When irrationality takes over...

Anonymous Guest's picture
Submitted by Anonymous Guest on Sun, 2008-06-29 01:24

I was reading this in the Sunday Times and laughing to myself.

It is all about the 10 worst property investments ever and contains some shocking horror stories due to foolish and irrational behaviour by investors and developers.

Much of it is highly entertaining to read and I fear there are a myriad of similarities in New Zealand in recent years, but where the chickens have not quite come home to roost as yet.

What is fascinating about financial or real estate crashes is how irrational, speculative behaviour is repeated at approximately 20 year intervals with such amazing regularity..(and probably by chaps who found history a boring subject at school).

This is always followed by Governments, banks, Central Banks, investors (and everyone else) saying exactly the same things their forebears (or parents) did a couple of decades earlier, only to be followed with equal regularity by [their children] ignoring previous events and warnings to jump in a repeat the process!

A couple comments I would make, however, are that Nicholas Van Hoogstraten (a splendid chap) rather understandably put Hamilton Palace on hold when he went to gaol for a couple of years (despite a lack of evidence proving any of the charges); and that Canary Wharf has turned out to be a splendid investment but it took a decade longer than expected to become so.

So yes this should be a cautionary tale for property investors, not everything works out as expected....especially when your calculations are based on hope rather than reality.


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