How hard is it to burst a bubble?

 Many people and even financial institutions believe there is a bubble in Bitcoin and other cybercurrencies, but why aren't they taking any action? Of course, some may have already taken actions; however, there is any known significant large short position created by any financial institutions. It is hard to short Bitcoin or burst the bubble because of several reasons.

Firstly, if you want to short something, you need to find someone who is willing to long it, then a contract can be made. However, no financial institution would like to offer investors to place short positions on Bitcoin, so no one can find an institution that allows them to massively short Bitcoin. Secondly, Bitcoin is not very liquid, it is very hard to convert Bitcoin into fiat money, this restricts either one time long position size or one time short position size. Thirdly, the transaction cost for Bitcoin is very high, the high transaction cost (including time consuming) makes any investment in Bitcoin less attractive. Fourthly, to burst a bubble requires some degree of market power or coordination. However, to create coordination may lead to information leak. If the market receives the information of potential coordination to burst the bubble, the market will react ahead before the short side traders coordinate and take actual actions.

Because of these reasons, shorting Bitcoin is not many people's choice.

Perfect substitutes rise in values together?

Bitcoin and other types of cybercurrencies are almost homogenous products for the same use. Microeconomics tells us that when a good increases in its demand, its substitutes will fall in prices. However, if we agree that all cybercurrencies are substitutes for each other, then their price changes should in opposite direction with one or another. There is one explanation for substitutes' prices move in the same direction, that is the values of substitutes have not been fully captured by the market. When all products still cannot satisfy the entire market demand, the prices for all will increase.

Therefore, if it is reasonable for all cybercurrencies increase in prices depends on if the total value of cybercurrencies capture its market. Yesterday I argued that the value of Bitcoin is approximately 11000 USD per Bitcoin. However, my calculation misses other cybercurrencies. If all cybercurrencies are included, Bitcoin should be valued as much. The total market for cybercurrencies would be shared between cybercurrencies. Of course, the cybercurrencies could choose to compete with each other; however, such competition is a very brutal one that only one winner will survive since all are homogenous products.

Based on my valuation of Bitcoin, the overall market for cybercurrencies have already been captured by today's value of cybercurrencies; therefore, a general increase in cybercurrencies' prices is a noise trading phenomenon.

How much does Bitcoin actually value?

 There are many debates about whether Bitcoin is currently overpriced or underpriced. I would like to propose a way to measure the value of Bitcoin. In the future, I expect that we will no longer need cash. No cash market would be very welcomed by governments and regulators since it is easy for them to monitor market activities. No cash market is not something that is difficult to achieve, all it needs is a common agreement that the society commonly agrees the numbers shown on our bank accounts have values, it is similar as we commonly agree the numbers on banknotes have values. However, once cash disappears, there is one group that may have to find an alternative to cash, this group is criminal groups and organizations. For them, the alternative is Bitcoin, it is even more untraceable than cash, helps them escape from governments' and regulators' monitoring. There is another group that may require Bitcoin as their medium of exchange, which is the population in the unrested countries. In these unrested countries, the governments lose their credibility, their issued banknotes do not have credit backup; when people do not trust their centralized fiat money, they turn to Bitcoin, this decentralized cybercurrency.

Since the criminal group and the populations in unrested countries need Bitcoin as their medium of exchange, when we sum up their market size in terms of USD and divided it by the total number of Bitcoin, we can get how much one Bitcoin values in terms of USD. There is a report suggesting criminal markets are now worth approximately 2 trillion USD a year, according to the UN Office on Drugs and Crime, and the GDPs in Venezuela and Zimbabwe where the local people are reported to use Bitcoin as their median of exchange are 215.307 billion and 17.105 billion USD, and the theoretical total number of Bitcoin is 21 million, so the value of one Bitcoin is approximately 11076 dollars.

If you believe the criminal markets are larger than what is mentioned in this article or you believe the number of countries where people use Bitcoin is larger, then the value of Bitcoin could be higher than 11076 dollars; vice versa.

What happens when a bubble is forming?

 Bubble is basically a miscalculation or misestimation about the market fundamental value; however, since it is very difficult to value the market fundament, it is almost impossible to be 100% certain about the existence of bubbles in the market before they actually burst. Now the bitcoin price is still incredibly high, but there is no agreement on whether there is a bubble in the bitcoin market or not.

