I am an economist. You must believe me. If you don't believe me, then why the central banks and big banks around the world employ economists to help them make money ? Last time the FED and all the banks in America collapsed due to sub-prime because they never employ me. If they employ me as their top economist, then they could have avoided the crisis 

I do think that our market is in a bubble of sorts but I'm not a DDD by any measure as my view is that the manner of the end of our bubble cannot be timed and predicted with precision. There are a myriad of possible endings, especially with BNM's intervention, EU and Japanese easing amidst the end of US QE and a potential Chinese slowdown. There are too many factors at play, and anybody who thinks they can time the market, whether up or down, is wrong as success in prediction depends more on luck than skill.

Rather than predict the future, all I believe we can do is assess and manage risk. As long as you are not too exposed, nothing wrong with holding a little property as long as you have other assets.

Your past decisions to bet big on property may look correct in hindsight, but back in 2008 there was a clear risk of a global depression that was only averted (or delayed, some say) by a controversial experimental monetary policy. The fact that the measures worked out to the benefit of Malaysian property investors was not something anyone can reasonably predict and claim credit for after the fact.

Please do not take this as a disparagement of your experiences. Bubbles happen all the time. There is a lot of money to be made on the way up, and in truth the smartest decision when facing a bubble is actually to join in, not to stay out. The trick however is to get out before it's too late. I don't think it's too late just yet, but if you wait too long you may not be able to get out in time.

Play safe. 

In particular, over a protracted period of good times,
capitalist economies tend to move from a financial structure
dominated by hedge finance units to a structure in which there is
large weight to units engaged in speculative and Ponzi finance.
Furthermore, if an economy with a sizeable body of speculative
financial units is in an inflationary state, and the authorities
attempt to exorcise inflation by monetary constraint, then
speculative units will become Ponzi units and the net worth of
previously Ponzi units will quickly evaporate. Consequently,
units with cash flow shortfalls will be forced to try to make
position by selling out position. This is likely to lead to a
collapse of asset values.

Ok, come back to serious discussion. I am into rental properties. So I hold long term. No intention to sell any soon. If you read my previous posts, you will see I always complain about high property price. It is so high it causes the rental yield too low to make any financial sense to buy rental properties now. Putting the money in FD which yield 4%+ could earn more than the rental (after all costs and taxes, and taking into account the work needed to become a landlord)

So, I wish the property prices will come down so the rental yield could go back up to 6%+ at least, which is ~historical %. But as much as I would like it to happen, I don't see any factors that will change the direction of property prices. If you see my point, I am actually a DDD who thinks that prices will not fall unless some changes in government policies are implemented or a external economic crisis happens

 
U wanna to hold for long term and collect the rental. No intention to sell any so soon
U oso predict next yr 2015 property price will drop at least 50% to 75%

In fact u should sell ur property now n buy back next yr.  

Then there is no point to wait for dead chicken since u know good area hard to get dead chicken.
Even got dead chicken, ppl oso won't buy coz the area no good.

 

Aiyo, where will crash..... Malaysians in general were like Ktards, owning RM20k above monthly wages, have multiple sexmates, where real estate agents are the most lucrative wage above RM50k a month, MLM business downlines RM150k/month, how to crash la???!!! If not all work in Petronas, all also above 30k/month at least!!

Everyone can afford one man... Roll roll and roll, we got unlimited access to money one lah!! What for get higher education, SPM education also can prevail one lah.... Your friendly ah long will guide you to your riches even you got no money, just borrow RM500k and  put your wife and kids as collateral lah.... Once flip sure can throw back the money to the ah long's face one.... Trust me, money supplies always unlimited.

All flippers have strong holding power, can afford to leave their vacant for 15 years before buyer is found.

I liken that mindset to that of a lottery winner.

All empirical evidence and real life experience shows that buying a lottery ticket is foolish. The risks are higher than the rewards.

However, somebody has to win the lottery.

