Stock Market Investment v Housing Market

Stock Market Investment
Stock Market Investment

Stock Market Investment

Which is currently the best investment, Stock Market investment or the property market? Is property as safe as houses, or is the Stock Market the place to be.

It‘s well known that the mug punters at anything (that‘s most of us) are risk averse. We don‘t get into risky investments until they seem relatively safe.

What, to us, seems to make them relatively safe is that they have been going up for an extended period of time. It seems to us that much of the risk has gone out of an investment if it has been going in a one way direction for a number of years.

Why Contractors Never Make Any Money

Of course, this is complete garbage and the main reason why most of us never make any money.

The longer an investment area has been going up in price, the less value it becomes versus other areas of investment. So, the more dangerous it has become.

That‘s why value investors and contrarians make all the money. Contrarians are those who back against the herd, i.e. who do the opposite of what everybody else is doing.

Stock Market Boom

A few years ago, many people who wouldn‘t normally buy stocks or shares, piled into the stock market. This included those who work in IT, and especially contractors.

Not only were they making money hand over fist in a booming contractor market, but they were making even more by re-investing their cash in the Stock Market.

I‘m sure that there must be quite a few people reading this with a bit of a wince.

We all know what happened to the Stock Market.

Just as it seemed to have become a one-way money making bet, it was becoming far more dangerous. It always happens that as soon as the mug punters are sucked in, as soon as they see it as a relatively safe investment, the bull market is on its last legs.

And so it was to prove – with a vengeance.

The same thing happened to contracting.

Just as many risk averse permanent workers, who would never normally take the risk of becoming a contractor, decided that contracting had become safe and took to the game, the rug was suddenly pulled from under their feet.

Housing Market investment

Now, despite years and years of rises in the price of the housing market, and it now being at record levels of affordability, those who are normally risk averse, feel that the housing market has now literally become ‘as safe as houses‘.

History says that the opposite is true. It says that a market like this is at its most dangerous. It has now been going up for a long time, it is a lot less affordable, and it is not good value on historical valuations when considered against other investments.

Therefore, history says that a fall is coing. Even if it doesn‘t fall, most of the major gains are already in place.

In those circumstances, it is best to look for another investment, which is better value. Find one which is nearer its bottom than its peak, and which appears to have turned the corner.

Stock Market Investment a Risky Investment

Many people who had their finger burnt in the Stock Market bubble will feel that this is a risky investment. They won‘t feel it is safe again till it has been going up for years.

However, it is when it is at low values that it is relatively safe in reality, and that time is now.

The Stock Market has been rising since last March. That’s not a long time, but there is a very definite new upward trend.

The value of shares, especially technology shares, compared to what they were in early 2000, is much, much better.

Many IT agency shares, for example, are less than 10% of what they were at the peak of the boom. This is now a highly cyclical industry. The sectors that lose the most usually have the most to rise as they are more cyclical.

We all know, perhaps better than the market does, that the corner has been turned in the IT jobs market.

Made Money from Stock Market

It‘s Stock Market investment for me, and I might even make my very tall target of making a million pounds from 100K in 5 years if this continues which I‘m convinced it will.

However, many people will ignore history and look to invest in the property market, just because it has been going up for years.

I‘m afraid most people are mug punters!