Bits Bucket And Craigslist Finds For October 12, 2006
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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This is OT but may be useful to small-time investors and traders here…. from WSJ Oct. 11 Page D1: zecco.com is offering free online trading accounts, and Bank of America is starting to offer no-commission stock trades to customers with more than $25K combined (available in the Northeast USA right noow).
BTW thanks for the pointers to thinkorswim & optionxpress yesterday, Txchick.
________________
Bank of America To Offer Free Trading
Move Applies to Clients With as Little as $25,000 in Deposits;
Escalating an Industry Price War
By VALERIE BAUERLEIN
October 11, 2006; Page D1
Bank of America Corp., escalating a raging price war as banks and brokerage firms battle for online stock-trading customers, plans to offer as many as 30 free trades a month to millions of customers with at least $25,000 in deposits.
The move, to be announced today, is effective immediately in New York City, Boston and other areas in the Northeast where Bank of America — which is based in Charlotte, N.C. — is a relative newcomer but has been pushing hard to challenge Citigroup Inc., J.P. Morgan Chase & Co. and other financial giants on their home turf. Bank of America officials are likely to extend free stock trades to the rest of the U.S. by February.
As many as a third of Bank of America’s 50 million individual consumer-banking customers are ultimately expected to qualify for free online trades. By comparison, Charles Schwab Corp., a leading online brokerage, has about 6.8 million active accounts. To be eligible, Bank of America customers must have $25,000 or more in any combination of checking, savings and other deposit-related bank accounts.
…..
Last week Zecco Holdings Inc.’s Zecco.com started offering free trades to build traffic to its Web site, which aims to become a social-networking hub for traders.
Other companies have tried offering free trades and failed, hurt by rising regulatory costs and other factors. Yet no bank has made as big a play as Bank of America, with its broad strategy of using free trades as a perk for a dedicated relationship, echoing frequent-flier and other reward programs.
Unlike pure brokerages, Bank of America’s motive isn’t getting a customer’s trading business per se. Instead, the company wants people to centralize their assets in one place, in keeping with its long-held tenet that customers are most happy and profitable when doing business with one financial-services company. So far, some consumers have resisted the financial-supermarket model, but Bank of America says its research shows that more people are warming to the idea.
WSJ article tinyurl.com/qent3
Three thoughts: (1) This price war will facilitate development of a temporary “echo” stock bubble. (2) No it won’t, because the number of people who actually HAVE $25,000 will be shrinking too fast. (3) Wonder if BofA has liquidity fears.
Maybe they’re trying for the daytrader crowd (25K is the threshhold for pattern daytrading)
Now I made myself laugh.
Will “Daytrading” return?
My Mother-in-law, who never met a get-rich-quick-scheme she didn’t like (and never learns) tried this back during the dot-com days.
She had just come in to some $$$ by suing an ex-husband for back child support (even though, according to her children, she was so drunk most of the time that they lived at friends houses, etc, during this period.)
So she gets 25K or so, and goes to a “Day Trading club” and loses it all. Then she takes money out on her credit card and loses that. Then (after asking us for $$$ and hearing us laugh at her) she applies for BK #3 (this was back in 1990. BK #4 is just about due.)
She’s also lost money on real estate several times. After husband #3, she got $$$ when they sold the house. She thought she was a real-estate genius and bought a house in Redding, CA. that she lost money on. I think she just did a defacto BK on that….send the keys back and stop paying.
However, the day traders don’t bother me much. They don’t cause my property taxes to rise, etc.
Funny - but sad.
Liquidity was my first though too. They’ve been getting some bad press from clarkhoward.com. He’s been encouraging his listeners to withdraw their funds from BofA.
As above, they are bleeding for cash flow,and having personally being screwed twice by BofA I wouldn’t give them a 3rd chance…they are rats…….
I was in BOA with a problem on my checking account a few weeks ago. Surprisingly, the lady proceeded to tell me what a valuable customer I am (although I only keep $2000 in my accounts there) and bent over backwards to accomodate my request. Just a few years ago they acted like they could care less about their customers.
WRONG…..it wasn’t an act.
I had an investment account at BofA, it reminded me of the time before discount brokers and the internet, they had to move into 2000’s
BFD. What you gain in commissions not spent you lose in execution slippage.
It’s kinda like free admission to the amusment park. What a great deal! ‘Step right up’ and play the un-rigged carnival games.
Obviously, the public still doesn’t know the comission is not to be feared, rather loss of their principle to the firm’s proprietary traders.