Is the lottery winner a genius for buying the right lottery ticket at the right time?

Or is the fact he won simply proof that you cannot judge the probability of an event from the outcome?

An oft cited example by Nouriel Roubini is the CEO of Citibank who was forced to resign after he called the US subprime bubble in 2002/2003 and refused to partake in subprime mortgage products, which were hugely profitable. As the market continued to go up despite his warnings, he was replaced by the board with someone who didn't believe in the bubble and dived headfirst into subprimes, causing Citibank to crash and burn in 2008.

The lesson here is that even if the signs are clear, timing is impossible because there are too many variables.

I highly recommend "fooled by randomness" by Taleb. In that book he shows how the way we think about probability and success in prediction is wrong because it is always viewed with the benefit of hindsight.

I was the one went through the 1997 crisis in the stock market,
I can share the experience during that time and a lot of people saw rosy prospect ahead, as many said it was rise of Asian Tiger back then, most people were very optimistic about the economy situation even though stock market had risen quite significantly , and stock market was quite buoyant. Even some analyst said high PE is justified due to rise in earning, just like dotcom bubble.

Little people saw the crisis coming, due to currency depreciation.
RM was as high as USD2.50 before the crisis hit.

Not to discredit economist or analyst,
but if economist and analyst indeed very good in seeing the future, RM won't surge to USD2.50 before plunging to more than RM4 just in months time.

The same can be said before subprime mess, Japan real estate burst and loss of decade etc.
Little economist saw how deep subprime affected Lehman, and the Lehman aftermath event that lead to global financial crisis.
Same with Euro debt crisis, little saw it coming until it is too late.
And same with Euro debt crisis, when most people including many analyst doom and gloom and predict the crisis exploded, it did not. In fact stock market in Europe hit all time high, and Euro stay high.

After seeing through and experience many kind of bubble/crisis, from experience, crisis often happen when people least aware.
As if people is more aware, people will take precaution measure, when people take precaution measure, means bubble deflated before it burst, hence the magnitude of crisis is significantly reduced already.

The next crisis may be out of most people prediction.

Try to time a crisis and predict a crisis is more difficult to guess a lottery number.

Basically, what I want to tell is future is unpredictable, economist can use data to justify whatever scenario, but whether it did follow the theory, it is another matter.
Human behaviour, how situation unfold in economy is never a mathematics or science subject that can use theory and calculation to predict exactly the outcome.

Risk can be assessed, but risk assessment high and low issue is another front compared to predict some event/crisis to happen and happen at when.

For eg.
Current invest in a property risk is higher than few years ago due to escalating house price that is too fast, as well as household debt is high comparatively.

So one can base on the risk assessment to do asset allocation, and alter investment decision etc, aka you look for reward ratio issue etc to make the asset allocation.
But you do not predict the property price plunge at 2015 or 2018. This is the difference.

As I do not have crystal ball to predict whether bubble will burst and burst at when.
I can only do whatever the deemed suitable for me aka just like you said, risk assessment, then I adjusted asset portfolio based on assessment done.

I cannot predict something to happen and when it will happen, that is beyond my control.

As those thing I have no crystal ball to know, so I cannot predict like bubble will burst on 2017 , and I won't make investment based on the prediction.

For me, and from experience, it is not wise to make any investment decision, based on prediction made.
Eg. predict stock market crash on 2015, then sell every stock and keep cash, or short the market etc.
As if the stock market doesn't crash, I may lose big due to short by predict the market to crash.

Even if the stock market is high in valuation (yes I view current valuation is high), I can do
1. Stop buying any stock
2. Reduce stake
3. Switch to defensive stock, low beta stock etc.

But I will never predict the market to crash that sell everything and short the market.
We can't time the market, but we can make asset allocation, diversification to counter the risk of it.

Euro crisis has given a good lesson why we shouldn't predict and time the market.
Those short Euro, short Europe market, sell everything during that time based on prediction Euro may disintegrate, are loss big time due to prediction.