Since no one is certain about the existence of bubbles in the market, when the market price is rising, people tend to follow such lead, not only noise traders will do so, but sophisticated traders will also do the same, because of the momentum of the market, the best strategy is to ride the "bubble ". Moreover, because of greater fool theory, once people explore there is a possibility for a price to decrease, they quickly apply greater fool theory and rush to buy in the asset and sell off at a higher price, and others will do the similar things at different levels until the point when the bubble bursts. The initial driver might be a sensible fundamental improvement, but once people are making money from buying at low and selling at high, the momentum is built and the price rises and deviates from tis fundamental value, then the bubble is created.

Therefore, when one stock is increasing in its price and draws too much attention of the market, people will rush into the market and earn profits via greater fool theory without paying too much attention to the market, a bubble will be built.

Emotional traders

There are many attitudes towards. People may vary their behaviours towards risk according to probabilities of states, potential losses and gains, (relevant and irrelevant) experiences, and information. Irrational behaviours are those decisions made based on irrelevant experiences and under poorly informed condition. However, at most of the time, people are always under such condition, because of countless existing constraints. Therefore, no one is a pure sophisticated investor (trader) in the market, and no one is a pure noise trader either; everyone is in-between noise trader and sophisticated trader.

Noise trader is not necessarily an emotional trader, as noise traders can just process their activities based on their incoming information without any analysis. However, emotional traders must be noise traders. Their activities are affected by their emotions, and their emotions could be affected by their trading performances and or any other things (such as their relationships with other people). Such emotional traders are almost unpredictable. But luckily these are usually retail investors that are unlikely to have the power to affect the entire market. However, black swan theory tells nothing is impossible, such unexpected noise might just create significant impacts on the market.

Is Median Voter Theorem useful in the real world election?

Majority rule is used in making group decisions that the option will be chosen if it gets the most votes among all options. Median Voter Theorem suggests that if all voters have single-peaked preferences over a given ordering of policy alternatives in a single dimension, then a Condorcet winner always exists and it is the ideal point of the median voter. However, this theorem has multiple assumptions that are not necessarily realistic. The theorem suggests that political parties will move towards the median of voters’ political positions. In modern politics, usually, political parties behave like what the theorem suggests that they are trying to capture the interests of the ordinary people (the median group). However, there are anomalies in recent years. The US presidential election probably is the most obvious one. Hillary Clinton was definitely a classical politician that aimed to capture the interests of the median groups, like what the theorem suggests; however, on the other hand, Donald Trump was and still is not such classical politician, his supporters are often considered to be the extremist groups and he did not win the majority of the voters either. His success was of course contributed by the US electoral system but also was contributed by his unusual campaign strategy as well ( which I think was more crucial).

Voters’ interests are multi-dimensional and they are aiming to put weights on their different interests and choose their favoured politicians based on their sums of weighted interests. However, since people are emotional, their weights on different interests can vary when their tempers change. The two politicians have many policies and goals; due to different priorities, policies can vary. Trump was successful of making people put more weights on his priorities rather than Clinton’s priorities by very aggressive speeches and rallies. When people put more weights on Trump’s priorities, their sums of weighted interests shifted in favour of Trump and more of them tended to vote for Trump. This was I think a very important reason for Trump to get enough votes to become the US president. Also, this is a common strategy for some radical political parties to gain so much attention, as they are trying to make people get more emotional and agree on their political priorities.

To conclude, to win an election is not necessary to get close to the median (as suggested by Median Voter Theorem), it is possible to make voters emotional and more likely to put more weights on your political goals rather than your competitors’.

Could similar platforms compete with each other?

 There are many platforms, especially in the digital world. In the digital world, similar platforms provide almost homogenous products. For example, GooglePlay and App Store are two smartphone application stores providing people with smartphone applications, and the smartphone applications are almost identical, the majority of the applications you can find on App Store are also available on GooglePlay. Because the numbers of similar platforms are relatively small, it is really easy for these platforms to collude with each other.

The power between customers and platforms is imbalanced, since customers cannot find anywhere to get what they want without these platforms. Of course, this would make some people think about entering the market; but newly established platforms are not able to compete with the existing players in the sector because they have different amounts of resources. However, the power between platforms and actual product suppliers is not as imbalanced as the power between customers and platforms. Without the support of suppliers, platforms themselves cannot survive. The problem of the suppliers' side is there are so many suppliers that it is almost impossible to let them agree on the same issue.