Now stop it. LOL. Don’t give the store away.
You want to see some real client scalping going on, Schwab is the one. Of course they use the ECNs now so you can’t see them doing it the way you used to be able to.
“To be eligible, Bank of America customers must have $25,000 or more in any combination of checking, savings and other deposit-related bank accounts.”
Not in the brokerage account, in a bank account. Check out their rates on CDs and money market accounts. They are about 2.5% below what you can easily get elsewhere. 2.5% of $25,000 is $625. So if you make less than 90 trades a year, you’re probably doing better sticking with scottrade.
Bingo, Bob. The vast majority of accounts they get from this will not be day-traders anyway. Just a bait and switch. Sorta like “free” furniture with a $650,000 two-bedroom house, eh?
Not True. BOA has a MMA that is paying 5.37% APY one of the highest rates in the nation. It is a carry-over from MBNA, which BOA recentley purchased. It counts toward the $25K requirement.
http://tinyurl.com/u9h8w
I think it’s a wave. Zecco is out there putting it’s stake in the ground at zero dollar commissions, which is going to pick off the low-end of the retail market. I think the message from BofA is that they were not a daytrading marketplace so they need to match or get out.
Txchick’s comment above definitely applies, IMHO. But who knows, maybe they’ll change how things are done by etrade, tda, etc. just like those guys changed how it was done for the old-time brokers.
I’m just thrilled at the prospect of another wave of GFs into the stock market. Trading was damned hard in 2002 especially when there was zero liquidity. Even if you were bearish it was hard to make money because nobody would take your short sells. I don’t know anything about house flipping but I am one hell of a stock flipper. Bring it on.
Bring it on.
ug. I was at the center of the optical bubble craziness in y2k. I’ll let you have this round…
An tips would be much appreciated. What’s your method?
The fastest way to make $1 million is to put your $2 million into the market and just start trading like a crazyman.
My feelings about BoA wouldn’t make it past the profanilty filter here….. but suffice to say they lost my business after taking more than 10 days to clear a sub-$10K out-of-state check deposited into my account, which caused some short-term disruption at a time when I really did not need any more stress in my life.
Good riddance.
I’ve had two vehicle loans that BofA bought the paper on, and I paid off within a month of the purchase… I love it when that happens! I ultimately pay cash for my vehicles, but the price is always sweeter when they think they can make up for it on the financing.
I did the same thing and I agree the price is sweeter. When it comes times for the financing guy, I don’t even care what the rate is as long as there is no prepayment penalty. Having cash is nice.
Free trades would be fun…but Bank of ‘America’ is currently outsourcing every job it can to India. I just can’t get past that irony.
“customers with at least $25,000 in deposits.”…..”As many as a third of Bank of America’s 50 million individual consumer-banking customers are ultimately expected to qualify ”
Sounds like John Q Public isn’t as broke as we’ve been discussing here.
The $25,000 is borrowed, of course — home equity.
Every region has the right to have his bubble!
Property boom reaches N Ireland and Scotland
By Jim Pickard, Property Correspondent
Published: October 12 2006 08:39 | Last updated: October 12 2006 08:39
“Prices leapt by 33.4 per cent in Northern Ireland in the year to September while in Scotland they were up 15.2 per cent, according to data published on Thursday by Nationwide, the lender.”
http://www.ft.com/cms/s/333160b8-59bf-11db-8f16-0000779e2340.html
They are not “building anymore rocks” in Ireland.
That is “damp, wind swept, moss covered rocks being bothered by sheep”, havent you ever been to ireleland??? beautiful, but drippy.
That is “damp, wind swept, moss covered rocks being bothered by sheep”, havent you ever been to ireland??? beautiful, but drippy.
On a totally off-topic note, it seems that all of Blogspot is down right now. I cannot read Mish or any of the Blogger housing sites at all.
Mabye It’s the Dotcom 2.0 crash
Blogger doesn’t get the attention it really needs from Google.
YouTube, take note.
uh oh…here come the black helicopters.
FTC Competition Director to Announce Real Estate Law
Enforcement Sweep
The Federal Trade Commission will hold a press event on Thursday, October 12, 2006, at 11 am EDT to announce the results of a real estate competition sweep that will include seven law enforcement actions.
http://www.ftc.gov/opa/2006/10/relawsweepma.htm
Heartburn with that collusion? A little tabasco on that relisting?
What is a law enforcement action?
Cop gets into car, takes sip of coffee, drives, turns on siren, slows, turns off siren, takes another sip of coffee = 7 law enforcement actions?