Who can predict Nokia 10 years ago that was handphone leader now no longer leader.
Who can predict Apple (prior before Iphone and Ipad) will become leader in handphone and tablet.

That's why I stop making prediction, because I am not good in predict something to happen as had seen so much thing changing that beyond my capability to predict.

Agreed that 1997 crisis wasn't caused or started by property bubble, quoted to show property price did dropped in the past.

Whiskey Contributorby Whiskey Contributor.Posted Jan 25, 2008.
WHEN SOME OF THE MOST INTELLIGENT AND POWERFUL MINDS in the financial world are all doing one thing, it can be very difficult for anyone to do anything else. With fortunes at stake, both personal and financial, going against the trend can sometimes lead to losses totaling in the billions.

If the winds are all blowing in one direction, it takes a brave and confident person to stand against those gusts and forge ahead into a new path. This is what two traders at Goldman Sachs did last year, and their bet paid off. These two traders, with a stronger stomach and a greater appetite for risk than most, went against the common thought on Wall Street and are now being lauded as financial heroes for their efforts.

In early 2006, like almost every other investment bank in the world, Goldman Sachs was exposed greatly to the booming subprime mortgage market. Goldman was doing a lot of business with the mortgage-backed securities that wound up exploding a year later, crippling many of Goldman’s immediate rivals. So why didn’t Goldman suffer the same fate as Merrill Lynch, Bear Stearns or any of the other once-giant investment banks? The answer is quite simple: they took a huge risk.

Michael Swenson, 40, and Josh Birnbaum, 35, with the help of mortgage department head Dan Sparks, 40, were able to convince the higher-ups at Goldman that things would soon come crashing down around them. Swenson and Birnbaum, traders in the firm’s mortgage department, were convinced that the subprime market would fail. Their convictions were not new, but they were in the minority opinion.

As early as December 2006, The New York Times reported on a study that predicted foreclosures for one in every five subprime loans. The report was conducted by the Center for Responsible Lending and was the first of its kind relating to the subprime market. The report stated that about 2.2 million borrowers who took subprime loans from 1998-2006 would be likely to lose their homes.

Swenson echoed the study’s sentiment. In January 2006, the ABX debuted. The ABX, an index of tradable asset-backed securities and credit default swaps, gave investors a chance to gain broad exposure to the subprime market. At the time, Swenson was head of ABS trading at Goldman and participated in a panel discussion at the ASF 2006 conference.

“The market has become big — I mean really big,” Swenson said at the conference.

In late 2005, Swenson convinced Birnbaum to join the structured-products trading group at Goldman. Birnbaum was already a Goldman veteran and had developed a new security that was tied to mortgage rates. Swenson convinced Birnbaum to try trading in the first ABX index. Goldman instantly started making profits with its ABX trades, but Swenson and Birnbaum were forced to use Goldman’s own capital to execute the trades.

Late in 2006, Goldman still had huge exposure to the subprime mortgage market, due to its holdings of CDOs and other securities. David Viniar, Goldman’s CFO, suggested to the group that it adopt an even more bearish look on the subprime market. Swenson and Birnbaum could not agree more and the pair quickly got to work.

Swenson and his group of traders began shorting slices of the ABX. The depression of subprime lending had yet to hit the market and these credit default swaps they were buying were still very cheap. Goldman had a lot of work to do if it wanted to sufficiently hedge its position in the subprime market. Goldman’s exposure was high, and it took a lot of time and even more money to build enough swaps to fully hedge the bets.

Swenson and Birnbaum had bets focused on indexes in the ABX that reflected the riskiest portion of the index. The subsequent weakening of the index was twofold. As predicted in the 2006 study, many subprime loans had begun the foreclosure process. Also working at the same time was an increase in hedging activity involving the ABX index.

