Let’s start with the laughable:
“Actor and writer Terry Chen performed in films including The A-Team, I, Robot and Almost Famous. Chen, 35, was born in Edmonton and splits his time between Los Angeles and Vancouver”
Clearly this makes him an investment guru worth listening to.
“I met somebody who told me, very early on, when I was 18 or 19, not to pay anybody else’s mortgage.”
“For some reason that advice stuck with me. The benefit in renting is you have flexibility, but in the long run if you are going to be paying rent you may as well be paying your own mortgage.”
But what if the cost of home ownership is double the cost of renting the same house and you instead take that money and invest it even in short term government bonds? And what if real estate is significantly overpriced by any measure of fundamental value? I’m sure he’s crunched all these numbers. He just doesn’t want to bore us with them.
“I have purchased and flipped about three properties in about the last ten years. At this point I have another large loft space in downtown Vancouver. I think the idea or goal for me now is to sit on the property I have for as long as I can and not sell.”
“Have you learned any financial lessons the hard way?”
“Absolutely. Playing the stock market. There have been certain times where I got a lead from a friend or source and tried to investigate it….I have lost tens of thousands in the stock market . . . I am less and less inclined to throw my money at (the market) these days.”
Got it. All real estate = good. All stocks = bad. Dude should stick to acting. You can’t make up advice this bad!
On to other more informative articles:
A very interesting article out of the UK where they are beginning their secular shift in terms of their views of renting and buying. The days of the ‘lowly renter’ social stigma are numbered. Some people (evidently not actors) are actually taking the time to rationally weigh out the benefits of renting.
“For generations, we’ve aspired to be home owners. But evidence shows we’d be better off renting – both individually and as a nation. In Germany and Sweden, the rental market is credited with making people wealthier and happier, and with creating more attractive cities.”
“Ours is not an exceptional case. The recession and the stagnation of the housing market have, over the past three years, contributed to the fact that Britain is increasingly becoming a nation of renters.”
“Although house prices are falling, they still remain out of the reach of the average earner, particularly now that banks and building societies are tightening up their mortgage regulations. This year, 67% of households in the UK are owner-occupied, down slightly from the all-time high of 71% in 2003. By 2020, that figure is forecast to slip even lower to just over 60%.”
“Fifteen years ago, Andrew Oswald, a professor of economics at the University of Warwick, was one of the first to note that countries with high rates of home ownership (such as Spain, where 89% of households are privately owned) seemed also to have high rates of unemployment. “I argued that that would ossify your labour market and economy,” explains Oswald. “You need labour mobility in an economy, with workers who are able to drop into the right kind of job slots, whether they pop up in Glasgow or Bristol. I continue to worry about the possibility that home ownership slows down people’s ability to move around.”
“Countries with a higher proportion of renters also have a higher GDP: Switzerland has a GDP of £46,719 per capita, compared to the UK’s £27,915.”
Oh heck, the whole thing is good. I’d end up reposting most of it if I tried to capture all the pertinent points, so just read the thing!
Assets getting whacked! Bond yields moving higher.
Just as the coordinated move in all asset classes over the past few months has me dumbfounded, so has the coordinated move lower over the past week.
It may well be that the expectation of QE2 buoying markets did a lot to actually buoy markets leading up to the announcement. Now that trade is unwinding.
Of particular note is the fact that the 5 year GofC bond (on which fixed mortgage rates are based) has seen a steady rise in rates and a fall in bond prices over the past month. The rates on the 5 yr are around 2.25%, up from around 1.9% in mid October.
This will be particularly troublesome for homeowners in need of refinancing if this trend continues, but I’m far from convinced that it will. I think this is likely the winding down of some front-running trades from those seeking to profit from central bank initiatives to drive bond yields lower. I’m still quite happy holding the bulk of my house portfolio in short term bond etfs like XSB, CLF, and CBO.