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mr_cash4

04/17/05 1:28 AM

#10592 RE: mr_cash4 #10589

TL_Trader, furthermore, comparing the real-estate prices (i.e. price of houses) with prices of stocks is a false analogy, because the vast majority of people buy the house so that they can live somewhere, i.e. have a roof over their heads, and only a very few buy houses so that they can make a profit, even though that may be changing now, hence we have had numerous calls by some economists (like Shiller) that we are now in a real-estate bubble.

on the other hand, people buy stocks for the sole reason of making money, otherwise why are they buying stocks???

furthermore, housing prices are different in different markets due to demand and supply, i.e. in highly congested markets like New York where land is scarce and building costs are high prices will be higher forcing people do devote more money out of their total income for a house than in the markets where there is an abundance of land and building cotsts are low;, whereas the prices of stocks are identical (due to arbitrage) wherever they trade, be it on AMEX or Nasdaq.

furthermore, different markets will have fairly different building codes and building regulations again influencing prices in different ways, whereas in the stock market ALL stocks face (virtually) the same regulations (as there as some minor differences in listing requirements among the various exchanges).

so, one can't compare the real-estate market with the stock market, even though both are termed "markets"