Correct me if Im wrong but I heard when the property market isnt good the share market is? And Why?

Question

And obviously this would be reversed if the share market was weak, would the property market then be booming?

Answer 1

Stocks and real estate are different asset classes and react differently to market conditions. Thats the reason for asset allocation. Inflation is bad for stocks, in the short term. Real estate, and hard assets in general, are hedges against inflation. So, in a rather broad sense what you say is true.

Answer 2

That's too simplistic, but there is a general truth that is similar to your statement.

Over any modest time period, maybe 1 or 2 years, the total amount of money invested is approximately the same. It used to be that the total invested in US markets of various types was constant, but now money can easily flow around the world.

So the point is this: if large numbers of investors take money out of one asset class, what do they do with it? They must put it somewhere. They don't just blow it on fancy cars & yachts. Investment flows from one asset area or class to another.

The problem now is that there are many different global regions, and asset classes. US, non-US developed, non-developed nations; stocks, bonds, real estate, commodities, currency, etc.

When tech and internet stocks were surging in the late 1990's, then money flowed into the stock market. When the those stocks began to fall, then money flowed into bonds because interest rates were high in 2000. When interest rates dropped dramatically in 2001, money flowed into real estate.

Why real estate? Because low mortgage interest rates means people can buy more expensive homes. The money could have gone back into stocks, but investors were still too afraid of declining stocks prices in the 2002 time frame.

Answer 3

simplictic observations like that aren't worth betting on. Especially when one or two missteps can wipe out all of your capital.

Answer 4

I wouldn't count on what you heard.