Bits Bucket And Craigslist Finds For November 18, 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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Name:Ben Jones
Location:Northern Arizona, United States
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here is something more to worry about…….
Derivatives Trading Soars to $370 Trillion / buffets “weapon of mass destruction”
http://www.immobilienblasen.blogspot.com/
have a nice weekend
“it is also scray that the derivates exceeds often the amount of underlying assets like gold, stocks, bonds etc.”
But doesn’t the amount of paper (of whatever stripe) floating around in a fiat currency system always exceed the amount of underlying assets
they represent? When you think about it, the difference between derivatives contracts and green pieces of paper are not as substantial as they seem at first glance. If you are not convinced, rent out the movie “Its a Wonderful Life” and reflect on what is happening in the scene when everyone lines up at the bank to try to pull out their savings. I imagine a financial market earthquake that triggers cascading waves of derivative “insurance claims” will play out very much like a bank run. Good thing we have a nice conundrum to keep the lid on volatility.
when I speak of bank runs, people laugh at me. this is why I am primarily a deflationist first, then inflationist when the gov’t responds.
the one thing the world is lacking is physical cash in their pocket.
“when I speak of bank runs, people laugh at me.”
Remember this bank-run?
Remember it! I lived it! The crush is taking place outside Most Bank on Ulitsa Pushkina in Moscow in August 1998 if I am not mistaken. Do I win the prize?
Ochen horror show!
Here’s the link to a well researched and documented housing bubble article from the guys at safehaven: http://www.safehaven.com/article-6329.htm
(Caution: It is lengthy)
MANDATORY READING!!!
It’s from Mauldin and based on Shiller’s research. Great stuff!
Definitely mandatory reading.
Pulls together all the major points with excellent charts in one place. Would love to see Maudlin or Shiller update the article and charts as new information and data develops. Thanks for posting!
I received that from Mauldin today and immediately printed it for my wife and forwarded it to a number of friends. It not only tells the current/forecast housing price story with easy-to-understand terms and graphs, but also encompasses more aspects of the boom and bust than I recall reading in a single recent article. It’s the type of writing that I take along in the glove box, in case I meet a clueless housing bull who’s never heard of Ben’s blog.
Its a great article. Not long ago Shiller was predicting only a 15-20% drop. Now it looks like he is saying 25% but would actually like to say 40%.
I think he is right on !
“I think he is right on !”
It’s gloomy research, and I’m afraid I agree with you.
As it stands right now I can take a 19.4% haircut without getting skinned here in my rural NW community. However, we still have slow but steady economic growth happening with huge data centers for Microsoft and Yahoo opening soon as well as other high energy use industries flocking to the area. Equity rich retirees continue to arrive from the SeaTac area too. Damned glad I didn’t drink the RE hemlock in California!
jmf ” Derivatives Trading Soars to $370 Trillion ”
Is that a lot of money?
$370t = 28 X US GDP (~ $13.3t)
Don’t worry,… be happy,
Don’t worry,… be happy, …
Silly “in” joke: What Ever Happened to Baby Jas Jain?
LOL… I was wondering that myself az-lender .He might be on the beach dancing .
-
What ever happened to The L I N G U S?
What ever happened to my favorite bulls (to mock)?
LV_Landlord
BeaConst
MA Homeowner & VA_Investor
These two were the most annoying bulls!
Yep — Homeowner_MA, if it’s the same one. The Boston Bull.
lv landlord is bragging about her 2 new investment properties in lv on the wsj blog.
maybe they are a more sympathetic ear! lol
posted “What Ever Happened to Baby Jas Jain? ”
Imploder kicked his butt six ways to sunday.
Whoa. To be fair, folks, Jas has, in his own right (elsewhere) contributed a lot of useful stuff about the bubble over the past year or two. True, he was exceptionally passionate about his politics when posting here, on a blog not intended for that as a principle message, but Jas is not a blogdom “nobody”; like the others mentioned here.
You are absolutely correct, Chip! Jas has been posting on other sites, and has been one of the most informative, accurate and honest writers.
Gypsy wagons are making a comeback as a alternative to $500,000 mortgages.
http://www.tumbleweedhouses.com/houses.htm
“tumbleweedhouses” seems like a misnomer. I have been thinking of a “tumbleweed house” as the description of a haunted McMansion in a Phoenix ghost tract home development five years in the future.
Those would be “The Tombs of the Underwater Flippers.”
phoenix |ˈfēniks|a unique bird that lived for five or six centuries in the Arabian desert, after this time burning itself on a funeral pyre and rising from the ashes.
Phoenix 2 | the capital of Arizona. A unique city that appreciated for five or six years in the American Southwest desert, after this time burning itself on a funeral pyre of consumer and real estate debt and not rising from the ashes.
Thing about Phoenix, the ghost tract home developments won’t stay that way for long. The general trend is for growth in the future. Sitting so close to CA, thousands of people are leaving and spreading out all over the western US, some will be moving to Phoenix.
Then you have the snowbirds, with thousands of baby boomers reaching the retirement age, and with Florida’s market drying up due to the dangers and the costs of hurricanes. The Phoenix area will get some of these people too. You would not believe how many midwesterners and easterners have a winter home in the Phoenix area. As soon as the prices stabilize, they’ll start buying again.
Also, regarding CA. With the expected economic trends showing a recession or regression, the resulting loss of revenues is going to cause the taxes to go even higher, driving more people out of the state.
I talked to a rental truck moving company guy, who didn’t have any trucks to rent, and he said they have trouble getting all the trucks back into CA. I myself can tell you that the same truck leaving CA is much more expensive the one heading into CA.
So my conclusion is that the AZ residential markets will survive, but the market wil come back because of the general trend for growth, especially once the prices come back to earth.
I think the areas like the rust belt cities in the midwest, where the general trend is a loss of population and a poorer economy, are looking at a loss that will never recover.
JMHO
“I think the areas like the rust belt cities in the midwest, where the general trend is a loss of population and a poorer economy, are looking at a loss that will never recover.”
Sounds like that area might be good to buy in in a few years for retirement.
Wow. Are you related to Greg Swann? Everything you say is straight out of the realtor certified it’s different here handbook. If anything you say is true how did we get to 54,000 for sale? Phoenix is poised for one of the greatest falls alnong with California and Florida.
LIP (and would that be ‘Living In Pheonix, perchance?),
What you write could be valid, but there are 2 macro factors which tend to intrude.
