Cross-posted from Investing in Chinese Stocks.
After 10 days of the new government policies on housing, the situation in Beijing is improved, with developers raising prices, but volume hasn’t jumped significantly for existing homes. According to one analyst, the lines out the door and jump in activity was caused by sales gimmicks designed to cash in on the government’s policy shift, iFeng: 新政十天多数项目鲜见提价 北京楼市热销真相:
“Now the market is far from the excitement of the extent of the heat, according to our survey, several known queued overnight, overnight selling items, mostly hype gimmick housing prices, want to give the buyers selling prices caused by psychological expectations. “The real estate industry analyst Chen Jianbo told the” China Times “reporter,” the truth is that after the New Deal, the property market transactions do see improvement, but only to rise steadily, did not show a blowout.”
One sales agent said their employer is clearing out existing inventory and not raising prices and buyers haven’t seen much marketing:
“Our project has now been converted to sales of existing homes, not much the rest of the houses, the key is clearing old project, and therefore did not launch a substantial promotional activities, but did not raise the price.” When a reporter to the identity of the buyers before the consultation, a salesperson told reporters dismissively.
Always intended to purchase Wong in Beijing after the New Deal, had to speed up the purchase plan. During the Qingming holiday, she consulted almost all just need to project Beijing real estate.
“I asked most of the project say much housing project, the basic situation is no centralized promotion push plate. Which is not a big bang there selling it?” Wong told reporters, real estate sales in the past, “bombarded” Interrupted different type of phone, after a clear, give her telemarketing sales staff is not much.
Cognitive dissonance is brewing as the real estate bulls see rampaging stock bulls as a bigger threat than housing bears.
Recently, with the Chinese stock market rush, stock skyrocketing, ordinary people seem to forget the painful lessons of the past, they rush into the stock market. Last week alone, there are over 166 million people in the venue. Compared to 2007 when the stock index peak at over 6000 points, a week madness comes into play nearly 178 million people, will know that this is what the concept of it!
…A history lesson, once this situation, the stock market often been mad. Experts at this time may have thrown a “sell your house, buy stocks” view, it is incredible!
I never said to sell a home, but for the past couple of years I told anyone who’d listen to buy stocks instead of property in China. Now, I’d cash some of my winnings for gold bars.
Stock market investors who invest most of them thought he was. However, investment and speculation is completely different behavior. When buying a financial product after the product can be kept expect to generate revenue, such as buying stocks, expect interest dividends regularly, this is the investment behavior; if only expected to sell at a higher price, such as stock buy low sell high, it is only speculation. Investment income from the investment material wealth created; and benefits are speculative losses from another speculator. In other words, speculation is involved in a zero-sum game (a loss of money and earn money sum to zero). Investment behavior can create wealth, and speculation does not create wealth, but the redistribution of wealth and transfer it. At the same time, due to investment income focus, the risk is controllable; and the risk of speculation, for ordinary retail investors, since the market is extremely asymmetric information, are not controllable. Further, the nature of the behavior of the same speculation and gamblers. Like casino gamblers always lose to the results, as most of the children to be lost to the retail dealer!
Wait a minute, is he talking about buying stocks or buying houses? The dividend yield on Chinese banks exceeds the rental yields in many cases.
That is the truth. Data show that, even in the mature markets of Europe and America, the long-term speculative retail speculators, 1 earns money, 2 stay even and 7 lose money. In the stock market flourishes almost impossible, from time to time people lose everything!
Currently, A-share market is 56 times the median PE, even if all future earnings are allocated to investors, investors also need to go back 50 years to the present! The GEM PE is already close to 100 it! Not to mention the stock market in China, the proportion of low real corporate dividends! Enter the Chinese stock market investors, the vast majority are not directed at the stock dividend, apparently basically speculation!
Selling your house to buy stocks after a 100% run-up is a bad idea. But if housing is a bad investment and stocks are a bad investment, what does that leave for the Chinese investor?