However, there is one occasion that platforms may start to compete. When the suppliers are unable to supply products to all platforms due to technological limitations and (or) other types of limitations. The platforms attract their users by providing the products they want; however, if the suppliers are unable to supply to all platforms, the platforms have to attract good quality suppliers, this will lead to competitions between platforms.

How can we explore illegal collusion in the market?

Collusion is illegal in most countries; however, some companies can form some form of collusion without making physical contact to negotiate with each other. If the companies all know they are going to collude with each other, they can make public releases to release their price policies, such strategy allows them to send price signals to others and form collusion. If this happens, it is really difficult to explore existing collusion in the market. However, there are several characteristics that determine if it is possible to have collusion in a certain market.

In the markets where it is possible to have collusion. Firstly, the markets need to have homogeneous products. Without homogenous products, there is no point for companies to collude, as the prices are set differently for different products. Secondly, there is a punishing system for cheaters. Without punishment for cheaters, cheaters can easily cheat on other players and make significant losses on other companies. Thirdly, it must be profitable for companies to collude. If it is not profitable, then there is no point for these companies to collude. Fourthly, the number of companies should be relatively small. A large number of companies is not easy for the companies to monitor their partners' behaviors, then it is more difficult to check if other companies are cheating and punish the cheaters. Fifthly, such markets need high entry barriers. If it is profitable and has a low entry barrier, then more companies will enter the market and the existing companies will lose their market power then forming collusion is impossible.

Based on these characteristics, to find a market which possibly has a collusion, we need to find the market price is stable and gradually increases at the most time but once experiences a price decrease, the market price will be very volatile and drop rapidly, this is because of the punish system in the market.

Why do we think stock prices moving up and down?

People expect stock prices to move up and down, and the stock market actually performs in the way we expect. If assuming the market purely react to stochastic shocks, then no one is able to tell what exactly will happen to the market. Under such circumstance, the market price moving up or down is the same as flipping a coin that, and the probability of price increasing or decreasing is also 50%.

Maybe many people have already know that even with three heads in a row, the probability of getting heads or tails does not change is still 50%. This should also be applied to the market. However, due to alternative bias, people tend to shift their choices, though all the outputs are independent of each other. If people have such bias in the financial market (usually many people do), when people are trading every day, they are going to expect the market to fall after the market rises, and vice versa. When there are enough traders in the market making such expectations, the market will act just like what people expect, as there are concentrated bids and asks in the market.

Therefore, when the financial market rises on one day, it adds some downward pressure on the next day's market, and vice versa, due to the existing alternative bias. Of course, the market has many other different types of fluctuations.  

Reversed QE

 All countries have passed the era of QE, since the global economy has definitely been fully recovered from the last financial crisis that the unemployment rates in many countries have fallen to the historically lowest points. Although no central banks are expanding their QE programs, the bank rates across the world have remained low. The US President Trump has appointed the new chairman of the US Federal Reserve, the market was worried about the possible hike in the base rates. Of course, the global financial market does not like higher interest rates, as borrowing becomes more expensive; however, there is another thing that the market could hate more, which is a reversed QE.

A reversed QE is a reversed process of asset purchasing that central banks sell their holding assets which they bought via their QE programs. This will increase the supply of assets in the financial market; such massive increase of supply will add enormous downward pressure on asset prices in the financial market. How like are we going to see a reversed QE? It is possible; however, I think central banks will know the risk and it is not a big issue for them to hold so many assets, so it is more likely for central banks not starting reversed QE programs. The central banks in many countries are supposed to be independent; however, since the members of the monetary policy committees are pointed by other parties, they cannot be absolutely independent. Moreover, central banks can change their behaviors, just like governments. In the past, governments tended to balance their budgets; however, nowadays, almost all governments tend to overspend, instead of balancing their budgets, they are now trying to limit their deficits within some reasonable ranges. Central banks may learn from governments and limit their holding asset sizes within some reasonable ranges. Therefore, it is unlikely to see a worldwide reversed QE.

What sort of firms is likely to grow?

 Yesterday I said I would like to invest in the stocks of firms that have massive growth potentials. This comes to another question what sort of firms is likely to grow. There are many different answers by different people, such as high-tech companies, newly set-up businesses; however, there is not a definite answer to this question because of the uncertainty of the future. Companies with massive growth potentials also mean they have a massive risk and they are highly likely to bankrupt. In addition, the entry barrier to investing in such companies is very high that only high net wealth investors (whose net wealth is over millions of dollars) are allowed to enter. Moreover, the information collection and analysis for venture capital investment are far more difficult, as the information is almost entirely private (risk of asymmetry information and moral hazard); additionally, some of these businesses' founders do not just look for investors' investment but also look for their networking and other resources. Therefore, venture capital investment should be done by institutions rather than individuals.

