Interest Rates, Stock Markets
and House Prices
and House Prices
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It has come to the attention of the Small Monkey that much of the Free World* is getting itself
unbelievably worked up over house prices, interest rates and stock markets falling. The
weeping, wailing and general gnashing of teeth is deafening; '...everyone is soooo much
worse off, isn't it soooo depressing, recession is on the way etc. etc. blah blah blah...'.
A few points must, at this juncture, be clarified for the sake of the millions of idiots who have
talked themselves into this condition.
1. Interest Rates are falling. Clearly, this is bad news for people with savings in cash, but it is
good for anyone who owes money. Since pretty much every major economic power has
Governmental borrowing on an epic scale, this must be a plus, right? Especially since your
next pay-rise may now actually be worth something in real terms.
2. Stock Markets have fallen. In general, momentarily. They fall about 50 times a day, and
rise just as much. If you were to take any major index, pick any start point you like in its entire
history to invest 10 grand, then fast-forward 15 years, you'd have made money. Even taking
into account the corrosive effect of inflation (which we have just established is at a low) - and
that is not even factoring in the dividends you would have earned along the way. Low stock
prices are only bad for people who HAVE TO SELL STOCK RIGHT NOW. Which, in all
probability, is not you. We at Small Monkey Productions make a point of asking anyone who is
bemoaning falling share prices a: do they have any, and b: do they really have to sell them
today? On the rare occasions we find someone that can answer in the affirmative to both of
these questions, we buy whatever the hell they have got at a knockdown rate. Blue-chip share
prices are not falling because the companies have lost value, they are falling because fund
managers are having to write a lot of checks (or indeed cheques) to a lot of nervous people
who, having fallen for the hype, believe they must get their money out of the market now - the
fund managers have their cash in shares, so they do HAVE to sell RIGHT NOW to free up the
cash. Hence, because the Press routinely show that you can fool the vast majority of people
the vast majority of the time, share prices are artificially depressed. Which means anyone with
an ounce of common sense can make a killing.
3. House Prices. OMFG they've fallen. See the argument above - if you don't actually have
multiple houses you HAVE TO SELL RIGHT NOW, it doesn't matter. If you have one house
that you live in, need to move and hence sell it cheaply, the new house you are going to buy
will be similarly discounted. So once again, it is a very small subset of the general populace
who have a problem. Of course, it could be that having lied about your income, house value,
and your ability to repay, you now cannot now re-mortgage (on reflection, maybe that's a
bigger subset of the populace). Sorry, but if the simple principle of 'don't buy things you can't
afford' is beyond you, there is little we at Small Monkey Productions can do to help. Perhaps
our 'Stop Smoking' or 'Lose Weight' plans can help you save a few bucks.
unbelievably worked up over house prices, interest rates and stock markets falling. The
weeping, wailing and general gnashing of teeth is deafening; '...everyone is soooo much
worse off, isn't it soooo depressing, recession is on the way etc. etc. blah blah blah...'.
A few points must, at this juncture, be clarified for the sake of the millions of idiots who have
talked themselves into this condition.
1. Interest Rates are falling. Clearly, this is bad news for people with savings in cash, but it is
good for anyone who owes money. Since pretty much every major economic power has
Governmental borrowing on an epic scale, this must be a plus, right? Especially since your
next pay-rise may now actually be worth something in real terms.
2. Stock Markets have fallen. In general, momentarily. They fall about 50 times a day, and
rise just as much. If you were to take any major index, pick any start point you like in its entire
history to invest 10 grand, then fast-forward 15 years, you'd have made money. Even taking
into account the corrosive effect of inflation (which we have just established is at a low) - and
that is not even factoring in the dividends you would have earned along the way. Low stock
prices are only bad for people who HAVE TO SELL STOCK RIGHT NOW. Which, in all
probability, is not you. We at Small Monkey Productions make a point of asking anyone who is
bemoaning falling share prices a: do they have any, and b: do they really have to sell them
today? On the rare occasions we find someone that can answer in the affirmative to both of
these questions, we buy whatever the hell they have got at a knockdown rate. Blue-chip share
prices are not falling because the companies have lost value, they are falling because fund
managers are having to write a lot of checks (or indeed cheques) to a lot of nervous people
who, having fallen for the hype, believe they must get their money out of the market now - the
fund managers have their cash in shares, so they do HAVE to sell RIGHT NOW to free up the
cash. Hence, because the Press routinely show that you can fool the vast majority of people
the vast majority of the time, share prices are artificially depressed. Which means anyone with
an ounce of common sense can make a killing.
3. House Prices. OMFG they've fallen. See the argument above - if you don't actually have
multiple houses you HAVE TO SELL RIGHT NOW, it doesn't matter. If you have one house
that you live in, need to move and hence sell it cheaply, the new house you are going to buy
will be similarly discounted. So once again, it is a very small subset of the general populace
who have a problem. Of course, it could be that having lied about your income, house value,
and your ability to repay, you now cannot now re-mortgage (on reflection, maybe that's a
bigger subset of the populace). Sorry, but if the simple principle of 'don't buy things you can't
afford' is beyond you, there is little we at Small Monkey Productions can do to help. Perhaps
our 'Stop Smoking' or 'Lose Weight' plans can help you save a few bucks.
| Monkey Wisdom Corner |
| There are 7,678,421 bicycles in Beijing. Katie Melua LIES. |
So what should I do?
Firstly, stop taking financial advice from a Small Monkey. Impressive as Project Money Punt is
thus far, Past Performance is Not Necessarily a Guide to Future Performance. Then again, at
least we don't charge. If we ever do decide to float the Company though, we promise you'll be
the first to know.
So, stop panicking, and ask yourself if you, personally, really are adversely affected. And if
you have to get rid of some quality shares pronto, call us first.
thus far, Past Performance is Not Necessarily a Guide to Future Performance. Then again, at
least we don't charge. If we ever do decide to float the Company though, we promise you'll be
the first to know.
So, stop panicking, and ask yourself if you, personally, really are adversely affected. And if
you have to get rid of some quality shares pronto, call us first.
| * The Free World being, of course, the surprisingly expensive bit of it. |