Bits Bucket And Craigslist Finds For March 8, 2008
Please post off-topic ideas, links and Craigslist finds here.
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Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Are there any financial institutions who stayed completely out of the madness and are now sitting with a conservative balance sheet and waiting for the fruit to fall?
It seems to me there’s a once-in-a-lifetime opportunity coming up to establish a major presence while all the competition is still bleeding. This is similar to what Berkshire-Hathaway is proposing for bond insurance, but I would have thought there’s more money to be made in banking.
Charlie Munger (business partner of Warren Buffett) runs Wesco Financial (WSC); it’s a good bet Charlie kept his head during the mania.
Problem is, WSC is pricy (P/E = 25), but it’ll be worth a look somewhere down the road after the recession kicks in and takes the Market down, IMO.
Combo, tell us when its a good time to buy this one.
Are there any ….
I’m sure there are although, imo, it’s too early in the race to pick anything. The whole sector took a 16% (?) hit. Will the terrain up ahead be more favorable to the lean and quick or to the heavyweights?
Flagstar Bank..is one..they are a conservative bank…
I am aware of many of the same ppl responsible for this mess who are planning to take their profits and form new companies and vulture funds with clean balance sheets as they bail from the old ones. The old model was a company with a pension plan that you worked for your entire career. The new model is rape and plunder and move on. There is no loyalty or trust on either side, just watching your own back and pile of gold.
watch your own back and pile of gold.
makes sense to me..
I am aware of many of the same ppl responsible for this mess who are planning to take their profits and form new companies and vulture funds with clean balance sheets as they bail from the old ones.
And since many of those folks know where the dead bodies are buried, they’ll probably do quite well.
Northern Trust seems to be doing pretty well these days, and I would bet money that they intend to pick up as many rich clients from failed banks as possible.
With Kasriel there they avoided the stupidity of the other banks.
US Bancorp (USB)
I know that Commerce Bank of New Jersey was not drinking the Kool-Aide and doling out these toxic NINJA loans…they were bought out by TD Banknorth (Toronto Dominion) back in the fall, so you may want to check out TD Banknorth as a potential “safe” bet….
And I wouldn’t be surprised if other foreign banks are running their rulers over potential targets …
New York Bankcorp (NYB) claims it was never in the subprime business.
Hudson City Bankcorp (HCBK)
Remember back in the day when you would go to DMV and see that crazy white guy out front at the table on the sidewalk protesting against the Federal Reserve and talking about the one world government and the new world order…?
I think a lot more people now understand what he was talking about.
If they don’t, I think they are gonna find out very soon.
Spook
Interesting comments, spook.
Did anyone catch the dog and pony show on C-Span yesterday where the House subcommittee held a hearing on “Executive Compensation”? Their guest panel consisted of Mozilo (who one of the reps kept calling “Maslow”), Prince and O’Neal, and assorted board members. Waxman was the Chief Inquisitor.
It seems like members of the House of Representatives were trying to figure out how these dudes could make so much money as they departed the companies that tanked on their watch. And while that might be a good question for the shareholders, as far as I am concerned, it was a complete waste of time and tax dollars. Yeah, it’s outrageous the millions of dollars the Mozilo and company make, I agree. But that’s between them and their shareholders and the gov has no business grilling them about it, unless they did something illegal. If the shareholders want CEOs to make their money go up in smoke, so be it.
The one thing that I did find interesting, however, was the woman who spoke about how mortgage brokers and their companies were compensated, being rewarded for closing mortgages, no matter what the quality.
Anyway, I’m watching these sanctimonious clowns from the House of Reps grilling these guys and I’m thinking how the US is tanking and maybe we should be having a discussion about how political reps are compensated and fiddling while the US burns.
Although I did enjoy the one question where one of the Reps asked the CEOs collectively if any of them felt they hadn’t been compensated enough. Silence.
That was a brilliant question. Seriously.
the shareholder has been separated from their ability to oppose management via regulatory rules, so that even if they want badly to oppose the management it virtually takes an act of congress to do so. Ask yourself, if all the shareholders are as upset as these blogs and their losses indicate, why
haven’t they been able to do more about it, besides just blog?
