Last In, Least Educated, from Craig Mee
Interesting that in Sydney's property market, the last area of housing to increase in price was from the socio-economically disadvantaged, and these guys were still buying when the richer suburbs had pulled up stumps. Now they are left with massive drawdowns and problems on a number of fronts, i.e. employment and servicing loans.
This seems to be a classic example of what to look for when analyzing where a market is in its cycle of price discovery — the least educated and responsive are last in.
It also reminds me of working on broking desks for years and dealing with major banks over significant U.S. figure releases. I surmised that there was a four tier response in price action over these numbers:
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Locals with their own screens hitting bids and offers as these figures came out.
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Bank Dealers on telephones (as it was overnight in Australia) being told what the numbers were, and dealing accordingly.
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Bank Dealers asking to be rung after the numbers, and subsequently placing bets.
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Retail customers calling in , and believing they where on the pulse as they only called five minutes after the numbers were released.
In reference to No.1, a bank dealer (who had recently seen some locals in action) said to me "I will never ever trade over a number again, after seeing the execution skills of those Locals, I am just too far off the pace!"