As reported as early as September 2006 in the Financial Times, the activity of hedge funds in the U.S. housing market had grown substantially. As a result of the hedging activity, the ABX index began declining. Home prices were falling, and the early signs of a collapse were all presenting themselves. The time to get into this short market was running out.

Luckily for Goldman, Swenson and Birnbaum had begun making their short trades nine months earlier. The appearance of CDOs, which were not as prevalent in the last housing slump, had buoyed the market and kept a bust from appearing. The mortgage shorting market was growing, but it had not yet topped out. Many on Wall Street believed that everything would be fine and that the housing slump would work itself out.

Meanwhile, back at Goldman, people were starting to get nervous. Despite the fact that Swenson and Birnbaum, with the heavy backing of Sparks, seemed to be correct in their bearish look, they were still investing a lot of money — Goldman’s money — in this idea. The idea of a single trader crippling a big company by making a bad decision was not new. We saw it in 1995, when Nicholas Leeson was held responsible for a $1.4 billion loss and the collapse of Barings PLC. As recently as yesterday, a single trader, Jerome Kerviel, 31, was discovered committing massive fraud and losing $7.16 billion for Societe Generale, France’s second largest bank.

Goldman’s chief executive, Lloyd Blankfein, was growing concerned with the amount of risk these two young traders had exposed Goldman to. Along with Goldman’s co-president, Gary Cohn, Blankfein demanded that Swenson’s group cut its risk in half. The position taken by Blankfein should not have been a surprise.

In June 2007, Blankfein, along with Merrill Lynch CEO Stanley O’Neal, spoke about his feelings on the subprime markets at a conference in London.

“It’s reasonably well contained,” O’Neal said at the conference. “There have been no clear signs it’s spilling over into other subsets of the bond market, the fixed-income market, and the credit market.”

Of course, O’Neal was wrong, and it cost him his job. As wrong as O’Neal was, Blankfein echoed his sentiments at the London conference. Swenson and Birnbaum couldn’t have disagreed more. The two believed that the housing markets, along with the credit and other surrounding markets, were still headed for dire areas.

As is usually the case, hindsight can be 20/20. Few were able to predict the fallout of the subprime market before it came. Many smart people thought that subprime lending would be a huge boon to the economy, and they were right.

In fact, Sen. John Kerry of Massachusetts wrote a letter to Freddie Mac and Fannie Mae in 1999. In his letter, the senator urged the two government-backed mortgage institutions to increase their dealings in the subprime industry. Kerry thought it would be a catalyst to help first-time and low-income families become homeowners. Kerry was right, and the boom in housing for Americans who could not afford to own houses unofficially began.

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Years later, in December 2007, Kerry, along with several other democrats, signed a letter written by Sen. Chris Dodd and addressed to Fed Chairman Ben Bernanke. Dodd urged the chairman to enact strict controls on lenders who work in the subprime markets. Kerry’s endorsement of this letter says much about the man. Evidently, the senator voted for subprime lending before he voted against it.

Swenson and Birnbaum held fast to their convictions, but alas, the orders from above came down and they got out of their short positions. Believing they had left money on the table, Swenson and Birnbaum continued badgering for the authority to get back in the game. They would eventually get their wish, but not before Goldman started experiencing severe losses.

As the subprime and general housing market continued to shrivel, Goldman realized that it must begin selling off many of its risky CDO holdings. Just like Merrill and Bear Stearns, Goldman was exposed to these poisonous holdings, yet it began selling its shares quickly.

The shorting market had now become harder to break into, but Swenson and Birnbaum returned to the fray and continued their short position on these CDOs. In July 2007, the riskiest part of the ABX index finally succumbed and began to plunge. As Merrill and Bear Stearns were set on a rapid fall from grace, Goldman was covering its losses and raking in profits.

The position of Goldman stayed the same throughout the fall of 2007 as things somehow managed to get even worse. The firm posted record quarterly earnings. Goldman was back in the black, and the smart moves by the guys that got them there were not overlooked. Swenson, Birnbaum and Sparks each received bonuses between $5 and $15 million.

