Invest in bricks and mortar

Full page ad (back page of Property Supplement) in SBPost today by Hooke and MacDonald:

"Invest in Bricks & Mortar

The best investment over the centuries"

General ad - no specific development.

Investing in land will send us hotfoot on the road to poverty
davidmcwilliams.ie/2003/03/0 … to-poverty

Young victims of property tyranny
davidmcwilliams.ie/2004/02/2 … ty-tyranny

Meanwhile, in Japan

but, once upon a time they had a property asset bubble

Let me get this straight - General Irish belief is that the bigger your mortgage the richer you are !

God the road to riches is sooo easy

Its more a quest for social status within your peer group.

Standing up in the Olympia
davidmcwilliams.ie/2003/06/0 … he-olympia

The middle-class myth of affluence
davidmcwilliams.ie/2004/02/0 … -affluence

Rich Ireland leads to a stampede for status
davidmcwilliams.ie/2005/01/0 … for-status

Shouldn’t ASAI have something to say about this?
Aren’t there rules against lies in Ads?

Would it be fair to assume that when we consider the “Best” investement, we’re talking about Return on Investment?

In which case haven’t equities proven over the years to be “Better” than property?

Was there any ‘*’ beside the claim with small print defining what “Best” means?

-Rd

No, no explanation of what best meant.

I’m not convinced by the equities argument.
‘They’ always quote an index - but the index is of the top 100 (whatever). If something fails they replace it.
Try telling that to someone who had Barings. The index presumably didn’t drop them with a loss of 100% - I don’t know what the index does in these cases.
What happened to the DowJones when Ennron, Worldcom went bust. And what happened to the trackers that you and I can actually buy.

Yes, but a risk averse investor would buy the index, and not take their chances on the individual constituents. It’s not a bother to get the S&P index return, minus about .2 through a number of vehicles these days, and since Vanguard launched in the US in about mid 70s.

So are you betting the index or a fund based on the index?

You can’t bet the index directly, you have to bet through a fund. But a fund will publish its tracking error regularly, so you will be able to see how well it tracks the index. A large index fund will generally be within 2% over a year which is nothing. Some of the small index funds & ETFs can have wider, sometimes hilarious tracking errors.

Thank you.
So do you know what losses did these funds attract when (say) Ennron went to the wall?
Are you saying it wasn’t a disproportionate hit?

In all fairness, the globe in 1960-present saw more than a trebling in homosapien population.

Yet in the same period, the non-land costs of building usable shelter plummeted.

I’m guessing that, as population growth goes into reverse, we’ll see a dramatic halt to home price growth overall.

You’re trying to get at some point here and I don’t understand it. These funds would have lost whatever the Dow Jones index lost. Enron was just one of 30 stocks in the Dow Jones index, so the impact itself was probably less than a % or two. The knock on effects on equities in general would have been bigger. The S&P 500 for example has 500 stocks (as it says), so the complete bankruptcy of one would make little or no impact.

en.wikipedia.org/wiki/List_of_S&P_500_companies

True. I am trying to get at something but I think you’ve answered it.
Whether the failing instrument is taken out as soon as it drops to an insufficient valuation or whether it is taken out at zero makes little difference because it is only a small proportion of the fund.

In that case, why would anyone invest anywhere else?

Because people think the index return is “boring” and believe they can pick stocks to beat it. 99% of professional fund managers don’t, so they’re in dreamland - however it is fun :wink: Malkiels “A Random Walk down Wall Street” explains all…

I was wondering where your username came from! :stuck_out_tongue:

the actual impact of a stock leaving an index because it went belly-up depends on the size of the index. Enron was never a Dow constituent but it was a member of the S&P 500. The highest current weight of any company in that index is 3.35% (Exxon). The problem is that Enron eroded market confidence and if a big index constituent goes bust it could be an reflection of wider economic problems.

Don’t forget, Smart Telecom went bankrupt here in Ireland and the market still rose.

Irrelevant, Smart was a tiny company relative to the iseq index and I’m not even sure it was included in the iseq index. Index tracking is good in long run especially if you reinvest dividends every year.