a bottom. Trend is up still.

    http://goldoz.com.au/83.0.html

    Aud gold up on 1440.44 too. If/when this long pause breaks to the up we’ll be well over 2K quickly. Nice pennant forming.

    Reply
  46. Next mine commencing production and good drill results from the island should see my target of 11.5 to 12.5 cents. Expect some profit taking at around this level (might join in this time)
    Drill results of 30,40 or even 50 g/tonne like the chip samples could see a rocket on the price

    Bought in a couple of more as well.

    “Seen a few people sell off on the down draft this week and regret it minutes later Shoes”
    One of my friends did.. panic got the better of him. Sold everything, is down a fair bit now he says. Got back on theF’s at 7.2 so he has regained ground there but still down.

    Stillgotshoeson
    March 19, 2011
    Reply
  47. I’d be amazed if he has sold those ‘four Karratha properties’, Ned.
    The brand new subdivision there would be an attractive entry to that market… and great competition for any older property, which would attract much higher stamp duty.

    The current view at PerthNow is that he’s all BS. A number of share traders
    who were very highly-leveraged in both stocks and property were caught out when the share market nose-dived. They lost their properties as a result.
    They’re fighting to get _something_ back… perhaps even their personal
    domicile. Given his inconsistencies, N Fool fits that profile.

    The fidiot who called me on our property holdings and travels has doubled the bet to $500K. I’ve asked PN editors to take it on.
    He has since disappeared… . ;)

    Like you, I’m working on a property today.
    Siesta mid-day. Warm here… .

    Reply
  48. Continued dollar weakness.
    http://www.fxtrademaker.com/usdx.htm

    Re: F’s…7.2 was a great buy anyhow. Hopefully we’ll beat the recent high quickly rather than go into a range.

    The Fletchers are holding well so far too I see.

    Important few weeks ahead I reckon.

    Reply
  49. “I’d be amazed if he has sold those ‘four Karratha properties’, Ned.” – Just checked – And see Karratha is in the Pilbara! (Geez, I should have remembered that from high school Geography. :D ) Yep, they could VERY well be ‘keepers’ then as you imply.

    If ever he wants to tell us what his story is I suppose he will. But as a ‘fellow’ bear, the long and the short of it is that I’m not placing any faith in any buy-in points he might mention without an awful lot more info on exactly what his vested interests are. :)

    Reply
  50. Comment by Lachlan on 19 March 2011

    The Fletchers are holding well so far too I see.

    Important few weeks ahead I reckon.

    More results expected soon for the Fletchers, will sell on them on the rise.

    Next 3 to 4 weeks will be interesting

    Stillgotshoeson
    March 19, 2011
    Reply
  51. Comment by Ned S on 19 March 2011:

    “I’d be amazed if he has sold those ‘four Karratha properties’, Ned.” – Just checked – And see Karratha is in the Pilbara! (Geez, I should have remembered that from high school Geography. :D ) Yep, they could VERY well be ‘keepers’ then as you imply.

    If I had property in that region I would seriously consider selling them and booking profits. However I don’t so it is a non issue for me. :)

    Stillgotshoeson
    March 19, 2011
    Reply
  52. You could be correct there as well Shoes. Though as I don’t follow WA property, I’m not sure at all. Depends how bad any minerals downturn might be I guess? Or how good any boom? Keep very much in my own backyard these days re property. I just like the fact that means I can effect most of the necessary repairs and/or renos myself, thereby keeping costs down.

    Reply
  53. Comment by Ned S on 19 March 2011:

    You could be correct there as well Shoes. Though as I don’t follow WA property, I’m not sure at all. Depends how bad any minerals downturn might be I guess? Or how good any boom?

    My view is that an over reaction to a minerals/mining/resource slump would be more likely than a “will just wait and see” reaction.

    The tragedy in Japan may have bought a little more time, however a lull is coming before the next boom time.

    I watch the Melbourne property market as a matter of course because I live here, I only look at other cities as a “general” observation
    Listings have increased in my area.. A lot more available below $400k now than has been for some time.. 10% to 15% reduction would be a fair call.

    Stillgotshoeson
    March 19, 2011
    Reply
  54. Finishing gun and cut-off saw my favourite reno toys Ned.
    Not bad at painting but I’m a brush kinda bloke. Ceilings I’ll roll but. Looking forward to doing my own place one day.

    Reply
  55. To say things are ‘quiet’ in Brisbane at this time would be a rather kind assessment I think Shoes. As I’ve said before, I would certainly like to buy at least one more within the next two years. At this particular time, my main concern is actually going to be to try to ensure I keep the interest rate up on my cash. (Not that I’m saying rates are going down – But I’m sure not convinced they won’t.) I’ll be looking at that next week.

