When getting advice on Getting Rich, never trust Property Agents / Consultants

Haven't you noticed? Whenever interviewed by the media, they almost always talk up the property market, saying things like prices have stabilized and now is the best time to get into property.

Yes, according to them, NOW is always the best time to buy property.

Recent case in point: in today's Sunday Times, among the 10 investment "experts" interviewed, the PropNex CEO said "property is certainly a good investment now". Only 2 other interviewees shared this view. Another gave a rather redundant generic advice - "property investment is sound if one is confident...", while six others suggested waiting for prices to drop further.

That is why I always give a huge discount to what those PropNex and Knight Frank directors said. They are biased. It is always in their interest to say something that helps their business, especially in times of declining property transaction volume.

Yet, incomprehensibly, the newspapers keep asking them for advice on property investments.

In my opinion, they should only talk about how the property market is doing and not make any predictions. Neither should they give any advice.

Same goes for property agents.

Otherwise, it's like asking a bank relationship manager whether her investment products will do well.

[Added 29 Dec: ]

But there's one piece of good unbiased analysis in the Sunday Times feature, coming from someone who doesn't deal in property for a living. Mr Gabriel Yap, senior dealing director with DMG & Partners Securities said:

"(My best decision this year was) to liquidate practically all my trading portfolio when the market saw two price peaks in October 2007... Based on experience, property will be the last asset class to recover this time round, in view of the looming supply. As with the past great equity bottoms of the Singapore market in 1985, 1998 and 2002, equities will bottom first before the economy, then will come companies' earnings and lastly, the property market."

http://www.salary.sg/2008/when-getti...y-consultants/

I have noticed several "popular" names that are frequently interviewed. The more you read, the more you notice that the similar types of comments made by each name.

For eg, someone from Savills was still saying in 2008 that property prices are strong and will continue to strengthen, etc. Granted, most people were saying that too. Now look at what has happened to the market.

My point: same as the author. Property agents/ firms are not the places to go to for comments on property prices. Do your own research on URA website and also on websites such as salary.sg.

I think this applies to getting advice from all the "so-called" experts. It was not only the property experts that said 2008 was a good year to BUY.

If you read all the top equities analysts reports, most of them said BUY! If you read a particular commodities' expert's articles, his view was that commodities was on a bull run or whatever. When the market peaked, he said BUY, when the commodities index came down 50%, he said don't worry hold long term buy. If you read what the head of the leading online fund distributor in singapore said at the beginning of 2008, his advice was of course BUY, when it came down 50%, he said it is cheap, he says BUY more now.

At the end of the day, these people are just doing their jobs to talk up the market. Some actually believe in what they say in a naive way, while others are just marketing people paid to talk up the market.

At the end of the day, I believe that it is the contrarions that make the real money. Buy low when no one has the guts and sell when everyone is buying. But it is a strategy that takes guts as it is difficult to time the market completely, you can't possibly buy it at the lowest nor sell at the highest, so you will need some stomach for this.

One person who does that well is the gentleman that bought Natsteel cheap understanding the real fundmamental of the steel industry which was about to turn as well as selling SC Global at the peak of the property market. This is one astute investor that understand business cycles and taking profits.

I also do not subscribe to the blind theory of long term investing. This is what the experts always say when they are wrong, they say that in the long term you will make money although you have lost money in the short-run. This is also what the experts say when prices has run up and why you should be continuing to buy property, stocks, commmodities etc, that in the long term you will make money although you may lose money in the short term.

Blind long term investing subscribed by many so-called experts is crap, because they subcribed to the fully invested theory. If you are always holding to investments long-term, you will never have sufficient cash to BUY when the markets are low because you are always fully invested and do not have cash.

I believe that asset allocation is the most important strategy for any individual, when markets are high, you need to be willing to allocate significantly more of your portfolio to cash by taking profit. Although, you may feel the pain of seeing opportunity loss when the prices continues to go up, at some point in time your decision will be right. The same when the market is down, you need to signficantly allocate all your cash into investable assets. Again you might be wrong in the short term as market may go down, you will do alright when market recovers.

At the end of the day, no one can make you rich, only yourself. Use some common sense, don't just trust the so-called experts blindly.

I have not done brilliantly in my personal investments as I have been conservative, but I have not loss much. I still have 85-90% of my total capital as it was mostly skewed towards cash, fixed deposits, preference shares. In 2009, I will be looking to deploy most of it into equities and oil ETFs. In 2010/11, I will possibly look at property as I believe that this property downturn will last longer. History has also shown that property is always the last asset class to move in a bull market.

Well said, James. You'll do well.
To add to your point on "expert" opinions, I personally find the quality control of such opinions in Straits Times wanting. It bothers me when the most-read English broadsheet here keeps publishing biased unbalanced opinions from people with vested interests, ie people who sell/market properties, stocks and funds.
Read any other broadsheet, even Business Times and Zao Bao, and you'll notice the difference. Such other broadsheets do a much better job in this aspect.

I think the advice given by Gabriel Yap is rather good. Property do lag behind stocks and the economy as an asset class. Anyway, he is not from a property firm thus the advice he gave regarding property should be unbiased.

Just a logical deduction.

There are only few famous things in the macroeconomics space that crashes - equity market crash, property market crash and car crash. All are unexpected, unpredictable and you only knew it when it's too late to do anything, of course.

short term trading, no fixed rule.
medium term trading, get the direction right.
long term trading, get the timing right.

difference between strategies is holding power. thats why never invest more than what u have and what u need.

property is always the laggard indicator. financials instruments most of the time the forerunner.

and econs 101, no free lunch in the world.

Hello "of course",

I think the crash in 2008 was expected, it could have happen in 2007 or 2008 or 2009, but you knew it was coming when the stock markets and property markets peaked in 2007. You may not know exactly when the crash will happen but it was expected.

Most people are generally to "fearful" to miss the boat and therefore they either jump in too late into the rally or stay invested into the rally. Few people (I know a few) totally divested out completely and held cash only. For me, I did not cash out completely but still most of it.

Again, asset allocation is very important. No point spending all the time analysing individual stocks etc, if you put in all your money into the stock market, even the best companies will have its market value cut by 30-50%. Only cash/deposits would have kept its value.


James

[Hermit]

Never trust anyone who is still an "employee" to tell you how to get rich. If they know the way, they would no longer be working for someone else, right?