I want to see chain gangs of fraudulent flippers.
Did jmf take the day off?
I thought that too. Not that I find him annoying. At least he keeps it to this thread, and lately he has been mixing other blog finds with his own.
Some here have called jmf annoying and I don’t get that. In my book, anyone who is putting forth the effort to expose the bull we’re being fed on daily basis is okay by me. The ones that annoy me are the ones that sit, do nothing, and buy into the crap that is shoveled at them. Most people are in the mess they’re in because of being to damn lazy to do their own research and come to logical conclusions.
I wouldn’t have a problem with him if 1) he weren’t cannibalizing my sources which he got from reading my stuff and 2) if he would just put it out there instead of trying to drive traffic to his personal blog. Other than that, no problem.
There’s a grey zone between appropriate self-promotion and spamming, and I think he was crossing well into the spam zone with the frequency of his posting links to his own site. It’s appropriate information, to be sure, but after a while it does start to feel like he’s trying to ride off Ben’s traffic more than anything else.
OT:
HedgeFundAnalyst,
Per our discussions earlier this week about the industry, please feel free to email me @ david_parker75@hotmail.com. Thanks.
Realtors: Home sales weaker, prices lower
http://money.cnn.com/2006/10/11/real_estate/realtors.reut/index.htm?postversion=2006101117
- “Given a positive economic backdrop of lower interest rates and job creation, we expect sales activity to pick up early next year,” said David Lereah, NAR’s chief economist.
- Ok, I will concede on the “lower interest rates ” … but the Job Creation is pretty shaky. Just what are the wages of these new ‘JOBS’. If 80% of these new jobs have a starting pay of 50-60K, then great! Full steam ahead!
However, if these are Walmart, Carwash and Taco Bell jobs …
A Washigton Post article implies the exurbs may take the biggest hit, of energy costs induce people to swap convenience for square footage: http://www.msnbc.msn.com/id/15230632.
Duh. That was postulated on ITulip’s roadmap for the housing bust many moons ago and discussed here last fall and winter. These guys are little slow on the uptake.
Speaking of ITulip, I received this yesterday and read it last night. Highly recommened for bubbleonians
http://tinyurl.com/t4gtz
Mine’s “in the mail” on a backorder. Any specific concept/strategy I should be looking for (in your opinion)?
Let your longs go up and your shorts drop
Well that clears up my strategy going forward. Thanks for the epiphany!
FYI, you have the sequence wrong, you have the shorts drop BEFORE you let the “longs” go up!
Business Week had a similar article about a year ago.
http://www.businessweek.com/magazine/content/05_42/b3955060.htm?chan=search
Robert Cote disagrees with this notion and has good data to support his position but I still feel the exurbs will be a transitory phase.
I don’t know what more i can add except for aquote from the article itself:
While many of America’s biggest cities continue to lose population, and inner suburbs are suffering symptoms of old age, out in the exurbs it’s a different world. Between 2000 and 2004 exurbia accounted for 17 of the 20 fastest-growing counties in the nation with more than 10,000 people.
Got it? The places that are losing population and ecaying and have higher crime and taxes and congestion and few and losing jobs are expected to benefit? The people who publish these articles are die-hard urbanists. They are still in denial themselves from the last half century of being wrong about cities.
A feel good hearwarming snippet of the WashPost article:
“Consumers who hardly gave a thought to gassing up when regular was $1.50 a gallon are abandoning their hulking sport-utility vehicles and pickups, signing up for carpools, and leaving the motorboat in the backyard now that prices are stuck at nearly twice that.”
Nothing brings me more schadenfreude than the demise of reckless, indebted, “you owe me”, righteously indignant “consumers”.
I bet they’ll say that God told them that financial stewardship can be disregarded.
Fed official talking about housing and the economy for Washington DC Region. Interesting comments.
http://www.washingtonpost.com/wp-dyn/content/article/2006/10/11/AR2006101101789.html
main point, all gov workers he’ll keep his job while the rest are screwed
Flat –
Maybe you ought to find yourself a government job. Just a thought…
Then he would just whine about all those lazy taxpayers expecting things from him like their drivers license, their mail, and their garbage hauled away.
Flat is a WATB (whiney A$$ titty baby)
most of you probably heard about a flipper in trouble in Clairemont Mesa part of San Diego. The flip was finally sold in September, read about the update here.
She claimed on the SDCIA board that she only lost 40k. Bullshit.
we don’t even truly know if it was really only $77,000 they put in. sometimes folks like this are sloppy with their accounting and only counted big ticket items, a lot of the time the small stuff from home depot really adds up.