    Reply
  56. Buy the dip Neddie ;)

    Reply
  57. Comment by Ned S on 19 March 2011:

    At this particular time, my main concern is actually going to be to try to ensure I keep the interest rate up on my cash. (Not that I’m saying rates are going down – But I’m sure not convinced they won’t.) I’ll be looking at that next week.

    I would like to think we are now in hold mode (from definite increase)
    Any (unlikely) cuts imho will be short lived.
    Later 2011 and into 2012 I would expect them to be on the up again.

    A complete meltdown in Japan may change that, however barring a complete meltdown the up I believe the up trend will continue.

    Stillgotshoeson
    March 19, 2011
    Reply
  58. I’m a butcher when it comes to carpentry Lachlan – Tend to play safe and cut stuff a tad oversize – Then grind it back to fit with a real coarse disk! :D

    Reply
  59. Shoes: “Later 2011 and into 2012 I would expect them to be on the up again.”

    Things just seem so potentially volatile all the time now Shoes. I’ll look into some sort of strategy along the lines of term deposits expiring a month apart as a start.

    Reply
  60. My grandfather and my uncle were carpenters. My grandfather basically built the town I grew up in. My uncle was in the papers in the UK in 2004..
    Can not say much more as it would kind of narrow it down to whom I could be eh ;)

    Stillgotshoeson
    March 19, 2011
    Reply
  61. Comment by Ned S on 19 March 2011:

    Shoes: “Later 2011 and into 2012 I would expect them to be on the up again.”

    Things just seem so potentially volatile all the time now Shoes. I’ll look into some sort of strategy along the lines of term deposits expiring a month apart as a start.

    For sure a battle of forces is in place.. inflation/deflation boom/bust mild disaster/catastrophe

    Staggered TD’s have a place.. money relatively secure but not totally locked away, monthly expirations of terms gives opportunities.

    Stillgotshoeson
    March 19, 2011
    Reply
  62. Shoes: “My grandfather and my uncle were carpenters.” – My dad always told me to make sure I made things “good natured” for myself – Mind you, he didn’t have any power tools when he started out. AND I’ve seen him put in some very strange stuff to pack out the gaps! :D

    Reply
  63. No more information required there Ned :)

    Reply
  64. measure twice, cut once.

    Stillgotshoeson
    March 19, 2011
    Reply
  65. Keep Biting you Neck you sill old Runt.

    One minute Punter & Me are the same & next we are different , next we are the same?… make up your mind?..Something else you got so wrong!!

    FYI my blog is getting 800-1500 hits a day!! My message gets out while you spend a whole day discussing me with Ned…. Two of life’s true losers!

    Tick Tick Tick

    Listings up 70% to 17,650, days on market 85 , average discounts @ 8%+

    But keep making it about me ladies, very good for my ego because it shows you fear the messenger as much as his n=message, but more importantly it exposes the fact you are unable to refute the message!!!

    Not Fooled By Property Spruikers Hype
    March 20, 2011
    Reply
  66. Over twenty posts trying to halt a $250K bet and you’re not involved?! ;)
    Makes as much sense as a fella who claims he has six investment properties (but he’s NOT a landlord????!) talking interest rates UP, talking rental returns DOWN, talking a 40% crash UP. Is your neocortex badly damaged?
    Did all your logical reasoning disappear during the GFC trainwreck?! :D

    “…my blog is getting 800-1500 hits a day… while you spend a whole day discussing me with Ned…. ”

    HaHa… You spend your whole day visiting your own site, clicker!~ ;)
    If you had bothered to reread Ned’s posts, you’ll see he actually spoke in your defence. I’m leaning towards other PN readers’ views… that you’re simply a noisy troll with nothing of value, tangible or intangible.

    Spent my ‘whole day’ repairing garden borders, painting, fixing a gate, weeding and replanting. Compared to spending a day cut’n’pasting, posting in countless aliases (‘Drew’ is your latest, I see…) and scouring the internet for anything remotely negatively connected to property anywhere on the globe, I’d say it was a day well-spent. We added some value.
    You add nothing but anger, repetition and invective.
    Frustrated angst stains every post.