1. If the global warming hypothesis is true, then Phoenix will become less pleasant rather than more pleasant.
2. Phoenix has, I believe, long term water issues.
Phoenix has future ghost tract home development issues…
ajh,
You might miss this because it’s so late, but no, I don’t live in Phoenix, but I have a house there, and I’ll be moving back real soon. (It’s a long story, wish I had known about this blog when I started the journey)
1. If global warming is true — you see we have a relatively new nuclear power plant that makes all the clean electrical power that we need. In fact we the consortium sells their excess power to CA at exhorbitant prices. I hope global warming is just a myth, but if not, a few degrees should not make a difference. It’s hard to believe, but it doesn’t start to feel hot until it hits 110 degrees.
2. — long term water issues — Actually, Phoenix does not have long term water issues. The city and the state have enacted laws that conserve the water that we get, catch the water when it rains, diverts the water from the streams, and channels large amounts from the Colorado River. Phoenix is sitting on top of a huge body of water.
While your perceptions are considered to be “common knowledge”, these perceptions are less than total fact. Still I have to admit they would tend to hurt the real estate future, but I’d rather pay $250 a month for AC in the sumer than $250 a month for heating in the winter.
Really impossible to tell what is going to happen here in Phoenix. We are due for a big fall in the next year or so, and I have a feeling things will be different everywhere by the time the up side of the cycle is supposed to start. The retirement migration patterns might turn backwards toward the cheaper houses in the midwest - that’s what my parents just did.
I went out to see an old friend play at a local bar tonight - he brought along a friend that he hasn’t played with in years. They mentioned that the second friend has five houses for sale.
The “gypsy wagons” thing comes close to my whole lending business. My clientele own their own lots in condo-ized RV parks, and then they have any variety of gypsy wagons, planted mobile homes, sheds, whatever. Most seem quite happy on their 60×30 plots in their 400 sqft mobiles (max for RV parks mandated by AZ law), with their access to common swimming pool, billiard room, laundromat, &c. Can you believe I had a request last week to lend $120K on such a property? (I didn’t make the loan.) Someone with a very good credit history does owe me $77K on a “double” lot with planted mobile, attached Florida room (which they call AZ room). Lots of luck to me !! Other than that, many loans in the $15K-$45K range on singles. One time a client said, “Oh, you have so much power, you practically own these parks.” I said, “Power ha ha. You guys would have the power if you all got together and decided to stop paying the mortgage simultaneously.” Fortunately I am seen as a very friendly and reasonable Bank so I don’t think they’ll exercise their power. Time will tell. I am trying to exit this business noiselessly. E.g., last few days one of these things sold and I was happy NOT to pursue a continuation of the loan with buyer, just taking payoff.
In that alot of people will end up in trailer parks of the sort your lending on ,I think you should be ok .
thanx for the encouragement HW
i have looked at some manufactured housing that is quite nice.cant be much worse than the crap these builders put out today.if you have a cheap piece of land it could make sense.
Thanks for the tiny houses link, Zadok. I’d love to have one of these tucked up in the mountains someplace just to have some peace & quiet from time to time.
I love them! A great alternative to living in a tax-debtor box.
A little cramped and a little on the heavy side, but a neat little cabin. The only problem in most places is parking/zoning ordinances.
When people indebt themselves to a life of servitude, they won’t allow others to “freeload”. Not many places in town to park the beast. Maybe we could get Walmart to reconsider the RV parking situation. They used to cater to them. Maybe this will create a comeback.
The “Vesica,” with its “dinning” room, probably would be too noisy. Being too old and arthritic to deal with a loft bedroom, I thought the B-52 Bungalow might work, with a Murphy bed in place of the day bed. But then there is Fleetwood, that longstanding purveyor of quality pre-constructed homes on wheels, called trailers in pre-PC-speak. . For the number of years I have left on the sunny side of the grass, if I had to choose, I’d go with a double-wide Fleetwood with a walk-in shower and garden tub.
“Gypsy wagons are making a comeback as a alternative to $500,000 mortgages”
This is the future for the legions of soon to be foreclosed upon FB’s. Mini-shacks on wheels, providing instant mobility for downsizing ex-McMansion owners. And plenty of available open tracts out in the vast desert scrublands of palmcaster or coachella. I can soon see a booming business in trailer/rv lots out in the IE/desert vast open spaces, renting out space to gypsy wagons. Not much room in LA however: any and all available trailerspace occupied by legions of illegals and /or retired in such mobile park oases as Carson, Hawawian gardens, Lomita, westminister,ect.
The $10,000 house?
Saw a few a couple years ago in a Buffalo real estate guide, whilst going to my wife’s home town. She guestimates if the Bills were ever to leave and go to another city, there’d be 100 suicides the day it was announced.
Any other locales that might have the flioside of a flippers dream, the elusive $10K house?
most of those on that site are well in excess of 10k to build. i would say 30k+ and trim it out yourself….
I’m all for living on a smaller footprint. As a nation, we “require” too much stuff and I applaud anyone who makes the decision to really downsize. If I could afford the land, I’d pick up one of the small Dwell (www,dwell.com) style homes in a heartbeat. Even Sunset mag has gotten into the trend. 500+ sq ft and bike to work in my dream (although I already bike in everywork while renting)
Sitting here reading the Rocky Mountain News. In the “Breaking News” section there’s a picture of a couple exiting a Circuit City store in Lakewood with their big score, new Playstation 3’s. Each one is carrying a PS3 in one hand, a Starbucks drink in the other, and both with big sh*t eating grins. Story said they waited in line for 40 hours outside the store. Y’all know what I’m thinking (it’s housing related)?
Flip this Playstation to make the mortgage note this month?
I saw many going for $1600 on ebay.
Only $1,600? Yesterday one went for $15,000!
http://www.tgdaily.com/2006/11/17/ps3_ebay_sales/
“Story said they waited in line for 40 hours outside the store.”
If you have to line up to buy something, you’re getting screwed.
If you have to risk getting shot to buy something, you’re getting screwed.
If you have to line up to get kicked in the nuts, your name is Nick Basile.
(with a tip o’ the cap to jim…)
i guess waiting 40 hours, which means taking a week off from work (paid vacation, hopefully), must have been worth it to get the playstations? Let’s see: two playstations. If they can sell the two on e-bay, each would bag $1600. Maybe they each are minimum wage types, so they could turn around and sell the things and come out ahead. But if they are professionals, each earning $100,000, they are nuts!
