Okay, then, in California between 1988 and 1990 house prices rose 50% in most cities. A similar thing happened in New England two or three years earlier, where prices rose up to 75%. In Australia there was an even more stark example ? house prices doubled, almost country wide, in a 12 to 18 month period from the end of 1987.
What ?caused? these booms? Was there a sudden drop in supply and a huge increase in demand? No. How far did interest rates fall? They rose! Remember those sky high interest rates in 1989? Was there a sudden massive increase in immigration or fall in unemployment? A shortage of land? A rapid inflation in building costs?
It was none of these things. It never is a change in economic ?fundamentals? that causes a boom or bust in house prices, despite what well-meaning economists might tell you via the perhaps not so well-meaning media. You have been dumbed down (conditioned) into believing that the earth is flat when it has always been round. And you never question it.
Think about it: If availability of land had anything to do with house prices, how could real estate values fall 80% in Japan in the decade following 1992 or fall 65% in Hong Kong between 1997 and 2002? Those countries have a genuine ?shortage of land.? And if location is the three golden rules of property investment, then why do some of the best properties fall the most in a bust?
There is only one thing that changes whenever there is a boom or bust in house prices. And that is the collective mindset (mood) of the ?herd.? Humans are driven by an unconscious urge to herd together and all do the same thing at the same time. That's why they all panic at the same time. Logic and common sense does not influence your decision to buy or sell real estate. Emotion and impulse does. That's why you often buy at the top. You buy ?because everybody else is making money? and you don't want to ?miss out.? On the way up panic is motivated by greed. Then you sell at the bottom (panic motivated by fear) ?in case prices fall further.?
I often say to my readers, when in doubt there is only one simple rule of investment you need to remember ? buy when prices are low; sell when prices are high. Yet it is human nature to do the opposite. When house prices are on the bottom and have been nowhere for many years, nobody wants to buy. But once they double in price, everybody wants to buy. I rest my case.
How do you break free from a herd of lemmings that might be rushing toward a cliff to commit mass financial suicide? How can you separate yourself from the pack and avoid the mistakes that most investors make?
The remarkable thing is that human crowd behavior has a pattern to it and you can learn that pattern. We call it the Wave Principle. The bottom line of a new science called socionomics is: mood governs events and not the other way around. Once the penny drops as to what that means, and you learn how to count the waves, it can be like discovering for the first time in your life that Santa Claus is not true.
You have been taught to study the plane. I teach you how to study the pilot.
The prices of petroleum rebounded after they had plunged to their lowest point this year due to the OPEC proposal to reduce its production. But the rise was further supported by a US government report regarding the decline of heating fuel inventories and the decision of Norway to shut its operations at 2 offshore oil blocks thus disrupting supplies from the third biggest oil producer and exporter in the world. Crude oil, then, settled at $58.19 per barrel in the US after it had previously dropped to $57.22, which was its lowest point since December 2005. Although the Organization of Petroleum Exporting Countries decided earlier to maintain their 28 million barrel daily quota, the group of exporters is now considering to lower its production. In fact, the OPEC members have proposed to cut daily supplies by one million barrels. The group of exporters though is yet to decide over the matter.
Meanwhile, Norwegian safety officials ordered last Thursday a shutdown in the operations at 2 offshore oil blocks. But according to reports, state-owned Statoil ASA and the Norwegian unit of Royal Dutch Shell, both of which share the operations in the two sites, were likely to continue with their production until they meet and negotiate with concerned authorities. A representative of Norway's Petroleum Safety Authority said that the agency had already sent letters to the two operators informing them that it did not approve the lifeboat standards at Norske Shell ASA's 140,000 barrel a day Draugen field and Statoil's 110,000 barrel a day Snorre A platform. According to Inger Anda, the shutdown order would result to a 9% fall in Norway's daily oil output, which is around 2.7 million barrels of light oil, crude oil, and natural gas liquids. The disruption of Norway's production would then affect global supplies considering its position as one of the biggest petroleum producers and exporters in the world.
Meanwhile, the US Energy Information Administration stated last Thursday that domestic stocks of distillates that include diesel and heating fuel dropped by 1.6 million barrels thus settling to 149.9 million barrels. According to the EIA, the decrease was due to the decline of operations in fuel refineries. Heating fuel accounted for the larger percentage of the fall in distillate inventories considering that heating oil plunged to its lowest level since March 24. The current distillate inventories though are still above the average level for this season of the year. Meanwhile, crude oil inventories increased by 2.4 million barrels thus settling to 330.5 million, while gasoline stocks rose by 300,000 barrels to 215.4 million barrels. It must be noted that the cost of petroleum is hovering around its lowest point this year amidst reports that major exporters might soon cut their production.
Recently, exporters have proposed a one million cut in the OPEC output. Particularly, Iran and Algeria have openly expressed their support to the proposal. Meanwhile, Saudi Arabia, which is the biggest oil producer worldwide, is yet to issue its final decision concerning the issue. Its move would be crucial in determining the future of oil prices in the global market. Since the middle of July, the cost of petroleum has decreased by more than 20% thus rousing serious concerns among the world's biggest exporters.
Both Graham Dyer & Vasily Klimko are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Graham Dyer has sinced written about articles on various topics from Finances. The forecasting record of "The Graham Dyer Newsletter" (since July 1983) puts it at the top of the world pack, including the 1987 stock crash, the Japanese debacle of the 1990s, and the real estate boom this decade, to name just three. Graham's work is a. Graham Dyer's top article generates over 1600 views. to your Favourites.
Vasily Klimko has sinced written about articles on various topics from Economics, Internet Marketing and Keyboard Synthesizer. For more valuable information on , please visit http://www.toboc.com. Vasily Klimko's top article generates over 40500 views. to your Favourites.