Aug 26

Financial Maturity

Do you, like me, page through the Weekend Argus Property Sections and dream of buying those Chairman’s Choice super homes? Well if you do then you may have noticed that a strange thing has seemingly occurred.  Strange in that South Africa’s property experts tell us property has fallen, at the very most 15%, yet no one seems to have explained this to the sellers.  No there they are selling one and two acre prize Constantia properties for R4 –  R5 million.  Odd indeed when little over a year ago these babies were being pushed along at R8 – R12 million, were they not?

Seriously though, this segment of the market appears to be in free fall, with many sellers seemingly begging for any offer at all.  This has to be, for the person lucky enough to be hunting in this price bracket, the opportunity of the century (albeit only 9 years old!).

If you are selling to move up the ladder sell now and bank the cash. Rent for six or twelve months and look again, with estate agents closing as quickly as up market car showrooms, I am sure your pot of cash will go even further than it does today.

Chatting to a mate in the city of London, that’s the part of London that was until recently a financial centre, it’s now more of a Job Centre. Anyhow, he is convinced, and I share his view, that many asset classes are approaching their low point and many offer probably the best buying opportunity of a generation.

An, International, blue chip, respected bank may have become, in itself, a redundant term but there are some absolute bargains out there. Who would have ever thought you could buy these stocks on a PE of 1, 2 or 3?  If their earnings do bounce, as surely they must in the medium term, you could be looking at a 20 – 25% dividend yield, quite bizarre!

So what do we do boys and girls? Well as the old adage preaches, Never catch a falling knife,â but one can begin to see upper and lower ranges emerging for the Dow, FTSE and our own ALSI Index.  Time is fast approaching when bottoms may be found and bargains hunted, not that I have ever been a bargain bottom hunter!

The other day I listened to Berkshire Hathaway’s headman, the Old Sage of Omaha himself, Mr Warren Buffett, admit openly that he had caught a few falling knives in his time, and several quite recently. He stated, however, that if you don’t make any decisions you might as well become an MP (sorry I made that up!) he actually said those who make no decisions never make any mistakes, they also never make any good decisions either.

Yes I think its time to start nibbling out there amongst many of the asset classes, if only I had Mr Buffett’s cheque book I could become quite a champion bottom nibbler!

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