Peter Lynch on Beating the Street 4

“Japanese investors, we hear, paid little heed to earnings and focused their attention to cash flow – perhaps due to shortage of the former. Companies spend money like drunken sailors, especially on acquisitions and real estate, are left with a huge depreciation allowance and a lot of debts to pay off, which gives them a high cash flow/low earnings profile.”

“Japanese banks were making 100% loans on zero collateral for office buildings where in the most optimistic scenario the rents would barely cover the expenses.”

Is Real Estate a Good Investment? VI

Correction: Years from base date for Japan should be 1980 and not 1985.

From the graph, it showed that house price in Japan soared 100% from 1980 to 1990. After the bubble burst, Japan suffered from a massive economic depression which lasted 15 years until 2005 which we saw there is a sign of economic recovery. Still, house price in Japan does not recover from its peak. In 2005, it signifies the depression of nearly 40%, this means if you bought a house for $ 200,000 in 1990, your house is worth $ 120,000 in 2005. This is a scenario if you bought with hard core cash. How about the one who highly leverage with housing loan? The consequence is more drastic, the real estate that they invested still in a group of “Negative Equity”, meaning that even you sold off the house, you are still in debt and need to repay back the balance to the bank. That’s the impact of leverage, in contrast to the one who always persuade you for the “Power of Leverage”. They are right in one point: Leveraging could shorten your investment return IF the market is booming; when the market burst, you not only lose all your investment but you would be in debt as well.

While in Australia, Britain and US, the average house price since 1995 registered a handsome return of nearly 150%. If you laid the investment since the beginning of 1995 and bought the house which priced $ 100,000, your investment worth almost $ 250,000 in 2005. The return could be higher if you are buying with highly leverage housing loan. While the house price for the past 10 years gave the investor of that time a handsome return, do you think it will do the same for the next 10 years, or it will show the same trend as Japanese backed to 1990? The answer? Only God knows…

“Any indication for you?”

12 Emperors of Dynasty Qing XII (The Last Emperor)

12th Emperor: Xuāntǒng 宣統 (Pǔyí 溥儀) 1908 - 1911

He took a title of the Emperor of Dynasty Qing after the death of his uncle, Emperor, GuangXu at aged of three. But in fact, he never had a chance to rule the dynasty.

After XinHai Revolution in 1911 lead by Dr. Sun Yat-sen, PuYi retained his title and special treatment as a royal member.

From 1925 until 1932, he became a puppet ruler of Manchukuo where the state created by Japanese as a preparation for the later invasion to China.

His later part of life was pitiful. From an Emperor of dynasty which once upon a time was the strongest super power in the power, he became a normal civilian. After World War II, he was captured by Soviet Red Army and he was put in the prison. After returning back to China where the nation was in Mao's ruling, he once again resided in a reeducation camp for 10 years. He died in 1967 of cancer and it marked the end of monarchy system started nearly 4000 years ago.



"People who deny history do not have his story."

12 Emperors of Dynasty Qing XI

12th Emperor: Guāngxù 光緒 (Dézōng 德宗) 1875 - 1908

Although his official ruling as an emperor of Dynasty Qing lasted for 33 years, but the man who is the real ruler was Empress Dowager Cixi. As a so called ruler, GuangXu actually was a pity man, he just a puppet ruler controlled by CiXi.

He was an ambitious ruler. In June 1898, he began a reform though only short life, which later known as "Hundred Days' Reform". His reform was an idea from Meiji Restoration, Japan which transformed Japan from a Samurai country to one of the influential nation that could stand aside with other powers such as Britain, France, Austria during late 19th century. However, his ambition did not materialized because of the interference from CiXi who afraid the reform would challenged her power.



He also became a ruler who gave up his palace, Forbidden City and ran away to Xi'an together with CiXi when Eight-Nation Alliance (八國聯軍) marched into the city in 1901. The alliance consists of United Kingdom, France, Austria-Hungary, Italy, Russia, Germany, United States and Japan.

"People who deny history do not have his story."