Let's focus on stock markets since venture capital investment is not suitable for individuals. Value investors love monopoly companies since they do not face competitions and are able to generate stable returns. However, since their returns are stable for a long period of time, their stock prices also tend to be stable, therefore they do not have much growth potential in terms of stock prices. In today's world, many companies can state themselves as monopolies because of product differentiations; however, many of them are still competing with other companies. I think the sectors where companies that are competing with each other at all costs are the sectors that have massive growth potential. Companies are not stupid that when they are competing at all costs, they are seeing much greater returns in the future once they win the competition at the moment. Such companies' stock prices could be low because of their high risk; in addition, due to the competition, their financial reports do not look good either, this would add downward pressure on their stock prices. Furthermore, even if investing in companies which do not succeed in their competitions, there is a probability of firms being acquired by market successors and investment would still possibly receive something back; and of course, investors should withdraw their investments when there is a clear signal of failure and turn to other market players, which now definitely have higher probabilities to succeed.

Financial (wealth) advice I give to myself

These points are the financial advice I want to give to myself and I hope I can follow them unless I find clear mistakes in them.

Work, Life and Investment

I can have two types of career paths.

One is to start up my own business or career. This requires me to put all of my energy and resources into it, because this path may possibly give me a great return (not only monetary returns, but also other sorts of achievement as well) and it will definitely be a very risky and unstable path. Under such circumstance, I should not spend anything on investing in asset markets unless it helps my career directly.

The other type of career path is to find a stable job that can give me a reasonably comfortable lifestyle. In this case, I can spend my spare money in asset markets. The income from the stable job could be seen as a source of risk-free return from my human capital. Like what Nassim Taleb suggests, my human capital is the risk-free asset in my portfolio that generates stable returns. And the money I put into asset markets will be my risky assets in my portfolio that I use for seeking substantially high returns.

I will never be a day trader or a professional investor (who uses own money to invest).

Investment (invest then forget about it)

As I mentioned above, my investment tends to seek for high returns, so risk awareness is definitely something that I need to sacrifice for some degree. I will focus on seeking high returns from growth in the long term, and the followings are my reasons:

Firstly, value investment and hedging require too much of my energy, this could affect my performance in my job. Value investment and hedging require very detailed study and frequent update of information on a large number of assets. On the other hands, since I look for returns in the long term, I do not need to care too much about the market volatility. And because the firms will grow in the future, some degree of overpricing could be captured by the growth in the future, so overpricing is not a big issue, either. Therefore, once I pick up my choices of stocks, I can just sit back and wait for my returns (if I am correct with my predication), this will help me to perform well in my job and continuously earn my stable (and even higher) returns from my human capital, since I am not distracted by my investment activities.

Secondly, such investment strategy does not require me to frequently update my portfolio information to see whether I make a loss or a gain every day. Frequent update will make me more impatient, since bad feelings when experiencing a loss will dominate good feelings due to loss aversion, and such bad feelings can be accumulated and eventually force me to sell off all my assets even though they are probably good assets that deliver positive returns.

Thirdly, value investment and hedging both tend to minimize the risk to deliver reasonable returns; however, because of the low risk, the returns will not be substantially high, this violates my goal of investment.

Therefore, my investment strategy will be investing in companies that I believe are going to grow significantly after very careful study, then forget about it (I mean do not check the prices frequently), if I choose my second career path.

How much do we like to take risk?

 In general, we are relatively risk aversive that we love stale lifestyles including style incomes, stable relationships and etc. However, sometimes we may tend to compare ourselves with others, especially those who seem to live better than us, then we may feel unsatisfied about our current situations and would like to shift our lifestyles to others which seem better. Moreover, resources are flowing within our community, we are not living in a completely planned community that everyone gets their equal share of resources. When people surrounding us are receiving higher and higher incomes and living in better lifestyles, our current lifestyle may still satisfy our needs but we start to fear that others may take some of our resources away and we become worse and worse and others become better and better. Such insecurity makes people feel their current stable lifestyles are only temporary, so the stability that people want breaks down. When people re-enter instability, they have to make risky decisions to get back their stable lifestyle, and the better lifestyle they want, the riskier actions they tend to take. Therefore, when we see that the society or the economy is being restructured, we tend to take risky actions. Moreover, when we are poorer, we tend to take more aggressive (riskier) actions. Poorer people tend to spend more money on lotteries than richer people do. Rich people do not like lotteries not because it is too risky, it is because there are many more profitable opportunities that are less risky and deliver higher expected returns. For poor people, they have too little to lose, so they are more willing to take risk.

