2015: The Bubble Bursts!

[Mr Whippy]

Pure market forces can't see them boom much more.

If used cars remain stronger across the board only a nearly new or brand new car makes sense.

Even now mid-term age cars make little sense vs 2-5yr old ones, so that must put downward pressure on values.

If people buy newer cars them residuals for those strengthen instead, though newer ones coming down the stack from people buying newer for little extra cost, from leases etc, will make the realities kick in... cars are mass market items, they rot and break and depreciate.
Those that can afford them will buy em newer and suffer, as they always have. Those who can't will hang on to what they have or buy a banger.

The market has been distorted years ago, it's ready to correct imo.


Pension reforms are gonna push up BTL, car prices, annuity rates, holiday prices, blue rinses, new kitchens, caravans. The list goes on.
In the end it's small fry except for the idiots who spend it foolishly.

Most will simply save it. Really the biggest boon will be for stock markets to be ballooned higher, and for the uber wealthy to cash out their huge funds for something other than an annuity, so they can buy OUT of the stock market! The irony.

Dave

[jonah35]

Mr Whippy said:

Pure market forces can't see them boom much more.

If used cars remain stronger across the board only a nearly new or brand new car makes sense.

Even now mid-term age cars make little sense vs 2-5yr old ones, so that must put downward pressure on values.

If people buy newer cars them residuals for those strengthen instead, though newer ones coming down the stack from people buying newer for little extra cost, from leases etc, will make the realities kick in... cars are mass market items, they rot and break and depreciate.
Those that can afford them will buy em newer and suffer, as they always have. Those who can't will hang on to what they have or buy a banger.

The market has been distorted years ago, it's ready to correct imo.


Pension reforms are gonna push up BTL, car prices, annuity rates, holiday prices, blue rinses, new kitchens, caravans. The list goes on.
In the end it's small fry except for the idiots who spend it foolishly.

Most will simply save it. Really the biggest boon will be for stock markets to be ballooned higher, and for the uber wealthy to cash out their huge funds for something other than an annuity, so they can buy OUT of the stock market! The irony.

Dave

Surely the stock market will go down if lots of money is pulled out of pensions?

There could be a short term burst in asset prices from May onwards for say 6 months.

Then, reality will bite.

Interest rates no where further to go, pensions raided and not much further to push up assets.

Then the bubble may burst.mit depends on if our rates go negative due to deflation or if inflation shoots up so rates shoot up.

[Mr Whippy]

From what I can tell, money comes out of pension and back into stocks etc, but now owned by an insurer (annuity provider)

Now it can leave stocks/shares and go anywhere.

But in practice many will still buy a form of annuity.

I'm sure many will also play stock market themselves via isa.


Stuff like cars etc, remember you could always take a lump sum enough to reasonably buy a nice car if you wanted that kinda thing.


I see it making very little real difference to anything.

It's a nice to have of course but it's the biggest benefit to the very wealthy who can now cash out their pension pots and get it away from more risky assets.

[richie99]

I'm hoping owners of 7 or 8 year old exec monsters will spend some of their pension payout on a nice shiny new one, thus lowering used prices, which is where I come in. Fingers crossed.

[Mr Whippy]

I'd be happy with a late e90 touring 335i m sport

Or if I'm feeling flush a v10 touring m5.

[richie99]

I would have felt the same 10 years ago, and did own an M3 convertible at one point. Funny thing about age, I fancy something with a bit more comfort, plus the 3 series is far too small for my giant sized kids.

[355Chris355]

Weakness starting to show in auction prices:

http://www.fleetnews.co.uk/news/2015/3/17/average-...

[Willhire89]

355Chris355 said:

Weakness starting to show in auction prices:

http://www.fleetnews.co.uk/news/2015/3/17/average-...

Yeah - you could say they have collapsed

Drop of 0.4% or in real terms £25

[Mr Whippy]

You could say they have collapsed, but that would be wrong.

Better to say showing signs of weakness

[sidicks]

Mr Whippy said:

From what I can tell, money comes out of pension and back into stocks etc, but now owned by an insurer (annuity provider)

Now it can leave stocks/shares and go anywhere.

But in practice many will still buy a form of annuity.

I'm sure many will also play stock market themselves via isa.


Stuff like cars etc, remember you could always take a lump sum enough to reasonably buy a nice car if you wanted that kinda thing.