While saving one of the biggest investment banks in the country has earned Swenson and Birnbaum a lot of credit for their investments, they are not alone when it comes to these giant gains in the housing market.

John Paulson, the head of New York hedge fund Paulson & Co., shared a similar belief with Swenson and Birnbaum. Paulson’s hedge fund started two funds in the summer of 2006 that were concentrated solely on expecting a collapse. After his expected collapse arrived, Paulson’s fund garnered some $15 billion in 2007. Paulson’s trade is considered to be one of the biggest single moves in the history of Wall Street.

A lesser-known version of the John Paulson move was the dealings done by Michael J. Burry and his Scion Capital hedge fund. In May 2005, even before Swenson and Birnbaum got to work, Burry made the decision that the housing market was overvalued. He placed a bet that the subprime mortgage market would eventually collapse.

Much like Swenson and Birnbaum, Burry used credit derivatives that were essentially insurance against defaults. He entered into the riskiest parts of subprime mortgages, and at first, his investment appeared foolish.

Through the first nine months of his investment, Scion’s funds were down 16.4%, with most of that loss coming from his credit derivative positions.

Burry made a risky decision and put the poorly performing credit derivative positions in what is known as a side pocket. By doing this, he basically separated these investments from the main fund, whose performance they were seriously injuring. Investors became angry about this, because the side pocket locked up their poorly performing investment into a fund they were unable to exit.

But of course, the market started losing ground and eventually went into a free fall. Burry’s investment paid off, and all those furious investors who were not allowed to leave wound up walking away with huge profits.

Men like Swenson and Birnbaum, Paulson and Burry have one thing in common. They have guts. They had the foresight to see the future before the rest, and they had the courage to stake their reputations, livelihoods and millions of dollars on their gut feeling.

The country, especially the financial sector, is run by some very smart people. Men with high degrees from some of the most prestigious academic institutions in the world are making high-stakes bets with large amounts of money. Even men with these pedigrees can sometimes make mistakes. And a couple of young hotshots toiling on an obscure index can prove that maybe they are the smartest ones of all.

Until next time,
Jamie Ellis
January 25, 2008

Just like why people should take what UUU ppl write in a pinch of salt as well; shouldn't just buy for the sake of those tokkok property investors that claimed to have gained their first million but only hang around in places like LYN.

My simple rule of thumb:-
1) There's no hot chick in the internet.

2) There's no rich dudes in the internet (no matter what Ktards 20k/month wagers claimed).

If this is available in mys, i will bet my $ on it.

A typical example u dont need to be an economist or highly knowlegeable to be wealthy..... u jus need the right person around u.....   

李嘉誠的司機給李嘉誠開車開了30多年，準備離職離去，李嘉誠看他兢兢業業幹了這麽多年，為了能讓他安度晚年，拿了200萬支票給他，司機說不用了，一兩千萬還是拿的出來的。

李嘉誠很詫異，問:你每個月只有兩萬收入，怎麽能存下這麽多？

司機回答說:我在開車時候，您在後面打電話的時候說買哪個地方的地皮，我也會去買一點，您說要買哪支股票的時候，我也會去買買一點股票，到現在有一兩千萬的資產！

這說明你是誰不重要，你和什麽樣的人在一起才是最重要的！

跟著百萬賺十萬，跟著千萬賺百萬，跟著億萬賺千萬。一根稻草不值錢，綁在白菜上，就是白菜的價錢，綁在大閘蟹上就是大閘蟹的價格。

跟著蒼蠅近廁所，跟著蜂蜜找花朵，跟積極的人在一起，你就是積極的，跟著消極的在一起，你就會出口成臟。

朋友，看看你所在的環境，需要改變沒有呢？

real or not doesnt really matter.... it definitely make sense to me.... the driver just need "courage"....