What do you want to bet that either 1) the sale will fall out of escrow, which happens All The Time down here or 2) she took a “creative” way out as recommended by her fellow SDCIA members
Even if the house is nice, you can get the equivalent in a part of town with better schools for far less than $530K.
Called “Buyers Remorse” Nobody wants to be thought of as a “fool” these days, and when she excitingly tells all her family and friends of her great purchase, the chances are someone will inform her that the market is crashing, and it’s a bad time to buy. The word is out everywhere about the housing bust.
I never tell anybody I sold anything until the check clears!
the sale is finalized.
Clairemont Mesa in one of those places where values would double if the whole place was razed. I can’t imagine paying $500k for the privilege of living there.
I just returned from a business trip to Reno, NV. Things are really as bad as they’ve been reported here. A couple of the engineers I met with were trying to sell their houses to do a job transfer and have not had a single offer on their houses yet. Just tooling around the ‘hoods I noticed a lot of For Sale signs. Speaking of NV and gambling, here’s a funny definition from itulip.com.
state lottery : n. A regressive tax imposed by the state on those of its citizens it has failed to provide a basic education in the laws of probability. Usage: “You don’t see many Harvard graduates waiting in line to buy lottery tickets.” Related quotation: “I never play the lottery. I figure I have about the same chance of winning whether I play or not.” - Fran Liebowitz
Now, hang on there, crash1. Don’t “scratch off” scratch-offs in an analysis of the value of lottery. Anyone with a child in Occupational Therapy for hand/finger grip or needing some creative math tutoring can tell you these things are worth their weight in platinum for OT and math. ; )
http://www.itulip.com/forums/showthread.php?t=503
Home Owners’ Loan Corporation (the real 1930s one): My worst f-ing nightmare. If this is what we have to look forward to, I guess I’ll just go out and buy the biggest overpriced house I can find. What have I got to lose? Not the house, certainly.
Following townhouses in Alexandria, VA, in one particular community. Wife and I looked at these in Jan/Feb. 05 and they were selling for between $520 and $580 list, with more from bidding wars. By Fall 2005, they were selling for high 500s to low 600s. By July, they were selling immediately when sellers dropped prices to around $530K. Now, there are two on the market, including one end-unit, for $495,000, and they are not selling. This is a DROP OF OVER 15% in less than a year, and probably 10% from early ‘05, and take prices back to early Fall ‘04. These by the way, are very nice, newer (early 90s) townhouses facing million dollar SFHs.
In overwhelming defiance of fundamentals, the homebuilder stocks seem to be the winners du juor in the Keynesian beauty contest whose judges are Wall Street analysts. How long can these analyst recommendations keep these stocks aloft against a backdrop of steadily eroding fundamentals? (My guess: A long time!)
A little touchup artistry going on, maybe. Millions are easily fooled.
http://www.campaignforrealbeauty.com/
Every homebuilder share price deserves to be valued at the present value of future profits, including the future lost value of land owned and optioned.
Totally OT but wow that was interesting. Thanks.
Not OT, just not obvious why it was on topic.
http://milwaukee.bizjournals.com/phoenix/stories/2006/10/02/daily28.html
Get over housing bubble, economists say, growth remains strong
“Some of Arizona’s leading economists believe the housing slowdown is a short-lived bump in the road that too many people spend too much time thinking about.
Instead, Arizonans should be looking at statistics that show the state created 161,000 jobs through August of this year, more than 340,000 jobs since the end of the 2002 recession and had a whopping 8.7 percent gain in gross state product for 2005. … ”
Hear that? GET OVER IT! Stop thinking about it. Better yet, just stop thinking. Boom. Problem solved.
Manufacturers See Slowest Growth Since Mid 2003 per Market Watch
http://tinyurl.com/ujaod
HUD ANNOUNCES THREE SETTLEMENTS WITH BUILDERS INVOLVED IN CAPTIVE TITLE REINSURANCE ARRANGEMENTS
Nearly $2 million in settlements the result of Department’s enforcement effort
http://www.hud.gov/news/release.cfm?content=pr06-137.cfm
How come I’m not impressed with the numbers. A couple of homes. That’s all that this nonsense cost these builders. How much do you think they made off of the deals?
The strongest indicator that Wichita is different from the nation is the number of houses listed for sale, he said.
——————————
Area home sales drop off
But slower sales in July, August don’t signal doom, experts say
BY DAN VOORHIS
The Wichita Eagle
10/10/06