Friday, August 9, 2019

Diversify or not to Diversify

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The stock exchange has apparently reached a top and the world enters a period of recession. England already has negative GNP growth, America is not far away and China stopped growing fast. Is real estate in Israel a better safe haven for my savings? There is tremendous amount of building here yet prices are not falling. The population is growing and will grow, not only by natural growth but immigration as the rest of the world slows down. May be I shall do it.

“In an environment in which the market’s not growing, it’s hard to see where capital gets a return. We have $15 trillion of sovereign debt around the world trading at negative rates. If you have that many alternatives that look so unattractive, it means capital going to where no one dared to go before and is pulling down rates." 

A small apt. in Kfar Saba sells for 1400000 sheqel (400000US$). Down payment 200000 $ and the rest 20 years mortgage at 3%. The profitability of the deal depends on the price I can get for the apt. in 20 years.  I presume it will be worth 600000 $ since (1) building permits are not going to be easier to get in the future, (2) population is growing and the number of family units ("units" = old maids needing an apt for themselves and their cats) is in ascendance, and (3) they are not making more land, and the Shomron is not a solution and Jordan is already overpopulated - there is nowhere to expand, (4) The Arabs of the Triangle are desperate to leave Kalansuwa and move into Ashkenazi neighborhoods and they are paying extra for the privilege of a Jewish neighbor. 

I think it is time to diversify.  Now, if real estate prices should fall, I'll still have to bear the mortgage payments of 4000 shekel a month. I would like to be more intelligent to see the future more clearly. In the past, I moved like a sleepwalker and never failed. I always knew what to do and did it, but now I've lost my self-confidence. I never needed these calculations to know that was to be done. Anyway, money is not important, so the whole thing is entertainment. I am not going to be here in 2040. 


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