yeah ~ many stories created to impress readers ~

the real story probably the driver begged LKS to give him some tips ~

I have the same view 

But the DDD wont believe you. Simply because your view means it is more difficult for bubble to form, and crash eventually

Having gone from the sublime (zero-money-down mortgages for Chinese homes) to the ridiculous (when China's largst property developer says "the period in which everybody makes money out of property is gone,") the latest desperate act of a dying Chinese property bubble is stunning. As WSJ reports, Season Joy City (a remote suburb of Beijing) offers not only a party bag of bonuses to lure potential buyers; but the development's big selling point is "buy one floor, get one free." The government's reluctance to bail the nation out may soon be tested as Barclays notes "this downturn is more serious than in 2008."



As we ironically noted previously -  "please take this home: it's free."

But the biggest draw is a “zero down payment” scheme, available for a two-and-a-half-week period only. At first sight this seems to go against government regulations, brought in to keep house prices under control, which stipulate a minimum 30% down payment on ordinary residential purchases.

Zero down payment schemes have popped up around China as developers go to ever greater lengths to shift apartments, but Season Joy City may have the distinction of being the first to try it in Beijing, said Tang Li, an analyst at North Square Blue Oak, an investment bank.

“They will help homebuyers to apply for this consumer loan that they can use as a down payment,” said Mr. Tang. “It’s very difficult to judge whether this is in line with the regulations or not. So far there’s been no punishment from the government.”
And then there is the really desperate...

Season Joy City offers a party bag of bonuses to lure potential buyers. The development’s original selling point was “buy one floor, get one free.”

When China Real Time visited last week, helpful sales assistants also offered to throw in kitchen fittings and four air conditioning units for nothing.
As developers are desperate to avoid cutting prices..

All this is to avoid cutting prices, which developers could fear could tank public faith in the housing market and ultimately pummel sales further. Instead, they resort to ingenious “promotions,” throwing in freebies worth thousands of dollars and even whole free rooms rather than slashing prices outright.
And it is not likley to end well...

It’s very clear that developers are in a hurry to sell,” said Rosealea Yao, a Beijing-based analyst at research firm Gavekal Dragonomics. “Developers in the suburbs always see the biggest decline in sales and prices [during a downturn].”
“If the property sector is in deep trouble, it’s going to affect a whole lot of industries and that will drag down the entire economy,” said Liu Qinglong, assistant sales manager at the development. “I think in the future the government will set up a long-term mechanism to ensure steady growth of property market.”
Barclays is less sanguine than your average Wall Street silver-lining hunter...

"The downturn this time is more serious compared to 2008 and 2011," said Barclays Bank analyst Alvin Wong.

...

"The very fact that the PBOC had to provide that window guidance means there is a problem," said Xiang Songzuo, chief economist at Agricultural Bank of China Ltd., using industry jargon for central bank jawboning. "Now, what you're hearing from banks' local branches is that 'we just don't think the property is worth that much money anymore.'"

...

"I don't believe that the local governments will be allowed to reverse the home purchase restrictions."
As WSJ concludes, with buyers standing on the sidelines and some developers starting to sound desperate, the government’s ability to support the market may soon be put to the test.

bearbear, I apologise to you for not being able to convince you earlier that bubble burst is not going to happen. You could have bought your dream property earlier at lower price. But its ok. Better late then never. Let those DDD like iceman keep waiting, like what they did the past 5-6 years. They will continue to hope for something not going to happen in the near future. And they will be disappointed again and again.

Sorry bro...

From bear bear case, have chances to buy the green terrain at 500k++ but at the end look at 650k prop. And out there are many more such cases. People are hoping that market going to collapse because of these. At the end bear bear close deal then can sure collapse is harder than win 4d lo. Wait bear bear good news to pump up the market confident level to 200%.

online is around 650k... dis is agent.. sadly never close deal.. agents increase price..

no worries will buy and update..