My sister knows this couple who have a house in Phoenix and are building one in Canada. The man is a car nut. Buys a new car every year! That’s Lexus/Infiniti, all luxury. He has some type of materialistic obsessive disorder. The couple has low net worth but are pretenders. People are nuts. That type of people scare me. They are the ones who vote for the politicians that will forgive their debts and send the bill to the concientious savers - the productive class.
They wouldn’t have to take a week off of work, just two days max. The people waiting in line did so for 40 hours straight, not 8 hours. If they timed it right, they might have only needed to miss 1-1.5 day.
Still doesn’t make much sense, but they didn’t forgo a full week’s pay.
I agree with Bill. If I have to stay up all night I am going to bill for it. 40 hours is 40 hours.
The only line I will wait in is the que at the ski lift!!
John Mauldin’s economic blog has a bunch of graphs on how crazy things are. A comprehensive portrait of a bubble past its peak.
http://frontlinethoughts.com/printarticle.asp?id=mwo111706
From Today’s WSJ, “Since January, housing starts are down 34% and permits have fallen by 30%. Pretty dismal numbers, right? Actually, we see this as an unambiguously good thing. The faster builders address their bloated inventories and bring the pace of home construction down, the quicker the housing correction will play out and the economy can return to a more normal footing. — Stephen Stanley, RBS Greenwich Capital”
Is he correct? If not, why?
Do you think if housing starts had been up by 5% these same guys would have been saying it was a bad thing?
Calculated Risk projects between 400,000 and 600,000 jobs will be lost in the construction industry by April 2007 based on the latest start figures. Plus the illegals. Is that a good thing? Also keep in mind that builders are still adding to inventory at the reported start levels based on present sales!
Permabull speak: If housing start are up/down, it’s good; in other words, if a market is contracting or expanding, it’s still good. Damn the facts!
Bovine brain’s mantra: “It’s all good.”
“Calculated Risk projects between 400,000 and 600,000 jobs will be lost in the construction industry by April 2007 based on the latest start figures. Plus the illegals.”
Popper, I think those numbers include the illegals. For this reason, I don’t expect the intermediate-term weekly unemployment claim numbers to reflect what is actually happening.
Plus the illegals
The illegals will be the last to go. They’re the cheapest-no workers’ comp., payroll deductions, no pesky sick leave or vacation.
They are overplaying the drop in permits to a level which Mr. Jones himself yesterday pointed out is still a high pace of new construction. This will be added to construction already in the pipeline plus a record inventory of new homes for sale plus a growing wave of foreclosure sales, as those who bought on the assumption of 10%+ appreciation forever have to retrench thanks to housing price deflation. So the spin may help justify the homebuilder stock price’s dead cat bounce, but it will not prevent the inventory train wreck which is in the cards.
Let me emphasize GetStucco’s point.
Even with the drop in permits, housing construction is above the absorption rate! In other words, this inventory train wreck is still gaining speed despite the twisty downhill approaching.
Neil
how many homes are we producing still that are above the sales rate? it used to be something like 600,000 more homes built than bought.
“They are overplaying the drop in permits to a level which Mr. Jones himself yesterday pointed out is still a high pace of new construction.”
Yeah, maybe compared with 1990, but compared with starts from 2002 forward, which have bounced from 1.8 million to 2.2 million, 1.5 million is pretty damn low. Those folks who insist that current stats are “historically high” always ignore how that the trend down wreaks havoc with an economy geared to the peak.
Those folks who exist that the builders will wisely reign in building to allow a soft landing conveniently ignore the fact that there is already a record number of new homes on the market against a backdrop of deflation, which tends to make it difficult to clear out the pipeline, as nobody who can afford a home valued over $500K wants to catch a falling knife.
GS, go to ocrenter’s blog and check out his excellent analysis of San Diego’s trustee sales as a percentage of Notices of Default. The % has clearly been trending up for the last 1 1/2 years, pretty much at the 20% level now, but with several recent months well over 20%, almost approaching 25%.
If we can agree that San Diego portends national trends, it will very interesting to watch this percentage over the next 6 months. If the % moves to 50%, we could estimate 700,000 REO homes added to inventory in 2007, based on CURRENT national foreclosure rates.
“Actually, we see this as an unambiguously good thing.”
This is Wall Street’s version of the Realtors’ (TM) mantra, “There has never been a better time to buy.”
Didn’t I say that was going to be the response from these clowns!
Mr Stanley may be right about the drop in permits being better for the housing market, BUT, the drop-off will feed on itself in the sense that it will probably not be possible to re-employ the REIC work force at good wages, hence fewer qualified buyers etc etc.
Another thing about Mr. Stanley. On September 15 of this year, he wrote that the drop in oil prices would create an “explosion” of consumer spending in September, October and November.
Still waiting for that pop ….
Stanley is a confirmed Permabull with blinders.
Also from today’s WSJ (article on p. A3):
‘The depth of previous downturns suggests that construction may have yet to hit bottom. In October, starts of single-family homes were down 32% from a year earlier, compared with 45% in January 1991 and 52% in March 1980.
“We could see further declines still,” said Daniel Oppenheim, housing analyst at Banc of America Securities. “In talking to the builders, I get the sense there’sprobably going to be a real push in the remainder of this year and the beginning of next year to resist any new construction.”‘
Next year the housing start rate will probably bottom out. But unless this time is different, we will have five years of falling prices ahead of us (like from 1991-1996).
How will the builders keep their share prices propped up while they stop building and use massive incentives to hide dropping market values while they flush out their bloated inventory of land and built homes onto a glutted market? Hopefully the PPT can help them out there, because I don’t think a growing perception of eroding market fundamentals will do the trick.
“We could see further declines still,” said Daniel Oppenheim, housing analyst at Banc of America Securities.
Hey, Mr Oppenhein, I guarantee no more housing from KB Homes whose fiscal year ends Nov 30, . When they file BK around Dec 15, cause their books are so screwed up from post dated options and SEC investigations following Krantz leaving,
their suppliers and banks will stop lending them money, and then you can tell everybody how you saw this coming NOT
yes, this is GOOD!!
business is SO BAD that we will quit making our product, that is how GOOD business is!
…now, please excuse me, I’m in the middle of a really good book called ‘Alice In Wonderland’ and I want to see how it ends.
He’s correct in the sense that there is an enormous oversupply. And the only way that oversupply is going to be absorbed is if the HBs stop adding to it. However, to alleviate the situation, starts need to fall to about 500,000 for a few years. Otherwise, the oversupply problem will continue to exacerbate. As an analogy, it is like an alcoholic only drinking 1.25 liters of scotch a day instead of his previous 1.75 liters. It’s better, yes, but the problem remains.
