Ask Colin

"Everyone" says the property boom is different this time. I know it is wrong, but how do I answer these people?

There are booms and busts in property just as there are in shares.

It is much harder to get a price series to show people in property than in shares, where the index shows it all. However, you could try searching for some series on the Internet.

The siren call of all booms in anything is that it is different this time. When I hear that, I know I am in a boom. It has happened before and the result is always tears.

What you say about the factors driving the demand is right. But markets always overshoot - they get fat and greedy on the upside and later lean and fearful on the downside.

My best advice to you is that you know you are right. These people do not want to hear what you know. Sure, try to tell them, but if they don't listen, or want to argue, just turn off. Give them a wry smile and say "we'll see".

Remember that all the arguments they muster are rationalisations. They are desperately seeking any reason that will help them convince themselves that they are right.

Finally, keep in mind that all profits in these markets is made by assuming risk. If something is a certainty and everyone can see it, then there is no way to profit. In booms, it often looks for a while as though it is a money machine. That is always followed by a giant vacuum cleaner that sucks it all back and more.

The hard part is living through it. It seems to go on so long. If you judge your results by what people think, you will not make it. There is only one result - the bottom line at the end of the day - when it is all over. He who laughs last lasts longest. You will be proven right, believe me. I have lived through a few of them and read the history books.