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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: Davy Crockett who wrote (5366)	12/13/2001 11:35:25 PM
From: Cogito Ergo Sum	Read Replies (2) \| Respond to of 36161

Hi Peter, If I may butt in on one little segment. (it's been 9 years since I butted out ;o) not real estate) Let me preface this with owner occupied home.... I think that depends more (for the regular joe like me) on the size of the mortgage. In my case I have 3-5 years to go depending on what I think is best. Alternatively I could just take over my mortgage in my RRSP, give myself flexible terms and charge myself the highest legal interest rate to also maximize the RRSP. If, make that WHEN, I decide to move to the country all prices will be depressed in a deflationary scenario so if I'm only looking to replace one domicile with another on a relative valuation I should be fine ? The alternative is to sell the house and rent ? I know that's frank's plan now but he has the advantage of being in Edmonton where an oil bust is likely to ensue, so the deck is stacked in his favour. A second point. As I'm sure you are aware here in Toronto the rental market is very tight as it was when I bought my first home. It is cost effective here to purchase as opposed to rent. All else being equal a home owner will be left with more than a renter. In areas where rentals are abundant of course this is untrue. regards Kastel

To: Davy Crockett who wrote (5366)	12/14/2001 4:01:14 AM
From: LTK007	Respond to of 36161

(not real estate).... that is highly situational.Need evaluate the type of property as some properties will remain in demand in hard-times,imo.Key is,the very rich remain very rich at all times,and their are areas they will covet more in bad times. Urban properties would have the bleakest future. Areas where the rich like to flee to be the best.That is one cynics opinion.Max

To: Davy Crockett who wrote (5366)	12/14/2001 3:16:28 PM
From: pater tenebrarum	Read Replies (3) \| Respond to of 36161

Peter, well, it's not that clear cut. bonds, specifically the safe kind (i.e. government bonds, not corporates!) normally do well in deflation. just look at the past 12 years in the JGB market for instance...Japan has had a bond bubble as a result of its deflationary depression. paying down debt is clearly warranted, as debt burdens tend to become more onerous in real terms in a deflationary era. cash is fine, and i suspect gold/silver will be as well. i also think that stocks in industries that are not economically sensitive (tobacco and food for example) and at the same time sport high yields will be sought after. generally, safe income generating assets are a good bet in a deflation. with the bond market there's just that little problem that it obviously DIDN'T do well in '30 - '32. but then, there were some special factors behind that, inter alia the fact that gold was flowing out of the US, which the Fed attempted to counter by actually RAISING rates in late '31. could the bond market run into similar problems this time? yes, it could. in case the dollar should depreciate markedly, the vast foreign holdings of US bonds and notes could begin to weigh on the market. so essentially the bond market could become an ancillary victim of the current account deficit coming home to roost. that said, i'm short term bullish on the bond market, as i believe the recent sell-off was overdone and warrants a correction. but all big positions in the bond market should sport stops, just in case the negative scenario comes to pass after all.