Yeah, when the builders cut back to a rate of 500,000 per year for a couple years the inventory will clear up but in the process all the HB’s will be go bankrupt.
Is that when the builder share prices will finally reflect fundamentals? BTW, how is Kara’s stock price holding up these days?
Isn’t Kara privately owned?
WCI is looking up these days since Mr. Icahn sprinkled some pixie dust on their stock.
I forgot to post this yesterday. Dr. Barton Smith, the guy who predicted the housing bust in Houston in the mid-1980s, says Houston had better watch out. It’s not the prices, it’s the fact that they are building too many houses.
http://www.chron.com/disp/story.mpl/headline/biz/4341322.html
I never understood why Barton Smith is so revered in SE Texas. I was in high school back then and even as a kid I realized something was screwy, just from hearing my parents talk about RE.
Let’s see… some random thoughts here:
I just moved to Shanghai a couple of days ago, from Shenzhen in southern China (richest per capita income city in mainland China, more than Shanghai)
Anyway, I am looking for a place to rent and have been talking to realtors and a taxi driver about apartment/flat/ghetto unit prices in Pudong, the new area of Shanghai (cheaper than Puxi, the ‘old’ city).
Apparently prices have gone up 300-400% here from 1996, the bottom of the last downswing. The taxi driver is the only person I talked to who whole-heartedly agreed that prices are completely out of line and didn’t ignore or refute my saying that prices were bound to fall.
Of course, Pudong has developed amazingly over those years, the question is, how much should prices be for a normal level here? I really have no idea. They were as low as 2,000 - 3,000 / Square Meter ten years ago. Now they are 11,000 - 14,000 / Square Meter.
Prices will fall over a period of years, likely lagging the US market by a year or so as falling demand really begins to hit China, the question is, how much appreciation is normal for a city that sprung out of “the other side of town” which was just that like 15 years ago, not Shanghai but Puxi, the town across the river.
Not planning on buying or being here that long, just curious about other people’s predictions. I am thinking 4-5,000 will be a bottom, taking into account inflation and the development that has occured here in the meantime. That is a pretty hefty fall from current prices, but well above prices ten years ago.
Thoughts?
I put the bit in about Shenzhen as I wanted to note that Shanghai prices are like twice that of Shenzhen, even though Shenzhen is also a rather wealthy city
“Apparently prices have gone up 300-400% here from 1996, the bottom of the last downswing. The taxi driver is the only person I talked to who whole-heartedly agreed that prices are completely out of line and didn’t ignore or refute my saying that prices were bound to fall.”
Shanghai cab drivers must be much smarter than NYC cab drivers…
China — I’m happy for you that you are not so Dum as to get Phukt. Yu probably already know that people on this blog have no clue about the best cost per sq.ft. of property in Pudond, much less Puntang. I know only about Mydong, which is of no help to you. I suggest you check with your girlfriend and ask her what she expects the most optimistic “longdong” price to be.
Better yet, rent. never buy there. There are a thousand ways to get screwed in real estate, but there a thousand and one, in China.
One of the best responses yet on Ben’s blog.
BTW, do we have awards? (note to self: suggest an awards system in the ’suggest topics’ section.
Housing sales won’t pick up until buyers come back into the market. Lower starts is a response to the dismal reality that sales are reducing, and builder outlook is bleak. Since when is low demand a good sign? If Ford came out tomorrow and said they are reducing their production by 15%, would we all say that things are turning around for the auto industry?
It will take 1-3 years to sell the existing inventory, according to UBS analyst Margaret Whelan (if I remember correctly). This housing downturn has several years to go, and the reduced permits is just showing us that builders are cutting back production because of low demand.
Article in today’s Portland Oregonian newspaper front page:
http://tinyurl.com/yhu7z2
How many old RE saws can YOU find to debunk in this baby? Classic bubble logic through and through. Then read the last couple of paragraphs of data.
BTW, my wife and I moved here 16 months ago. When we got here, prices were $200-175 / sq. ft. Yesterday we were with a realtor who gave us data on recently closed comps for a house we walked through. Recently sold went for $160-140 sq. ft. Funny how THAT little factoid didn’t make it in the paper!
dead link
CONCORD - A new education-funding plan would roughly triple the statewide property tax, but give a generous break to low- and moderate-income homeowners.
Peterson’s Homestead Plan would increase state education aid from $830 to $1.14 billion.
The extra proceeds would come from raising the statewide property tax to $7.50 per $1,000.
Peterson said he would cushion the blow for homeowners by exempting the first $200,000 of property value from the state tax.
http://www.nashuatelegraph.com/apps/pbcs.dll/article?AID=/20061115/NEWS02/111150132
Interesting proposal that would probably lower property values
of houses above $300K. NH as an educational funding crisis
which has to be solved by next spring or I’d guess that the
courts will take over school funding. The Governor has
staunchly said no new taxes which probably means that
income and sales taxes are off the table. The Governor has
already asked for state departments to trim their budget
requests for the next two years.
The proposal above would essentially mean that those with
expensive homes would subsidize those with inexpensive
homes. Probably unintentional but it should help to deflate
the housing bubble too.
I guess no one there, in the supposed final frontier of “land of the free,” considered the possibility of no government schools (and therefore no tax issue). Zip. Ya wanna learn? Pay for it, or get a charity to pay for it, or do it the old-fashioned-way. There are countless charities that will provide a motivated youngster with a computer and a desk in a heated space. That’s all it takes.
Back to the trenches on the construction industry homefront:
I promised an update about my company’s (manufacturer and supplier) current position. As I posted last week we had some layoffs, but I was unsure of extent. They were minimal. I think the senior execs are trying to be optimistic. I think we should have cut more, or will need to probably just in time for the Christmas Holidays. Fortunately, my office was not cleaned out on Monday.
I track SHIPMENTS, not sales, or orders, or promises or anticipations of things to come. I do that by visiting the warehouse daily and watching the product loaded for shipping.
Yesterday, our location shipped out about 1/2 a trailer full of products. That compares to 2 to 3 trailers at the peak. For about 2 months we have been shipping about 1 truck. Occasionally, we would need to load out part of a 2nd. This past week has been very slow. I consider Friday my have been a aberration. We have better days on Wed. and Thurs. But we are clearly shipping about 1/2 our previous product count.
In my earlier posts, I had estimated we were down 30%. Management confirmed that, as that was the number reported back to us. What they fail to see is that the volume continues to decline.