    Reply
  67. Comforting to me to realise that you’ve pretty obviously managed to remain one of ‘the little people’ in many, many ways Biker. As:

    a) When I first graduated from uni (with it being a bit of a big deal back then) my mum expressed a concern I might ‘forget where I came from’, and

    b) If you haven’t, then I reckon I continue to be REAL safe! :D

    Reply
  68. Yeah, well I’ve never been one to overrate money, Ned… especially over health issues, or enjoyment of life. Poor old N Fool spends his daze thrashing the keyboard to crash the market, with gems like “… Keep Biting you Neck you sill old Runt….” and we get to enjoy a beach house (and the travel claims) while we do some repairs.

    It’s critical we don’t forget our origins, Ned. From April, I’ll start the family history, at the point when my grandfather and great uncles were forced to undertake army training, using swords rusted into their scabbards… courtesy the Napoleanic wars… !!~

    Life was simpler back then, wasn’t it? We look at Libya… then focus back on Japan… and then back to Nagasaki and Hiroshima. And over at Money Morning, Kris looks at the pros and cons of uranium:

    http://www.moneymorning.com.au/20110316/are-uranium-stocks-a-buy.html

    Found this statement intriguing:

    “We’ll just wait to see if the initial euphoria wears off before we consider dabbling in uranium again.”

    Euphoria??!!~ May be an opportunity for the contrarians among us. :D

    Fortunately my dad warned me not to try to catch a falling knuke!!~ ;)

    Reply
  69. I like Bonner’s writings about family Biker. Dan (the blogger) was always big on that as well – See he’s been popping up here occasionally here as well of late.

    Reply
  70. Yes, I like Bonner’s stuff too, Ned. His aspirations for his kids, his sense of family responsibility, his connectedness to real life.

    The US writers are top communicators. ;)

    Reply
  71. “Had a much longer reply to your comment about your mum’s advice” – Be very interested in reading it when you eventually get it through mate. While most things really do seem to be about money ‘these days’ (probably always were?) – Not ALL of them are pretty obviously. (Says he who has just had a chat with an OS connection where USD 30 still represents the sort of sum that brings out thieves more then happy to ‘roll’ 70 yo old ladies in the street for said loot.)

    Ni nite Biker – And yep, Oz is still pretty damn good (for mine) regardless of what some might think.

    Reply
  72. Property Spruikers will tell you Australia’s prices will never crash because of China & their demand for our resources, underpinning our economic success?

    Before anyone gets too excited about China being our safety net they might want to look at this story on SBS Dateline show 20/03/2011

    ” Chinas Ghost Cities ”

    http://www.sbs.com.au/dateline/story/watch/id/601007/n/China-s-Ghost-Cities

    This story shows 64,000,000 empty apartments & Whole Cities with shops & offices but no People!!No doubt a Bubble in the making,

    Pretty SCARY that this is what everyone in Australia is pinning their hopes on not imploding?

    Not Fooled By Property Spruikers Hype
    March 21, 2011
    Reply
  73. Hope you screen dumped that comment by someone else as to how come being so wealthy means he can pay others to do “mundane” stuff (like gardening) while he “enjoys life” Biker? :)

    Musty admit DRA’s application of their comment policy does sometimes mystify me.

    Reply
  74. Some of the stuff which disappeared overnight seemed fairly innocuous, Ned.
    My comment acknowledging N Fool’s great wealth, always being able to pay others for mundane repairs, for example!~ :D

    Hadn’t noticed the regularity of a Monday Morning Cleanup before.
    Thanks for that, Ned… .

    Reply
  75. Filthy-rich property speculator about to explain a very complex mathematical theory to a very stupid biker unlikely to grasp its complexities:

    http://www.perthnow.com.au/business/australias-home-ownerhip-rate-falls-oecd-report/story-e6frg2ru-1226025319325

    Biker Pete
    March 21, 2011
    Reply
  76. I can explain nothing to someone who thinks he is earning interest in a Mortgage Offset Account, when in fact all he is doing is saving interest!

    If you are not able to grasp that what hope do you stand with anything more complex?

    BTW I need explain nothing to you. You seem to forget your place.

    I am the Master & you are my Puppet, I pull your strings & you dance.

    Keep that in mind & you will be less frustrated.

    Think about I set the agenda & you respond (Proactive Vs Reactive)

    Not Fooled By Property Spruikers Hype
    March 21, 2011
    Reply
  77. Brought to mind Mel Gibson’s upcoming movie “The Beaver” for some reason – Wonder how it will end? :)

    Reply
  78. N Fool: “I can explain nothing…”

    You should have stopped right there, N Fool. ;)

    Reply
  79. His excuse for not explaining this highly-complex financial strategy?

    “Nah! Because it is irrelevant weather something effects me or not!”

    Kid you not. That’s his reply after I asked him how his speculation in six properties would benefit from his coming 70% property crash… .

