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Randy's mid year property update

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  1. #31

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    I have to agree with Randy but my charts have a familiar curve to it.


  2. #32

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    I was clicking from First - 1 - 2 - 3 - 4, only to find out there's no single post in response to randy1 from DeletedUser. TB, can you come out now and say something?


  3. #33

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    Quote Originally Posted by randy1:
    Here's another nice image...
    You call that nice?

    Speaking of nice images...

    bryant.english and virago like this.

  4. #34

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    Randy

    I'll play with you.

    $10m hk. Cold hard cash.

    What would you do with it right now?
    And let's have an update at Xmas.


  5. #35
    Quote Originally Posted by jimbo:
    Randy

    I'll play with you.

    $10m hk. Cold hard cash.

    What would you do with it right now?
    And let's have an update at Xmas.
    Randy, using that 10M, I'm assuming you would invest in more property because of your "buy buy buy" and "it cant fail" attitude. So please choose a specific listing that is on HomePrice.

    Also, we expect you to tell us when you "sell" this fake property too, so we can see your realized gains on an imaginary property, as opposed to imaginary gains on an imaginary property.

  6. #36

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    Bacon - your assumption is incorrect. If I had 10m to invest, with a 6 month horizon to make a profit, I would not be investing in property in HK. As I have explained on this thread, and other threads, due to the transaction fees involved, you need to be prepared to hold for a period of time, such that the gains outweigh the transaction costs.

    Jimbo - your question is a little better, as you are not limiting the investment to a single type of investment class. However, you have placed a specific time horizon on the scenario. Nothing inherently wrong with that, although my method of investment has ALWAYS to been to buy something fundamentally undervalued, with the knowledge that it will, over a period of time adjust to "full value", but not knowing specifically when that adjustment will take place, but being prepared to hold until what I assess as being the fair value has been achieved.

    With regard specifically to HK property, my feeling is that it is currently close to "fair value". Not significantly underpriced, and not significantly overpriced either. So, OK to buy if you are going to live in it with a 5 years holding horizon, but not as a short-term speculative buy with a view to making quick and big gains. I am holding everything I have in HK (imaginary or not) as everything I have is financed on a consolidated mortgage at HIBOR +.65%. The HIBOR rate has not significantly changed, but the margin banks now charge on a HIBOR loan is typically higher than .65% I have, meaning that if you were to buy now you would likely be paying more interest on the loan to a bank (not to mention higher stamp duties etc).

    So, what to do with 10m for the next 6 months? There is no single answer - many factors play into it - is 10m the total value of all your assets or just an amount you want to use for speculative investment? Do you have a family to support, do you have a salary income or are you unemployed, how secure is your job, how old are you, what degree of risk do you want to take, etc.

    I will however try to provide a more helpful answer though:

    1 - I would aim to be putting around 5 million, over the next 6 months, into HK listed equities with China exposure. I am a value investor, and right now there are many such companies that are EXTREMELY cheap. I cannot tell you exactly when they will increase in value to reach what I consider "fair value" but I feel quite confident that you would likely double to triple your investment over a period of 2-3 years. I'll be even more precise here and give you 10 companies that you could put $500K each into that fall into this category (I will just list the HK stock codes, and anyone interested can do their own research).

    3838, 300, 74, 904, 1086, 1174, 8086, 633, 1863, 921

    These are all companies that based on currently available information seem extremely cheap, and fit my type of investment profile, and which I would expect to rise sharply and significantly once we have a little more stability and a more sustained global recovery.

    2 – So what to do with the other 5m? In general, I am not a huge fan of staying in cash. I like to have most of my cash fully deployed. However, right now we are in a time of financial uncertainty, and certain asset classes are prone to quite sudden and extreme price movements. So my suggestion would be to keep the other 5m in cash, and be on the lookout for an extreme bargain that might present itself. Now what that will be I do not know – you need to keep actively looking. It might be a panicked property investor that wants to immediately liquidate. It might a banking stock that is overly affected by a rumor of the bank’s stability. It might be an airline stock that has taken a huge fall due to a crash of one of its airplanes. It might the stock of retail food company that has good fundamentals but which has taken a bigger than justified dive due to a scandal about using an ingredient that fails to meet health standards. You get the idea...

