Sunday 12 October 2008

Let's Party Like it's 1929 - Shares v's Property

Here's something you don't see every day, in fact I'm not sure it's ever been seen before. Perhaps back in 1929, but it's certainly been a rarity since.

The pic attached is of the FTSE (UK) share price index last Friday (October 10th 2008). It is the only time I have ever seen the screen entirely in red. For the uninitiated this means that every single stock in the FTSE was in retreat (prices were going down). If anyone knows if this has ever happened before in living memory we'd love to know, just for the 'table quiz' value it might provide.

Further down the picture indicates the prices going up on the left hand side at the top of the screen, it is completely blank, with the prices going down on the right hand side, where every single FTSE stock was listed.

I guess this highlights just what the stock market can, and cannot, do. It can be a generator of wealth if you're prepared for a bit of a rollercoaster ride. Of course most of us would invest in shares in the presumption that they would, in the main, go upwards. The bloodbath that's been seen over the past few weeks could not have been predicted even six short months ago. But there you go, stock markets can be very difficult things on which to get a handle, even if you're an expert in such things. Let's face it, the experts have probably lost more money than anyone else in this very public flogging that the markets are taking. You can't beat confidence and it is something that is singularly lacking in virtually every share market in the world at the moment. 

If you want stability then it has to be international property, not just any property, but well chosen property at a reasonable price with sustainable rental capability. If you want liquidity (being able to realise your investment quickly), on the other hand, then you'll have to plump for cash or shares. Cash will generally struggle to keep up with inflation in the bank. Of course that bank could go bust, but if you're in Ireland you won't be too worried about that, at least not until the government reveals all of its, more than likely very stringent, bank guarantee criteria. As for shares, well they're a gamble at the best of times so if it's gambling you're after then they might be worth a shot. If you want sustainable returns, however, you'd probably be better off investing in property. 

As they say in Wall Street these days, 'Let's Party Like it's 1929'.  

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