Craig Gibbons' Lifeblog lifeblog://tri.eat.net

5May/090

Stocks, Bonds and other things I don’t fully understand

Lately I’ve been dabbling a bit in the markets. Following the deepest darkest stock market declines since the great depression, I figured if I bought some stock and just held onto it, sooner or later I’d come good and in the mean time I might even experience what it feels like to receive a dividend or two. As it turns out, I didn’t have to wait very long. By virtue of some expert picks (read: sheer luck) my selections took off almost immediately, with pretty much everything gaining somewhere between 5% and 60% over the past 2 months. The experience has been eye-opening. While I will in no way pretend any of this was anything other than, as I said, luck, I have nonetheless sought to increase my understanding of all things financial and now have a modicum of knowledge in the area, or just enough to be dangerous, as we say in the technology world.

Much of the commentary is seriously perplexing. For almost every viewpoint, it is possible to find a contradictory viewpoint as vigorously expounded. For every broker recommendation, others are lining up to discredit the research and cast confusion and doubt. What then is an amateur, or even a total beginner to do? In the past, I bought into some funds. These funds had been the top performers in categories for the past few years and seemed pretty safe. Clearly they were bought at the wrong time, but they tanked just as hard as anything else when all the people with million dollar houses on minimum wage across the pond stopped making their mortgage payments. Maybe, I thought, funds are not necessarily the way forward. What about gold? Well, after watching the gold price fluctuate between $800 and $1,000 an ounce, I decided there is not in fact “gold in them thar hills”. Oil? Smart play if you want to lose money quick. Those long on oil (betting on an upward movement) would have found themselves dead broke now as the oil price tanked (no pun intended) from a high of $147 last July (’08) to around a third of that now. Defensives I hear you cry! Sadly that way is danger too. Pharmaceuticals got high on their own supply, auto makers got a flat, miners dug themselves a hole and the banks, well, enough said about banks!

In the end, any (every) market participant needs to know something about what they’re actually buying and about the company, sector and economy, domestic and global, as a whole. Some investments are inherently safer than others and I’ve tried to diversify into those. Whatever happens from here, the learning experience has, at least, been well worth it.

16Feb/080

The Crest KL, growth of a property portfolio

It's been a successful last couple of years in London. Since starting at Merrill Lynch and moving on from the days of £200 dinners for kicks, expensive cars for fun and designer suits for nothing, I've wised up at last and started trying to make more of my opportunities. To this end I have added a 3rd property to (what I am now calling) my portfolio.

I've been shopping around for about the last 6 months for a good investment. By now, everybody knows the party is over for the London property market (in fact it's more like the morning after when you come out the club and it's light and you can't get a cab, and it's raining) so I knew I needed to look further afield to invest in something with actual growth potential. At the moment there are several so-called property hotspots in the world, among them Eastern Europe, Brazil, Macau (and indeed China in general), several of the Caribbean Islands, Mongolia and Malaysia. One thing I have learned through the process of looking for a good investment is that if you can see the herd, you're already too late, but for a part-time amateur investor like me, I was never going to be intrepid enough to take the risk on a completely new market so it was all about finding a location which was booming, but still not overpriced. The investment also had to be 'hands-free' (i.e. No more to pay after deposit) and preferably cash-flow positive or at least neutral (i.e. actually returned cash or simply took care of its self). Lastly, there needed to be good let potential and exit strategy, which implied strong local market demand.

Finally, after so many hours reading about different locations, analysing local markets, tax laws, exchange rate trends and rental yields I have found what I believe to be the best investment possible within my budget, a new apartment in Kuala Lumpur, Malaysia. KL is a booming metropolis and Malaysia is really on the up and up with 50% of the population under the age of 27, an urbanisation rate of 10% per annum and a booming IT services industry servicing neighbouring China, it looks set to achieve solid growth over the coming years. It should also be largely protected from the downturns in the current credit crunch given the economy is not dependant on the US consumer, like so much of the rest of the world is. The property is a two bedroom, 77sqm apartment in the heart of KL's Golden Triangle, about 5 minutes away from the Petronas Towers, the world's tallest buildings. Set for completion late 2010, this is definitely a long term investment and anything could happen during that time, but I figure what the hey, one can't be too overly cautious. It's a risk to be sure, but a risk I hope will pay off.

Update 26/05/2010: Initial completion estimates have proven to be overly optimistic. Instead of October this year, the Crest KLCC will now only be complete in the final quarter of 2011.

27Feb/070

Adventures in House Buying

It’s been a while since I sat down in earnest to write something to post on this blog. Truthfully, even though so many things have happened over the last couple of months, I have lacked inspiration. Call it writers block if you will. But now, after all this time, despite an all consuming work load and seemingly endless life and work administration tasks to perform, something wonderful has happened, something inspiring, something life changing! Gemma and I have bought a house!

We had in the past, discussed at length houses in London and our desire to own one. For the longest time we’ve been peering through windows and leafing through papers and watching those TV shows where somebody takes a wreck of an old barn and makes it into a palace and all along, the desire has been growing and growing until about a month ago we finally decided enough already, and we began to look for our own house, well, our own home.

People will tell you different things about buying a house and the gravity of the decision is not to be underestimated, but I don’t think either of us were fully prepared for the experience. Certainly in years gone by the property market has been buoyant, but never ‘white-hot’ as the Metro (that all-authorative source of information) put it a few days ago. This is by no means an exaggeration; it is profound how prolific house buying in this town has become. It’s a seller’s paradise out there and everybody owning anything from a town house on Regent’s Park circle to a janitors 3m x 4m shoebox in Kensington (no kidding) is cashing in. While this is bad news for buyers, I am confident this is still the time to buy. With London having now eclipsed New York as the financial capital of the world and city bonuses set for another record year, the trend seems set to continue. One is left with the feeling that every day spent not owning a property is a day one is losing money and as an estate agent friend of mine said, “Buy anything. Buy it now. It all goes up”.

Our new place, Subject to Contract (he says while clutching a wooden chair), is a 1st floor apartment in a beautiful period house not far from Queens Park in North West London. Guests welcome anytime.

UPDATE 10th August 2007: We heard last week our sellers have decided to pull out of the deal. Apparently the market had risen so much during the time us faithful buyers were waiting for problems to get sorted out, the sellers decided to go back out to market, for another £75k. Nice. We've been back in the hunt for a while since then. No darn fun.

31Dec/040

The Claremont – My perfect new flat

During this past vacation in Cape Town (22 - 29 December 2004), I had the good fortune to come across an opportunity to purchase a styly 1-bedroom apartment in a new development. Tired of listening to my fathers persistent pleas to purchase some property and 'get on the ladder', I decided to go have a look at this development in the Claremont area, more specifically, on Claremont main road. This new development, aptly called 'The Claremont', is located between the Pick n' Pay building and the Stadium on Main mall. Construction is set to begin in June 2005, completing sometime between August 2006 and March 2007. Eventhough timelines are a little vague at this point, I am of the opinion the wait will be well worth it. I managed to get the last 1-bedroom apartment in the entire development, it's relatively small at 55m2, but has a good view into the complex, which is completely secure, and comes complete with a parking bay and optional storage room. This is a good first-time investment buy and a perfect lock-up-and-go holiday flat. If anybody is in Cape Town around December 2006, come and visit me at The Claremont, Cape Town. I have space for, oh, maybe one other person 😉

Check out theclaremont.co.za for more details.

UPDATE 25/01/2005: Yay! ABSA Bank has approved my loan application. I am now officially a "home owner"!