I expect that this level is about where we will stay well into next year. But we have 2 shifts in the plant and warehouse. We don’t need to run both to produce the levels being shipped, and if you can recall my prior posts………….our warehouses are FULL.
I am predicting that some people are not going to have a Merry Christmas. I am hopeful I am not one of them, but I am one of the most highly paid. Consequently, my departure could save them the cost of 5 average workers. Hummm? Not a happy thought.
Have a bubblicious day! And remember……….last year our new Fed Chief Ben Shalom Bernanke said, “there is no housing bubble to burst”. Oy vay.
Good luck to you my friend .
Diogenes — your story reminds me of some old movies about guys on submarines that are doomed, or the logs thereof. It also reminds me of a Franklin Day Planner proverb from the late 80s that I’ve long since discarded but not forgotten — it had to do with two employees who work for an ill-fated company. One reads the tea leaves about the decline of the company, circulates his resume and finds another job. The other believes the employer’s encouraging statements, rather than their income statements, and hangs in there with them. Ultimately, the former lands safely in the arms of a new employer and the latter goes down with the bankrupt company that he believed in to the end.
LA Times - Dataquick YoY numbers are out for cities in Los Angels County, The OC, The Inland Empire, San Diego county, Ventura County, and Santa Barbara County:
http://www.dqnews.com/ZIPLAT.shtm
The damage by county:
LA : 3.8% (I had predicted negative by now. Oh well.)
OC: 0.0%
Riverside County: 3.8%
San Bernardino County: 4.3%
San Diego County: -4.5%
Ventura County: 1.6%
Santa Barbara County: 23.3% (!!!!)
Hmmm, I don’t get the Santa Barbara numbers…eyeballing the cities data leads one to believe that the county number should be negative. Five of the cities are positive, while 12 cities are negative. Anyone with better data manipulation skills care to comment?
SLO county even stranger … almost all cities negative, county slightly positive. I can certainly INVENT a set of selling prices for which the medians would have this strange property. But it just shows you what a slippery statistic the “median” is.
“SLO county even stranger”
http://www.dqnews.com/ZIPCAR.shtm
(September data)
Yeah, I’m not quite getting that one either. Only Paso Robles and San Miguel are positive, and just barely at that. Paso had a large number of sales, but it doesn’t *seem* to be enough to pull everything positive.
“it just shows you what a slippery statistic the “median” is.”
You got that right, brudda.
Could the rising median despite falling city prices be due to the fact that the last-gasp of the big expensive spec homes are being marketed and sold, which is pushing up the median even as the ‘average’ house falls in value??
That makes sense to me, but only from intuition, not experience with that area.
Anyone familiar with Santa Barbara zip codes 93105, 93108, and 93110? If the Data Quick numbers for Santa Barbara county are indeed positive (23.3% YoY!????), these zip codes would have to be the ones doing the heavy lifting.
“Santa Barbara County: 23.3% (!!!!)”
Like a physics professor once explained to our class, what’s a missing negative sign between friends?
LOL.
Figures probably be revised next month. The median price without a sq. ft. value is absolutely meaningless to me.
A $500,000 median for a 2000 sq ft median property in August vesus a $510,000 median for a 2200 median sq ft property in Sept gives me a positve $10,000 median, but the sq. ft. median is 200 sq. ft. higher, which tells me larger houses were selling.
A median price alone is totally useless.
From your link, it’s easy to solve this particular case of “median mystery”.
The median house sold was in all likelihood from zip code 93463 or 93427 (Solvang/Buellton).
This can be assumed from the following:
Total # of homes sold was 219. So median house is the 110th cheapest/most expensive house. If you add up the number of houses sold from most to least expensive zipe code, you’ll find that 114 of the houses sold in zip codes having median price of $699k or above ($699k corresponds to 93427 zip code).
Now here’s where it gets really interesting — and where the SB county caste effect rears it’s ugly head — what do you think is the next cheapest zip code in SB county after $699k? 93455 in Santa Maria at a whopping $467k.
This is rather stunning. Just a few more houses changing hands in Santa Maria could have made a HUGE swing in median price (e.g. from POSITIVE 23% to NEGATIVE 15-20%) .
And something else that is interesting:
The numbers summary says 219 houses sold. However, if you add zip by zip, you only get 214 houses. Perhaps the missing 5 houses actually sold in zip 93455.
AnoninCA — Just my personal observation — I hope you post here more often. That is good homework, at the ground level.
“LA : 3.8% (I had predicted negative by now. Oh well.”
That is a long way down from the 23% appreciation many LA households were expecting to go on for another decade according to a poll Robert Shiller conducted a couple of summers ago.
“LA Times - Dataquick YoY numbers are out for cities in Los Angels County, The OC, The Inland Empire, San Diego county, Ventura County, and Santa Barbara County”
In LA county, I have noticed Large 15-25% yoy increases in some rather slummy craphole zips of innor LA. Did a long post on the specifics on ‘housing observations’section of this blog but can briefly summarize that in one particular instance 4-5 adjoining zips in the scentral part of LA(90001.90011,90037,90061,90248) all showed similar 20-25% YOy%, with astoundingly high median selling prices from mid $400,000’s to high$500,000’s. These zips are all strung along the 110 fwy south of dtwn LA, and are without exception blighted scentral heavily immigrant slumzones.
Someone is being taken to the cleaners, most likely the lenders, bankers, and secondary MBS holders loaning out at these prices in scentral gang-infested third-world slum neighborhoods.
HISTORICAL NORMS DON’T APPLY
by Peter Schiff
Euro Pacific Capital
November 17, 2006
As new statistics confirm the extent of the real estate market collapse, many wishful thinkers now herald bad data as positive omens. For example today’s release of dismal October housing start figures convinced many naive economists that the market was on the mend. They argued that the 14% decline in housing starts from September (the lowest activity in six years) and the lowest number of building permits for the last nine years would solve the problem of oversupply, thereby restoring balance to the market. Talk about lemonade from lemons.
The current glut of homes comes when home ownerships rates are at the highest levels in history while home affordability is at its lowest. The recent reduction in new and future construction is too little and comes too late to restore balance. The optimistic reaction is based on comparisons to historical averages of prior real estate down-turns. However, a comparison of the real estate mania of 1996-2005 to any prior national real estate boom reveals the folly of applying historical norms to the current correction. Economists, market strategists, and homeowners who still harbor a dream of a real estate soft-landing, with marginal price declines and minimal spill over into the broader economy, are in for one of the ruddiest awakenings of all time.
http://www.financialsense.com/fsu/editorials/schiff/2006/1117.html
In 2006, “toast” might have included the option of “white, or wheat?” I think that in 2007, or certainly by 2008, there won’t be any options.