I see it making very little real difference to anything.

It's a nice to have of course but it's the biggest benefit to the very wealthy who can now cash out their pension pots and get it away from more risky assets.

Annuity providers do not hold stocks to back annuity liabilities.

[Mr Whippy]

sidicks said:

Annuity providers do not hold stocks to back annuity liabilities.

Not directly, but ultimately they're insuring an income for you and that insurance comes from a system of confidence and leverage spanning from bonds that may be leveraged against debts which are based on stock market business performances.

Unless I've missed something and everyone could cash their annuity back out from their annuity provider tomorrow sans costs for provision so far.

Is the annuity/insurance business completely capitalised... or do they run like banks with a whole load of leverage?

Dave

[sidicks]

Mr Whippy said:

Not directly, but ultimately they're insuring an income for you and that insurance comes from a system of confidence and leverage spanning from bonds that may be leveraged against debts which are based on stock market business performances.

Unless I've missed something and everyone could cash their annuity back out from their annuity provider tomorrow sans costs for provision so far.

Is the annuity/insurance business completely capitalised... or do they run like banks with a whole load of leverage?

Dave

Annuity liabilities are fully backed by assets plus additional margins and insurance capital support.

i.e. nothing like banks!

Of course everyone trying to sell similar assets at the same time is likely to lead to a significant decrease price...

Edited by sidicks on Wednesday 18th March 20:41

[Mr Whippy]

sidicks said:

Annuity liabilities are fully backed by assets plus additional margins and insurance capital support.

i.e. nothing like banks!

Of course everyone trying to sell similar assets at the same time is likely to lead to a significant decrease price...

Edited by sidicks on Wednesday 18th March 20:41

What assets?

You hand then cash, and they store it and grow it how?

[sidicks]

Mr Whippy said:

What assets?

You hand then cash, and they store it and grow it how?

Government bonds and corporate bonds.

[355Chris355]

Mr Whippy said:

Better to say showing signs of weakness

Thanks Mr Whippy

[355Chris355]

Prices of Jaguar E-Types ''softening'

http://www.classiccarsforsale.co.uk/news/classic-c...

Very candid comments from the Director of Barons Auctions stating that investors are propping up the value of these and that the prices won't be sustainable when these monies are moved elsewhere.

[Mr Whippy]

sidicks said:

Government bonds and corporate bonds.

So how do these work exactly?

Hand money to businesses and government and they promise to pay back plus interest over time.

So how are they fully capitalised? The only way is if the capitalisation itself is an insurance promise from someone else? Do they have all the cash sat there somewhere? Or just promises?

[sidicks]

Mr Whippy said:

So how do these work exactly?

Hand money to businesses and government and they promise to pay back plus interest over time.

So how are they fully capitalised? The only way is if the capitalisation itself is an insurance promise from someone else? Do they have all the cash sat there somewhere? Or just promises?

Probably best if this is taken into the Finance forum (happy to respond here) - it's no longer N, P & E!!

Government bonds are a promise to pay a set schedule of interest and capital payments. Corporate bonds are the same, issued by a company.

[Mr Whippy]

sidicks said:

Probably best if this is taken into the Finance forum (happy to respond here) - it's no longer N, P & E!!

Government bonds are a promise to pay a set schedule of interest and capital payments. Corporate bonds are the same, issued by a company.

It's kinda relevant here in so much people are wondering how pension pots, annuities and other such matters will impact prices of things leading into a possible bubble burst.

So if an annuity is fully capitalised with bonds, the money has gone to a business or government and been spent. It's fully capitalised in promised money into the future.

If there were a 'run' on annuities they'd have no money to give out?


The point is that money behind the capitalisation of annuities goes back into the economy in one shape or form whatever happens... Not like annuity providers take pallets of cash and lock it away and hand it out to pensioners.

So buy an annuity or buy stocks, or a car, or bonds, or whatever, it's not like we'll see a significant surge anywhere because of pension changes.

The thing I expect to be most likely is lots of people hammering away at isas to get big tax free lump sums built up, possibly with lots right back into stocks and shares where they were before.

[Jimbo0912]

The bubble is largely in Ferraris currently. Feast your eyes on this bargain. ;-)

Only £349,875 for a Ferrari Testarossa at Kahn: http://www.kahndesign.com/automobiles/automobiles_...