    We’re dealing with a huge intellect here, Ned. ;)

    Reply
  80. Reminds me of Sir Johannes “don’t you worry about that” Bjelke-Petersen.

    We had lovely wether in Brissie today. I wonder if the mutton I’m having for din dins tonight came from a whether (or not)? [Sorry Shoes – Couldn’t resist! :D) Then again, I guess any such things that affect me are irrelevant hey? ;)

    PS: My old man always reckoned you had to be a scoundrel to get a knighthood.

    Reply
  81. HaHa!~ Checked your reference to Mel Gibson’s Beaver flick, Ned.

    Yes, I can see some parallels to Drew Fool’s weird puppetry fantasies,
    but I figure that the crap he’s handing us lately means he has his hand shoved somewhere else…. other than up a glove puppet.

    I’ve joined the Disbelief Brigade, Ned. I don’t think he has _any_ property
    whatsoever. I think these six properties were invented to convince the PerthNow crew he’s not a ‘renter’ (his term for tenant).

    He has worked himself right into Liar’s Corner, with no way to explain the ‘complexities’ of making his M*O*T*Z*A out of a 70% crash. Had to happen.
    Claimed he wasn’t a landlord, claimed rents were falling, talked up interest rates, etc, but isn’t cluey enough to see the pitfall was a cliff.

    No sympathy whatsoever. Live by the ($)word, die by the ($)word… .

    Reply
  82. “Claimed he wasn’t a landlord” – Bit hard to do that when he reckons he is stuck with a DHA house he can’t “dump”. If you’ve got a PerthNow (or other) link to that Biker, I’d say the kindest thing one can say is that he handles the truth VERY carelessly. Which has been my suspicion (and foremost concern) all the way through I guess.

    Reply
  83. N Fool, PerthNow, 6:08 PM, September 01, 2010:

    “I would hate to be a landlord in this market…” ;)

    Reply
  84. Hmmm … Legally not conclusive maybe Biker? (Given that he did express his extreme unhappiness at having to hang onto the DHA house?)

    Reply
  85. With it being deceptive in terms of its implication quite possibly? – Rather than an out an out lie if you get my drift. But in the absence of catching the defendant in an out an out lie, only a few such deceptions seem to be required to make judges very unkindly disposed to accepting the veracity of their basic yarn … As well as making their own barrister very strongly inclined to plea bargain! :D

    Reply
  86. I figure he just added a little colour to his story, Ned.

    Just as there’s a Money Market link at the base of every negative property story, there’s generally a DHA ‘worry-free tenancy’ google ad on the RHS.

    He’s a dinky-di conman, Ned. True-blue, certified, dyed-in-the-wool
    wolf in sheep’s clothing, spinning a yarn… . ;)

    Reply
  87. http://www.nytimes.com/2011/03/22/business/22econ.html?_r=1

    Record low rates and government intervention has not saved the US housing market…

    Stillgotshoeson
    March 22, 2011
    Reply
  88. Plenty of Option ARMS dead ahead Shoes – Assuming the author of this article was wrong about them re-setting early? :

    http://www.dailyreckoning.com.au/subprime-loans-caused-initial-illness-option-arms-relapse/2009/12/22/

    Reply
  89. Re the original article: “Once oil got over $100 a barrel it made a lot of other conventional and unconventional energy projects economic” – That’s not a lot of incentive for the oil companies (or even the oil producing nations) to see prices stay above USD 100 would be my take on that. Unless they reckon they can buy up the alternatives? So if thinking that way has any validity, then maybe USD 100 is the price around which we can expect oil to oscillate (with volatility) going forward??? ‘Course I could be attributing the big oil companies (and their [guv?] backers) and the oil producing nations with powers they don’t have? But then maybe they do – Where’s PeterG gone? He loved a good conspiracy theory as well! :D

    Reply
  90. Ned: “Where’s PeterG gone? He loved a good conspiracy theory as well! :D ”

    Yes, but he was hitting the reds even more heavily than us, Ned.
    Maybe the Irish Curses reformed him and he sought refuge in a
    Schottenklöster… ;)

    Reply
  91. “Schottenklöster” – Without googling same I can only hope it’s an alcoholic beverage Biker? And if it is, then I reckon he made a wise choice re his source source of solace! :D

    Reply
  92. Get thee to a nunnery, Ned… ! :D

    No relation to the footloose one’s Jagerbomb, Ned…

    (Judy calls… . Night… . ;)

    Reply
  93. As the Russians say: “Yes, sometimes it is necessary to be sober; But obviously no sensible person would choose to if he could be drunk.”

    And Nite to you as well mate! :)

    Reply

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