Anyone have advice on how to get some local MLS data, specifically month by month sales data compared to a year ago? I’ve e-mailed numerous Realtors, no response. The newspapers here never report this.
The local Prudential office web page shows YTD sales. I had a Realtor friend of mine check the MLS, and he got totally different results. The Prudential site shows 2006 running ahead of 2005, while my friend’s results showed 2005 way ahead of 2006 in terms of sales.
What metro area are you looking for? The Sac Bee has a few years worth of data in their real estate section, although obviously that’s not much help if you don’t live here.
Realtors aren’t going to be very helpful. Even if they wanted to help your independent research (most don’t), everything that they have is proprietary information and they could get into trouble for sharing it “outside the family.” So your best bet is probably local news media.
Dumb question, but where do the local media get their data to report? If the stats are proprietary, how are they able to report them?
My “metro” area is Billings, MT. Since the local media aren’t in the business of reporting stats anyway, maybe I’m out of luck.
TU — this in not in any way sarcastic. If I were you, I’d go to the cafes in town that serve breakfast to the locals. Eat there for a while until you’re not a “stranger in town.” Then start talking to the regulars, about the housing market. Factor out the realtors and mortgage brokers, of course. Better than any MLS, if it’s a fairly small town.
More DQ Year-over-Year price change numbers, quarterly (Q3) for certain US metro areas:
http://www.dqnews.com/
Includes:
Phoenix 3Q06
Honolulu 3Q06
Las Vegas 3Q06
Portland 3Q06
Seattle 3Q06
Nashville 3Q06
Miami/Palm Bch 3Q06
Jacksonville, FL 2Q06
Denver 3Q06
Chicago 3Q06
I’m getting ready to hit some open houses this afternoon. Based on recent precedent, I may not survive the experience.
“Think of me, think of me fondly, when we’ve said goodbye!”
have some fun and post back w/the realtwhore tactics!
Think of me,
Think of me buying, silent and resigned.
Imagine me, paying too much
For any house I find.
You’re really not a bit, the gawkish granite countertops that once you were!
Sammy posts “I’m getting ready to hit some open houses this afternoon. Based on recent precedent, I may not survive the experience.”
Dude you are hardcore! I hate the damm things….
Don’t get laid for a house you can’t afford.
Check this craigslist posting out. I’m sure he’ll get some suckers.
http://sfbay.craigslist.org/eby/rfs/236665274.html
He argues that you’ll be priced out as mortgage rates rise and as buyers return for the spring selling season. Problems with that are the mortgage rates are back down now and that the spring may not bring out the buyers. They certainly didn’t in 2006.
http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/11/18/BAGR7MFMJ01.DTL
Mortgage fraud suspect flees in BMW as FBI nears
lunarpark posts “Mortgage fraud suspect flees”
They should lock all of them up in OZ….
No thanks.
We have plenty of our own scamsters to fill the jails down under.
Amusing blog on the uber-strange lowermybills.com web ads, which typically feature animals covered with state abbreviations. In this particular ad, the states are fish and the shark is “Bad Credit OK”
=====
“There are several problems with outsourcing your work. Missing out on the nuances of language is one of them. Nobody must’ve explained to the poor Flash novice in India about the ‘loan shark’.”
http://tinyurl.com/y9e385
Interesting article in the NY Observer about Generation X selling out:
Generation $$$
Gen X Plus 15 Is Like, Rich, But Reality Still Bites, Bro
By: Christine Smallwood
Date: 11/20/2006
Page: 1
In 1991, Douglas Coupland wrote the best-selling novel Generation X: Tales for an Accelerated Culture, popularizing the term, well, Generation X. Gen Xers are roughly defined as those born between 1965 and 1980. At the time of Mr. Coupland’s breakthrough, they were in their early 20’s, fresh out of college, hanging onto the bottom rung of the company ladder. Now, 15 years later, they are in their late 30’s or early 40’s, more likely to be buying up market share than using dad’s gas card at the mini-mart.
Mr. Coupland, meanwhile, is adapting his work for television and, when the pressure gets to him, he takes a boat to his “hideaway” in the Queen Charlotte Islands. At least, that’s his day according to the new BlackBerry Pearl campaign: Mr. Coupland is its “generational” spokesman, the kind that makes it O.K. for sensitive types to adopt the accoutrements of investment bankers and Web designers.
This evolution from critic of “accelerated culture” to its face is perhaps the latest movement in the repackaging of the generation that Mr. Coupland helped to define. Those who were once sores on the body of the system are now selling its Band-Aids.
“Generation X” has come to mean more than just a specific group of post-boomers, more even than a marketing demographic—people who will go see Last Days one evening and drop $5 on a pumpkin-spice latte the next morning. It has also come to serve as a marketing model, in this post–Reality Bites world, for how all young Americans should live out their 20’s. Now we are all Generation X.
According to OnPoint Marketing and Promotions (whose clients include Ford, Microsoft and Pepsi), Gen Xers are 50 million strong, make up 17 percent of the population and spend $125 billion on consumer goods each year. Whereas Mr. Coupland’s characters removed themselves from families, schools and potential career paths to tend bar and dwell in bungalows in Palm Springs, grown-up Gen Xers retreat into gated communities, planned developments and luxury loft condominiums. They used to be obsessed with other people’s money; now, they obsess over their own.
The 90’s came, but they never really went. CSI: Miami has acquired the right to use Nirvana songs on a future episode about “evil military recruiters,” and with Courtney Love’s blessing, the company that controls its catalog is looking to license its music for commercials. (Kurt Cobain is now the top-earning dead celebrity, having surpassed Elvis, Warhol and Dr. Seuss.)
Recent movies like Thumbsucker and Junebug owe a debt to The Ice Storm (1997), which captured the darkness of the 1970’s suburbia that reared and nurtured Gen X. The Lindsay Lohan flick Mean Girls was a poor man’s Heathers; Heathers’ tale of a backstabbing clique and murderous revenge not only paved the way for 90210 and Melrose Place, but catapulted Winona Ryder from Beetlejuice notice to Gen X screen-queen stardom. (The name Lelaina Pierce ought to ring a few bells.) And now Heathers screenwriter Daniel Waters is returning with Sex and Death 101, which not only bears a title reminiscent of some key Heathers themes, but also stars Ms. Ryder.
