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Real Estate Investments

People will tell you about how the value of a certain plot of land or house grew 50 or 100 times in 40-50 years. This sounds fabulous, but is actually nothing special. The BSE Sensex has become 300 times its value in 38 years. Even a gain of 100 times in 50 years comes to only 9.60% per annum, which is good, definitely not exceptional. There are perhaps five sources of gains in the price of a given property, and the final profits is a product of these: The original change in usage of a piece if land from agricultural or barren to residential or commercial The development of physical infrastructure which makes this land usable for the new purpose The improvement in livability or commercial viability as the area becomes more and more populated The periodic booms and busts that afflict real estate The general inflation of the economy that becomes part of the visible change in the property's price
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Identifying the next Big Trend

The theoretical definition of a bull market is a time when the index convincingly crosses its previous high by more than 10% and keeps making new highs thereafter The bull market always happens in stocks that were not the leaders in any of the previously concluded bull markets and would normally be a 'new sector' Cement led 1992 bull run; IT led 2000 bull run; Infrastructure and Real Estate led 2008 bull run One way of identifying the trend will be to closely watch the revenue growth of most of the companies in a specific sector An investor looking at new trends should try and estimate the market size in relation to the leading player in the segment When the sector tops out, the market cap of the leader will be worth a lot closer to the size of the sector Most companies that start a new trend are incubated by first generation entrepreneurs Established promoters are not the best place to look for a new trend because a new trend generally starts with the new blood An
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Identifying Tops and Bottoms

If a stock is making new highs and has gone into extended valuation and stays with 7% of this new high for the next 5 to 7 trading days then that high isn't a terminal top The primary catalyst for creating the disequilibrium is any mechanism that can suck the liquidity out of the system Last Leg to the Top: An already expensive stock leading the bull market showing no signs of correcting makes a big dash into its bull market peak moving 60% to 100% in three months, going from an outrageously expensive to a thoroughly bizarre valuation. None of the fundamental analysts cold justify the price three month before the final dash and certainly not at the peak as the stock defies all logic and reason while making new lifetime highs. Prices fail to hold at the top by more than a few hours, In most cases the top is made on intraday prices where the stock sees a sharp correction towards the close after having fallen vertically from its intraday high. A dramatic rise of an alr
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