There’s one thing shareholders can do and that is NOT put their money into these enterprises. That’s what they can do. And, they’re doing it anyway, on a sort of forced basis, when their money goes “poof”.
I would guess that most of the money going into these companies is via mutual funds and most of those are from 401k investors. Most people don’t know they are invested in this sh^t so they don’t know who to be mad at. It’s an awful system that benefits a few. The whole f—ing thing needs to be torn down and rebuilt.
Exactly. For most “shareholders” the only retirement plan option is the company 401k, in investment plans picked by the company rep, which they have very little control over. They may not even want to invest in the market but don’t want to pass up the company matching a percentage of their dough. So the money is sent out, gets “invested” (ha ha), probably in a mutual fund so it is divided into many different options and the average sap can’t even name the stocks he is an “investor” in. So there is little oversight from the “shareholders.” With the average person now changing jobs frequently, they may have three different “company plans” that they have either rolled into one, or left in separate plans when they left different gigs. There is little chance that they are gonna go to shareholders meetings for every damn company in their portfolio. The ones that do, of course, probably have a financial incentive to let the CEOs walk with massive compensation while the company tanks.
Of course I know some here will shout that these people are idiots and should have more of a handle on their investments, but keep in mind the vast majority of people are not market wonks and don’t want to be bothered. This doesn’t make them bad people, just makes them more likely to be suckered by the big boys. What’s the option? Don’t participate in the company 401k, and keep your savings in the bank to have it wittled away at by inflation? Those saying that it’s not the governments place to be discussing this issue, well, in reality a lot of “shareholders” have no chance in hell of voicing their opposition to massive CEO pay.
NYCityboy, I agree 100%.
“NYCityboy, I agree 100%.”
I love those freaking words.
Should I have to watch every step of the process that goes into getting my hamburger in the wrapper when I order at McDonald’s? F— no! There should be enough rules behind the scenes that I’m not getting an E-coli burger every time I order.
These CEOs should have far more accountability for this robbery especially since the average American is being forced, and yes they are being forced, to play in their game. Either cut the nuts off of these guys or find a completely different way for people to save for retirement.
You think it is really about the “rules”? We have rules upon rules and laws upon laws for just about everything. Without honesty and integrity all the rules in the world mean squat.
Well, then I guess nothing should be done, because humans have shown pretty conclusively through the ages that they commonly lack honesty and integrity…
There are three components: rules, enforcement of said rules, and undesirable penalties for breaking of the rules.
To be effective you need all three. Currently in our financial system we’ve got (maybe) some rules, but they aren’t enforced, and in the rare event that they are the penalties are wrist-slaps. Start sending crooked businessmen to prison at the same rate we send non-violent drug offenders, and you might see some changes.
Here comes a rant…
Yes, I saw it, and I totally agree with you; what business does Congress have regulating executive pay? It’s not like any of these companies are GSEs, they are private enterprises; how is the pay structure congresses problem?
Congress, in the past few months, has spent weeks on steriods in sports, and now on executive compensation. Is there NOTHING for these people to really do? I mean, we’re heading into (or are already in) a recession, and the MOST IMPORTANT things for them to talk about are executive pay and steroids? WTF?
It just burns my a** when politicans decide to stick their nose places where it does not belong. ESPECIALLY when there are serious (like recession and a WAR) matters for them to attend to. So stupid.
Yea I am with you on this. Mozillow and company are scum but wtf does congress have to do with their pay? Where were they when this was going on? Now after the damage is done they are going to stoke up classwarfare. I would have told the committee to kiss my azz! Why even show up and give these clowns the show trial?
This isn’t class warfare. Every time the CEO and senior managers award themselves these giant pay cheques, that’s resources and money that the company doesn’t invest, doesn’t spend on proper process, doesn’t spend on risk management.
And the reason they do it, is quite simply because they can. There is nothing to stop them. It’s got nothing to do with their value to the company, or their skill. It’s because within modern company structures, they are the dictators of their little universe.
Don’t believe me - just look what Washington Mutual did. Mortgage losses not part of the executive bonus calculation. Folks, this is theft, pure and simple. Money stolen from every employee working for the company, from every customer paying excessive prices.
It would be simple to stop this. Just pass a law that says that the maximum compensation in a company can be no more than 20 times the minimum. From international surveys, 12 seems to be the magic number in terms of successful economies.