Overall, when experiencing unstable or unsatisfied lifestyles, people tend to take riskier actions.

Confusion about risk

When asking many retailer investors what is a risk, their answers often refer to downside risk, which is about asset price falling. However, a risk is not merely about price falling, it is about the variance of price changes including both rises and falls. Therefore, not only during the bad time, also during a good time as well, the risk by definition is high since the changes are much more volatile than normal time. A stock is much riskier when the company is about to release its earnings report every quarter. Before a company's earnings report day, the probability of beating the estimate and the probability of failing to meet the estimate are equal, since the market has used available public information existing to price the stock, the stock price should be seen as a fair price at the point before the earnings report and could be treated as the mean. Once the earnings report is released, the stock price will adjust around the mean; because the adjustment could be very volatile, by definition, the risk at the point when the earnings report is release is significantly high.

On the other hand, if a stock price falls by 50% in one month due to the bad environment, many retail investors will say the market risk is great. The risk is definitely large, but it is not necessarily greater than earnings report releases during a good period. If there are 25 trading days in a month, the stock price only needs to fall by approximately 3% every trading day in order to fall by 50% in one month, so every trading day, it is about 3% change, and comparing with 10% (or even higher) change after earnings report releases, the variance is smaller and the risk is lower by definition.

To conclude, when experiencing a bad market environment, it does not mean we are facing a higher risk.

What is the implication of the recent stock market fall?

 On Monday, the US stock experienced the largest fall as the market was afraid the new Fed chairman would increase the rates. It implies that the US Fed definitely does not provide guidance for the market, as often before the Fed meetings, the market often volatiles more than average. In addition, from what we saw on Monday, the change in the US Fed's leadership shifts the market expectation about the future Fed's policy. However, such volatility that responds to the US Fed's possible policy is often a short term reaction that does not affect the market mean. Often the market is relatively more optimistic when the economic environment is good as when negative news hit the market, the market may fall and but bounce back, and when there is positive news, the market may rise and not fall afterwards. In addition, when the Fed officially announces its monetary policy, the market will definitely respond to the news. This gives even more solid evidence that the current monetary policy does not follow the guidance rule that the market does not know the monetary policy in the future.

When central banks do not follow the guidance rule, markets will be very sensitive to central banks' actions (but not behaviors), this adds more volatility to financial markets. Guidance allows the market to know what central banks will respond to markets, since central banks keep their promises and all actions are expected by the markets. Under such circumstance, the volatility in the market comes from people's expectations about central banks will be minimized. In the future, if central banks try to be more active, they will add more volatility to financial markets.

Let's talk about the space industry

Elon Musk's SpaceX successfully launched the Falcon Heavy rocket on Tuesday. Before SpaceX, launching rockets was often seen as something that had to be done by government; even nowadays, there are some critiques about SpaceX and its several launching failures (the failed deployment of a spy satellite on January 7th is the most recent one). SpaceX's success is huge that it shows there is a possibility for individuals to start space businesses.

Why did no one start their space businesses? This is in many people's mind, the space businesses including rocket launching are too risky. This is still true. Even though Elon Musk has significantly lowered the costs, the entry bar is still very high in this industry. Moreover, the probability of failure is relatively high that SpaceX is relatively experienced, but it still can fail to deploy satellites. More importantly, in this industry, if a company fails, it loses every single penny. However, with the help from the insurance industry, such risk could be reduced by buying insurance but the premium it has to pay is much higher than in other industries.

If Elon Musk's SpaceX can carry on, it sets an example for everyone else that this is a profitable sector with a bright future. His success may indicate in the space industry, the profits could overcome the costs and the risk taken by the companies. This could potentially encourage more companies to enter this industry. When more people work in this industry, there will be more innovations and what we can get from this industry may be something we never think of at the moment.

What possibly is able to determine the exchange rates between cybercurrencies?

