Gordon Gecko said it, “Greed is good.”
Gordon Gecko was the fictitious character in a movie called, Wall Street.
When he said that, initially it stirred my stomach up. At the time, I was struggling myself and couldn't really relate to high-flying stock market gurus fleecing companies and destroying jobs in the process.
So, is greed good or bad?
Here's another take on it.
You may have heard this recently in the media… It comes from the great man, Warren Buffet.
“When there's a lot of greed, it's time to be fearful and when there's a lot of fear, it's time to be greedy.”
…So is Mr. Buffet saying that greed is good? ‘
I suppose it just comes down to a perspective and more importantly the… TIMING.
So right now I think it's time to be greedy.
On the weekend, I went to 3 auctions. All of them passed in without anyone lifting a finger to put in an offer.
For the uninitiated, that would seem like a desperate situation and perhaps an indication that you should do nothing right now in the way of investing.
My thoughts are that right now would be an excellent time to be greedy and pick up property for a song!
Anyone who is selling in this marketplace and is willing to consider offers is for whatever reason a “willing vendor”.
What that means is that you can bring forward future profits right now.
I know what you're probably thinking, “what if the property market collapses?”
Some experts are saying that they may see a 30% fall in property prices over the next 2 years.
I sincerely hope you're not taking advice from those experts. Maybe they're the same guys who said that once the stock market breaks over 6,000 points it's going to roar ahead like thunder.
Wrong then… and they're wrong now.
But lets get this straight…
Property prices are not going to boom just yet.
Here's what's happening on the ground…
Rentals are getting more expensive every single moment someone comes out of a lease.
Here's a case in point… On the weekend I drove past another property that I thought was up for sale, simply because there was a large group of people standing outside it.
I looked for a board but couldn't see one because it was obscured by the crowd. I parked the car and thought I'd at least see what was going on.
As I walked closer to the property, I didn't see an auction sign or a For Sale sign.. Guess what I saw?
… A sign that said, “For Lease”.
I was blown away.
Probably 15-20 couples all lined up in an orderly manner.
I have to say that I have never seen that before.
So here's what I think will happen…
Rents will still climb and interest rates will come back.
Meaning that at some point, people are going to start to realise that it's cheaper or affordable to buy instead of rent.
That's when we'll see another property upswing.
Pretty simple, I know. But it's basic economics really.
Here's another reason why property wont crash.
If the typical home owner's house goes from $700,000 to $500,000, it's really meaningless until they have to sell.
So unlike the stock market, there's none of this short selling or panic-selling stuff that goes on in the property market.
Of course, this all depends on leverage and borrowings. The other thing to note a lot of the stock on the market right now that doesn't meet the vendor's price will simply be taken off the market and sold at a later date.
So what about shares and stocks?
Ok, I wouldn't be buying equities right now unless I had a time frame of at least 3-5 years.
That doesn't mean I'm not interested in the stock market. I know of dozens of “traders” (not buy, hold and pray investors) who are making an absolute killing trading this market rather than investing in it.
(There is a difference).
So what am I up to with the stock market?
I'm nibbling at it…
What does that mean?
30% of my available cash has gone into the market in the last 30 days.
Interestingly (and this is good if you're a parent), I've bought my 3 sons each shares in BHP. They're all around the 10 – 12 age group, so this is a perfect period not only to teach your children about money, but also an opportunity to do something proactive and invest in their future.
Your children have the greatest resource available today… And that is… TIME.
So what will I do if the market edges down a bit more?
Have another nibble at some quality blue-chip shares.
What if it goes up? Do the same…
At all times I'll be leaving a little bit of cash on the side just for future opportunities.
One more thing.
I'm not buying shares with any margin or borrowings. It would be really dumb to do that in this market.
Anyway, that's all for now.
Signed with Success,
P.S. The education that is available today through simply following the current financial climate is invaluable, regardless of whether you're a beginner or professional.