Quote:
Originally Posted by ptader
Hold on there, let’s get the picture straight here before pulling out all those sucker punches. Throwing an offhand statement that the REAL world works differently seems like a blatant attempt to prop up an argument that made no sense.
You started off recommending to others to hold on to cash and wait for 3 years property price to go down then buy. Together with this recommendation, you made several disparaging remarks on forumers who are bullish on property basically saying you’ve got the analysis worked out, investment is more than just buy & hold, good old days are over etc etc.
When challenged to flesh out your so called investment logic to back up your advice that property prices will drop the next few years, you then claimed that you are not into market timing but specifically emphasize to us that you’ve done calculations on the odds and you “play the probabilities” based on your analysis and economic rationale. So this brings me to my post #408 which I specifically asked you to share with us these so called calculations and probabilities.
You responded in #411 with totally ZERO evidence of any calculations on probabilities. Instead you listed down some generic things that everyone knows like interest rate is low, government is trying to cool down, global economic uncertainty etc and then just humtum either “for” or “against”. No numbers, no research, no trend analysis, no residential market insights - just a bunch of “for” and “against” personal judgments followed by a sudden conclusion that the odds are “against” for properties.
In #413, I asked you again the same question – where are the calculations you claim you did before arriving at your recommendation? This brings us to your latest post in #416, a highly condescending personal attack about me being childish don’t know anything about the real world etc. I have asked hard hitting questions on your investment thesis which I think is just as arbitrary and flawed as the buy-and-hold crowd which you condemned earlier, but I have so far not made an form of personal attack against you. I treat this latest tirade as a sign that you got caught swimming naked and now trying to back pedal.
Your excuse on how you cannot calculate probabilities due to the lack of perfect data and predictive model is like – duh!?!?!. I mean, if data and model is perfect, then that’s not called probability, it’s called prophecy. Even if you are unable to arrive at a defined x%, I was hoping at least there’s more thought process and research numbers to demonstrate you at least made an attempt to quantify the odds and a comparison of the expected returns on both alternatives.
Instead we get shaft with a so what attitude of “be my guest -it's your money and it's your life.” Yea we know that, can we have the calculations now please?
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Sigh. I don't know what is so difficult to understand.
Statistics 101. If you are in a closed system, like dealing cards, you can assign probabilities easily. But in an open system, there is no way to do so reliably. Assume Real Madrid plays Barcelona, and assume its an even match. If Messi, Barcelona's star gets injured, it is clear Real Madrid has the better odds, but can you reliably put a percentage to it? Now assume Xavi, the other Barcelona star gets injured, how much better does that make Real Madrid's odds?
Even if you assume that we can reliably assign odds to any one event i.e. Messi gets injured means Real has a 10% better chance of winner, or Xavi gets injured means that Real has a 5% better chance. How do you now assign correlation when both Messi and Xavi get injured at the same time?
There are ways i.e. regression analysis, historical track record etc, but there's too much noise and often too little data points to make statistically significant conclusions.
So, if you cannot assign probability numbers, does it invalidate the conclusion? Well, let's go to basics - what drives up prices ? Liquidity and affordability. There are other factors, but these are fundamental.
Let's look at each factor discretely (and assume I can afford to pay $4000 for mortgage because my salary is $10k):-
1. Buy when interest rates can only go up - today i may get a $1mn mortgage but tomorrow I may only be able to get a $750k mortgage. The impact of interest rates on housing prices is straightforward and hard to dispute.
2. Buy at all time high - prices have gone up 100%+ over past 6 years, while salaries have gone up by 20%. Now median household income in Singapore is $7k and median
HDB price is $600+k, 7 to 8x price to annual income ratio. The recommended ratio is 3x and the average ratio in the state just before sub prime was 4x.
3. Buy when record amount of TOP in both private and
hdb is due over next 3 yrs - basic supply demand dynamics. rental may fall.
4. Buy when govt is doing everything they can to bring down the market to a soft landing (which is always the target but almost never achieved) - remember, govt has unlimited bullets, and they have already taken away foreign liquidity via the 10% stamp duty. Affordability is reduced by 35y/65 yr old rule, 60% mortgage for 2nd pty.
5. Global uncertainty - if europe crashes, it increases the chance of margin calls which increases the chance of forced sales.
Affordability is adversely affected by 1, 2, 3 and 4. Liquidity is adversely affected by 3, 4 and 5.
How do you see prices go up ? Well the only counter argument is liquidity which could muddy the water, but I think long term, we will see a reversion to fundamentals.
In other words, if you lose Xavi and Messi, and Barcelona's coach is ejected, and your goalkeeper gets a red card, you would think that Real's odds have improved... even if you cannot assign a precise probability to each event discretely, nor can you assign a collective probability to the combination of events.
Or perhaps I should be asking, whatever is making you so confident of property prices going up despite the above?