 There are several types of cybercurrencies existing, the most well-known cybercurrency is Bitcoin. All these cybercurrencies are designed based on the same ideology. The exchange rates between fiat currencies are much easier to be determined. From the market prospect, the exchange rates between fiat currencies are determined by the Forex market demand and supply. Different fiat currencies are similar but have slightly different usages, though they are also designed based on the same ideology. The key difference between cybercurrency and fiat money is one is centralized and the other is decentralized. Because, fiat currencies are centralized, their values are different from the differences between different centres, such as their economic performances, government credit ratings and etc.; on the other hand, cyber currencies are decentralized, which means everyone is possible to mine cyber currencies, then this make it difficult differentiate different cybercurrencies in terms of their fundamental values. Though people may use their upper bound quantities to determine their value differences, the cyber currencies are almost homogenous currencies, their values are completely determined by the supply. When one cybercurrency's value increases, more people will mine this cybercurrency and increase the supply and lower its value. However, since we know cybercurrencies have upper bound quantities, if we are at the point where no more cybercurrencies can be mined, then the exchange rates across cybercurrencies are completely fixed. The exchange rates are completely fixed, what is the point to have so many different types of cybercurrencies?

Small investors and large investors

I think that a stock price represents the company's value and the accumulation of discounted future growth. Currently dividends seem not as important as previous that many companies do not pay dividends at all but still attract lots of investors to buy their shares, such as Apple (though it has started to pay dividends). Shareholders are the owners of their companies, the reason for shares having values is because shareholders expect they will get dividends from their companies or sell their shares at higher prices. Let's ignore the option of getting dividends, as many companies' dividend yields are only a bit better than bank saving rates, and investors are bearing a lot higher risk. Then investors' main purpose of buying shares is to sell their shares at higher prices. However, shares need actual functions to gain values. Shareholders can use their shares to influence the companies. However, small investors cannot have sufficient shares to make actual influence on the companies; in these ways, shares owned by them do not have functions. Of course, they can sell their shares to large investors and large investors buy shares from small investors and gain influence over the companies. However, there is a situation when large investors do not need small investors' shares. Such situation takes place when the company has only one large investor and the large investor has already gained sufficient shares to control the companies, then small investors' shares become useless so their shares would be valueless and the large investor have a plenty of ways to get profits from the company anyway. Therefore, the share price will be low and almost valueless under such circumstance. 

All have incentives to create bubbles

Sophisticated investors have perfect information about the market, they know the fundamental prices. Usually we think if they explore bubbles, they would hedge against the mis-pricing and bring the market prices to the fundamental prices. However, in reality, this is not the case. They have the incentives to further expand bubbles, and short the market prices at the point where the bubbles burst; this strategy will give these sophisticated investors the biggest profits. On the other hand, because of the existence of noise traders, when the bubble is very small, the sophisticated investors may have to wait every long to get their returns. When the time period is longer, the cost for shorting increases, and if they seek funding from individuals, their sponsors may be impatient and want to withdraw their money from the sophisticated investors.

However, such strategy is only profitable and relatively safe for large institutional investors. Institutional investors are more able to influence the market prices and are powerful to influence and affect the point where the market turns (although they do not have full control of it). For smaller investors, this strategy is very risky, because they do not know when the turn will occur. It is also not ideal for them to short the market if the market is above its real value either, the reason is explained above. So for small investors, their strategy that is profitable and less risky is to long the underpriced assets. And if they want to take some risk to get higher returns, they estimate the size of the bubble that is not likely to burst immediately and hold their assets till the market bubble size reaches their estimation, and sell their assets.

Property sales fall 20% in London

 Property sales in London fell 20% over the past four years. This might show some issues of Britain. Firstly, the population growth is slow and Britain is facing an aging population. Low population growth rate and aging population would decrease the demand for properties in the cities like London. Secondly, there are better alternatives to Britain. When a country has more migrants, the property sales will increase. Property sale drop may indicate Britain has been losing its attractiveness. This could be caused by the Brexit. This may also be caused by the weak economic growth. Trump is a president that is likely to bring things different to the US economy. However, the current Prime Minister is unlikely to shift the British economy from its current. This can be a good thing or a bad thing. Thirdly, other countries become more attractive, so fewer people come to Britain. More and more Chinese students who graduate from British universities find their jobs back in China, many of them believe there are more opportunities in China comparing with the UK. Fourthly, individuals in the UK, especially in cities like London, may find it better for them to rent instead of to buy their flats or houses. Fifthly, it is not a good option for investment, especially for Chinese investors. The Chinese currency is likely to continue appreciating, and the Chinese housing prices in cities like Beijing, Shanghai, increase sharply over time; under such circumstance, the housing market in the UK is not an attractive real estate market.