Maybe the grittiest, or at least most original, Gen X activity, skateboarding, was put under glass in Dogtown and Z-Boys and Lords of Dogtown. Tony Hawk hawks himself, and this month The New York Times reported on the largest skate ramp in the world.
Having experienced their own youth, Gen Xers keep selling us—and themselves—a secondhand version of it. They’ve successfully packaged what it means to be young, and we keep buying—even when what we’re buying is a ticket to the awful, treacly, terrifically annoying X-trickle-down Garden State.
Without a doubt, Gen X moved from the margins to the mainstream. Headbangers Ball and 120 Minutes gave way to emo tyranny and slouching shaggy-haired dudes (I’m looking at you, Justin Long) shilling Macs and Coca-Cola’s downloadable podcasts of the “freshest talent” in “North American grooves,” while the Left of the Dial: Dispatches from the ’80s Underground boxed CD sets push nostalgia on those too young for Time-Life collections. Cool hunters (thank you, William Gibson) and youth marketers (soon to be joined by Atoosa Rubenstein?) skulk about, while high-school students eagerly enlist in “buzz marketing” campaigns—because the separation of youth and corporation, once the prized plank in the X platform, is no longer an issue.
And Mr. Coupland—Douglas Coupland, the outsider himself—uses his BlackBerry Pearl smartphone to get directions to a hot restaurant in Toronto.
THE CANADIAN COUPLAND SCORED a coup with his depiction of American youth. His novel is the story of three friends who make their lives “on the fringe out in California.” Dag, Andy and Claire are all obsessed with nuclear war (a fear that seemed cutely anachronistic; not so much now since a little dictator in Pyongyang scared the bejesus out of the whole world last month). They tell each other stories to pass the time, an earnest hobby that smacks more of fantasy than of the behavior of any real-life twentysomething, Californian or not.
And in the margins of the oversized book, which measures nine inches by eight, are clever comics and dictionary definitions of Mr. Coupland’s neologisms. One of the words, “McJob,” caught on. The others—“successophobia,” “emotional ketchup burst,” “tele-parabalizing”—never really made it. Vocabulary becomes rhetoric and generations come to stand in for “what are only persons after all,” loopy Renata Adler rather reasonably, and critically, wrote. And so this tale of three dropouts came to stand in for—or rather, take over—the whole society that they tried so hard to escape.
Some people saw it all coming, right out of the gate. Back in 1994, Frank Rich, having just seen Reality Bites and found its coming-of-age crises a bit similar to those his peers had witnessed in The Graduate, asked, “Has nothing changed? Did my generation make a major bore of itself for all these years only to be supplanted by a bunch of kids who are boring in almost the same way?”
Incidentally, the “original” Generation X, according to the British, was the rock ’n’ roll mod generation of the Swinging 60’s, who were interviewed by Charles Hamblett and Jane Deverson in 1964 in their book called, yes, Generation X. It was so popular that, according to The Guardian, “John Lennon wanted to turn it into a musical.”
The idea of a generation, of course, is always that of said generation’s youth: The spending habits of today’s $400 Stones-ticket-buying baby boomers (another generation that betrayed its promise) is understood as a product of their recovered Flower Children–itis. Xers devour magalogs and gossip rags to fill the hole left by their secular, soulless, single-parent teenage lives. But since Generation X was packaged and sold to Generation Y—the kids who were teenagers when Mr. Coupland was making it big, who got into Nirvana in middle school, who couldn’t wait to get out of school and start slacking—it became a template for how to live your 20’s in any era.
Kids: We keep getting older; they stay the same age.
And then we turn into our parents. Can we even help it? In a New York Times article last August, Nina Munk wrote that “shopping … has become the defining occupation of [Gen X].” She reported that the average Gen Xer spent 18 percent more on luxury goods than the average baby boomer. So much for anti-proliferation. “Our parents’ generation,” Andy thinks in Generation X, “seems neither able nor interested in how marketers exploit them. They take shopping at face value.”
Turning into your parents is easier when your parents are busy turning into their parents. The boomers’ iron hold on the culture tyrannized their Xer kids, forcing them to go slacker. Then X took over and grabbed a page from Mom and Dad’s playbook. Lesson No. 1? No classic rock song is so sacred that it cannot be used to sell health insurance; no Nick Drake number is so dreamy that it cannot work wonders for Volkswagen.
READING GENERATION X IN 2006 ISN’T AS TERRIBLE as you might think it would be. It hasn’t aged well, but it could have aged a lot worse. Yet, it’s hard to jive the idealism of Generation X, which is a book about, more than anything, honesty and an unironic questing for some kind of authentic meaning in your life, albeit done through irony and appropriation. Only a cynic would think that the comics and dictionary terms might make the book more useful as a marketing manual than a work of fiction.
Still, BlackBerry? Isn’t that kind of … yuppie? Kind of … Malcolm Gladwell? Kind of … Jay McInerney?
When we first knew him, Mr. Coupland was the anti-McInerney. He was the one who rebelled against the culture of consumption, who wrote about “real” things, authentic things, like girls in vintage dresses and finding yourself in the desert. He didn’t know about Bolivian marching nights in Manhattan or … whatever else it was that Mr. McInerney wrote about. Mr. Coupland is Canadian, after all: He liked nature and worried about the nuclear threat.
Around 1994, following the publication of his Life After God, the author/screenwriter/art-school grad/lexicographer made six station ID’s for MTV. In 1998, Mr. Coupland did an ad for Absolut, but contrary to Internet scuttlebutt, the $10,000 in profits were donated to the Western Canada Wilderness Committee. In the 2006 BlackBerry Pearl ads (“small, smart, and stylish”), he’s in very tasteful company, joined by modernist auction-house owner Richard Wright and Martin Eberhard, who created the electric sports car. (Mr. Eberhard uses his BlackBerry Pearl to e-mail investors and watch videos of “Roadster prototypes.”)
Mr. Coupland occupies a position not so distinct from Mr. McInerney’s, at the point where the vector of the monthly House & Garden wine column intersects with the axis of personal digital assistants. (All of this conference-calling, text-messaging and private-islanding also prevents Mr. Coupland from returning e-mails, apparently; or it could be, as his agent indicated, that he is “deep underground.” The surface-level marketing team at BlackBerry Pearl was also disinclined to comment.) And Mr. Coupland knows how to appreciate a good ad when he sees one: On his own Web site, there is streaming video of the “best commercial ever made,” the “Khaki-a-go-go” Gap spot that features a team of khaki-clad preppies dancing like mods to an Austin Powers–esque tune.