  7. #37

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    Quote Originally Posted by randy1:
    ...my method of investment has ALWAYS to been to buy something fundamentally undervalued...
    I thought you might be interested to have a play about with this.

    Property Prices Index By Country

    Of the 106 countries listed, HK ranks as:

    7th worst house price to income ratio

    7th worst gross rental yield for city centres

    38th worst gross rental yield for outside city centres

    7th worst price to rent ratio for city centres

    38th worst price to rent ratio for outside city centres

    mortguage as a % of income at 150%, compares with the US at 23% and the UK at 52%.



    I'm not saying you're wrong in suggesting that HK property will do well, I just think it's laughable that you say you're a value investor and make decisions based on fundamentals, but then spurt out a load of macroeconomic arguments (most of which are pure conjecture) for why property will do well. I have no skin in the game so I really don't care what happens and I wish you the outcome you desire, but to me, you sound like you're suffering from a great deal of confirmation bias.

    (I would like to point out that I do think you're very brave for sticking your head above the parapet and continuing to divulge your investment theses... particularly 1) when it relates to property prices after the events of the last few years, and 2) knowing how "wise" everyone now seems to be in light of the recent property collapse. You must be aware that you're bound to receive a lot of flak for going long in a situation that in some ways resembles the disaster we've just experienced, though I suspect you couldn't care less. If your arguments were more solid and looked less like confirmation bias, it would be extremely commendable.)
    Last edited by Gweilo86; 23-06-2012 at 05:58 PM.
    bryant.english likes this.

  8. #38

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    Quote Originally Posted by Gweilo86:
    I thought you might be interested to have a play about with this.

    Property Prices Index By Country

    Of the 106 countries listed, HK ranks as:

    7th worst house price to income ratio

    7th worst gross rental yield for city centres

    38th worst gross rental yield for outside city centres

    7th worst price to rent ratio for city centres

    38th worst price to rent ratio for outside city centres

    mortguage as a % of income at 150%, compares with the US at 23% and the UK at 52%.



    I'm not saying you're wrong in suggesting that HK property will do well, I just think it's laughable that you say you're a value investor and make decisions based on fundamentals, but then spurt out a load of macroeconomic arguments (most of which are pure conjecture) for why property will do well. I have no skin in the game so I really don't care what happens and I wish you the outcome you desire, but to me, you sound like you're suffering from a great deal of confirmation bias.

    (I would like to point out that I do think you're very brave for sticking your head above the parapet and continuing to divulge your investment theses... particularly 1) when it relates to property prices after the events of the last few years, and 2) knowing how "wise" everyone now seems to be in light of the recent property collapse. You must be aware that you're bound to receive a lot of flak for going long in a situation that in some ways resembles the disaster we've just experienced, though I suspect you couldn't care less. If your arguments were more solid and looked less like confirmation bias, it would be extremely commendable.)
    Thanks - its an interesting index tool you have provided there. Probably the most useful stat for me is the so called "mortgage as a % of income" index, and on that index, HK is ranked pretty much average compared to all of the countries indexed.

    Indexes are a useful tool, but when making an investment decision one needs to supplement that data with things that may not have been included in the data - eg what % of the country has private housing, what is the tax rate, what is the current interest rate, the demographics of the country (compare Japan for example to Vietnam), possible political changes that will take place in a country, etc.

    Secondly, you talk about "the recent property collapse". What collapase are you referring to? HK property is at record highs, (and bear in mind this is in the context of a severe economic crisis). There as been no collapse at all in HK.
    Last edited by randy1; 23-06-2012 at 06:34 PM.

  9. #39

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    Quote Originally Posted by randy1:
    [ keep the other 5m in cash, and be on the lookout for an extreme bargain that might present itself.

  10. #40

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    Gweilo 86: What property collapse are you talking about? Is it HK or you are talking about USA and Europe? HK has had many ups and downs, but at present the property market is steady. Does not look like collapsing.Prices may come down in some ares of N T. As for as HK island and Kowloon are concerned, I do not see any major change.


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