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Technology Stocks : Semi Equipment Analysis

SOXX 324.89

-1.1%

Jan 7 4:00 PM EST

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To: Return to Sender who wrote (29363)	3/15/2006 8:09:50 PM
From: sammy™ -_-	of 95689

Very well said. As the stock market pitches restlessly, investors are quick to channel their savings into the security of bricks and mortar. Of course, a rapid increase in the demand for real estate results in a corresponding increase in property values. Historically, the value of property rises by at least 25% per year throughout this period of the economic cycle. Because property purchases are funded primarily by borrowings, a corresponding increase in demand for real estate causes an increased demand in borrowings (interest rates). And because interest rates increase in line with the demand for real estate (as well as other factors such as inflation), the rapid growth of the real estate market cannot be sustained once interest rates make the cost of borrowing money too expensive. I think this is where we are at moment. However, unlike the share market, the property market stabilises at the close of the real estate cycle – rather than crashing. This stabilisation in the value of real estate prices marks the beginning of the fixed interest (or cash) cycle. yo

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