The original Xers have retired the whole earnest, alienated slacker thing. They’ve grown up, like everyone does, and accepted—no, embraced—what they once despised: the corporate world and its blessings. On a Canadian TV special about Mr. Coupland, Judith Regan described him as “one of the great voices of his generation.” He sure is.
http://www.observer.com/printpage.asp?iid=13715&ic=Observatory
Hmmm, born 65 to 80 means aged 26 through 41, a major transition age for any group, half of whom are still trying to get on their feet with a career and paying off education costs, the other half having kids and trying to get some stability in their lives or growing their career.
There is also a disconnect in the front and back half of the GenX wave - born in 72, I’m in the middle and I can look forward and back to see what’s going on. Those older than me saw the Baby Boomers make their money in houses and entitlements and as they saw the good life drift further away from them they grabbed hold and bought their houses and indebted themselves. Those younger look at debt as something inevitable, unavoidable, and from the example of their elders nothing to worry about.
But why wouldn’t they ’sell out’? After years of working in engineering and trying to make things better, faster, cheaper, and able to do new things, I am resigned to the fact that the guy next door who didn’t finish highschool earned more over the last 3 years than I will in the next 10 because he is willing to lie to niave couples to get them to sign off on toxic mortgages they can’t afford. The 90s and the 00s so far have shown their is no benefit in honest hard work, no penalty in being underhanded, and that you’d better con the other guy first before he cons you.
Even trying to be positive, you look in your own work at the upper management of boomers within 10 years of retirement, none of whom will take any risks, try anything new, allow changes, challenges to existing ways of doing things, move to cheaper locations (their houses are nearby even though no-one else can buy), nor will they get out of the way to allow someone else to do so. And then they wonder why staff retention is at an all time low.
Anyway, a pointless article discussing a generation that has been cut down the middle due to the resurgence of globalisation, making all the original assumptions from 1990 pretty much obsolete.
“The 90s and the 00s so far have shown their is no benefit in honest hard work, no penalty in being underhanded, and that you’d better con the other guy first before he cons you”.
Unfortunately, I think you’re right about the 90’s and single digits. There are a lot of shameless people out there. I refuse to live this way myself. I don’t think I became acutely aware as to just how rampant the con artists and backstabbers are until I’d already been screwed by these people several times.
Hmmm, isn’t this a housing blog?
Other than institutional investors receiving kickbacks for putting their clients’ money at risk, who is dumb enough to be investing in hedge funds these days?
—————————————————————————————————
Saturday November 18th 2006
PRINT EDITION
Hedge funds
Mutiny about the bounty
Nov 16th 2006
From The Economist print edition
The risks from hedge funds are not that high. Nor, investors should note, are the rewards
PAY peanuts and you get monkeys. Most people assume the corollary must be true: pay handsome fees and you get superior people and an excellent standard of service. That certainly seems to be the assumption in the hedge-fund business, where investors are willing to pay not only a high annual fee but also a fifth of all profits to get access to the world’s best money managers.
The trouble is that hedge-fund managers are not producing the kind of bonanza they used to in the days when George Soros, the man who famously “broke the Bank of England” on Black Wednesday in 1992, dominated the sector. In the 1990s, their compound annual return was 18.3%; since 2000, it has been just 7.5%. True, other asset classes, notably shares, have also delivered disappointing results in recent years. But that only illustrates the point that hedge-fund returns are not conjured from thin air: they are significantly dependent on the fortunes of financial markets in general.
There is, to be sure, a degree of skill involved too. Hedge-fund managers can be adept at exploiting pricing anomalies as well as obscure market niches. But those opportunities will diminish as more and more capital pours into the industry. Hedge funds’ assets have increased more than thirtyfold since 1990, and they are now competing with traditional financial companies such as banks and private-equity firms (see article). Academic research is also breaking down the mystique of hedge-fund managers and suggesting that it may be possible to replicate their returns using low-cost strategies in the futures markets.
This creates a problem for investors. In a period of low inflation, the fees charged by hedge-fund managers absorb a large proportion of nominal returns. This is particularly the case when clients invest through a fund-of-funds; one academic reckons the hedge-fund take can be as much as 40% of portfolio returns. That makes it hard to see how the process can be worthwhile for the client.
Of course, this system is extremely good news for the managers themselves. Hedge-fund titans regularly top the list of the world’s greatest earners, thanks to the performance fees that kick in when they do well. They are a lucrative source of revenue for the brokers they deal with. And the sector is so attractive that investment banks—Morgan Stanley being a prime recent example—are desperately trying to buy themselves a seat at the table.
Media interest in hedge funds is focused on the collapse of Long-Term Capital Management in 1998 and the risks to the financial system of a similar debacle. But recent hedge-fund disasters, such as the misadventures of Amaranth Advisors, which gambled heavily and lost in the energy markets, have barely caused a ripple. Most hedge funds quietly expire when they become unprofitable to run rather than collapsing in a blaze of ignominy.
The low volatility observed in the markets for currencies, bonds and shares suggests that hedge funds have helped to stabilise the system. Indeed, part of the reason investors are moving into hedge funds is that they are, on average, a lot less risky than stockmarkets. No doubt hedge funds will be at the centre of the next financial disaster, as one regulator recently observed; but that is because they are at the centre of everything that happens in financial markets these days.
High time for hedge-trimming
What ought to concern investors more is whether they are getting value for money. Pension funds are being pushed by consultants into hedge funds to reduce their overdependence on shares and as an alternative to low-yielding bonds. But they need to focus on price. The expansion of the industry should have led to competition on fees; instead, fees seem to be drifting higher. More of the big pension funds should follow the example of the Dutch group ABP and use their market power to fight back on fees; smaller pension funds should walk away rather than pay too much. There is no need to transfer yet more money from the retirement savings of ordinary employees to the grandees of Greenwich, Connecticut, and Mayfair, London. Hedge-fund fees are overdue for trimming.
“…who is dumb enough to be investing in hedge funds these days?”
Probably nobody who (personally) will be financially responsible for the loss.
Horse attacks real estate agent
BEDFORD, Ind. - Real estate can be a tough business. But sometimes it’s a real beast, Erika McKinney has learned.
McKinney won a trip to the hospital instead of the closing table when a horse bit her and knocked her into a tree during a showing Friday.
http://www.fortwayne.com/mld/newssentinel/16020303.htm
That horse is smarter than most FBs.