Exactly, Mike Fink. I am no fan of Mozilo, Prince or O’Neal by any means, but Congress has some balls asking these guys why they couldn’t see it coming, when Congress is seriously blind collectively. Why couldn’t CONgress see it coming? Too busy bending over their consituents in the service of Wall Street. Never have I had such CONtempt for such a group of people.
Congress, in the past few months, has spent weeks on steriods in sports, and now on executive compensation. Is there NOTHING for these people to really do?
If you ask me, Congress is trying to hold hearings on anything and everything in an effort to delay holding hearings and voting on the 100+ federal appointments Bush has waiting for confirmation.
I’m sure that come January 20 they’ll all be withdrawn and Congress will get back to making bad laws again.
They are never going to be able to nail the CEO’s for benefit packages because they are smart enough to be within the letter of the law . What I think they need however is hearings on accountability for the faulty lending .Countrywide is a big market force (or was ) and the industry follows what Countrywide does . Apparently one of the Congresspeople said in essence that 17% of Mozilo’s loans defaulted on even the first payment . In addition another Congressperson at the hearing alluded to the the fact that a party that wanted a fixed loan was offered a toxic mortgage 2 days before closing by Countrywide and they were afraid to cancel because they would lose their deposit on the house (of course the Realtor never protected the buyer by making the contract subject to them getting the loan they wanted ).
For instance ,Mozilo apparently increased his bad lending ,which pumped up his stock price ,just at the time he wanted to dump stock to retire ,(we all know how bad the loans were from 2005 to mid 2007)
If a Company or agent threw a defective product on the market or breached their duty to underwrite loans ,or encouraged fraud by breach of duty to underwrite loans or oversee loan product on a mass scale ,it’s a issue . This would be especially true if the intent was to get short term profits to pump up the value of a stock that a CEO wanted to cash out and run . Does anybody buy Mozilos claim that he was just helping people get the American dream .The CEO of Countrywide has been around for 40 years and that dude knows the difference between a good loan and a bad loan(or should of know) and the junk that he was passing up to the secondary market was absurd junk .
it would be the same if a car Company put a bunch of defective cars out on the market and cause tons of damage for endangering the public . Making loans to unqualified borrowers , crooks ,and flipper or speculators ,which caused a false inflated demand ,causing prices to falsely rise ,is not a light weight crime to society .It’s not enough that these lenders think they get off the hook because they could pass this junk to the secondary market for those investors to take the loss.Not to say that the loan originators and RE sales people didn’t play their part in the great RE ponzi-scheme, as well as the brainwashed borrowers looking for easy money .
Mozilo is now saying in essence that the government needs to ease up underwriting . No doubt Mozilo has a ton of loans they are holding on his books that he needs to pass on to the new sub-prime lender of choice …..the GSE’s. I’m just hoping that Mozillo gets delayed so all his defaults on his junk loans happen before he can pawn them off to the taxpayers risk .I don’t know how many have already been pawned off and Countrywide is just servicing them .
The hearing was a utter waste of time in that it wasn’t the right kind of hearing .
I thought the same thing you did. Who the h*ll cares who takes steriods. Plus I think it is up to the shareholders to complain about CEO compensation. After all it’s coming out of their pockets too.
“Who the h*ll cares who takes steriods.”
- Who the hell cares who uses insider information to trade stocks?
- Who cares who uses government influence to gain advantage getting government contracts?
- Who cares who lies on mortgage applications to buy houses they can’t afford?
Who indeed gives a flying f—? I, for one, do. That competitive advantage these a–holes get on the playing fields due to chemistry is no different than the advantage other a–holes get in all of these other areas. I say no Hall of Fame for Bonds, Clemens, McGwire, Sosa, etc.
The fact that we as a society are so quick to excuse cheating in one area says a lot. Selective morals is no morals at all.
/rant
Maybe they should not be telling corporations how much they should pay their corporate leaders, however the tax code on excessive payroll/profits is a valid governmental concern.
I am not sure of the dollar amount, but a vaguely remember that high wage individuals in the 1960’s were paying a going marginal tax rate somewhere around 97% of their income.
Lost,
Been thinking about ya. My co is looking for someone in SoCal, are you interested?
When CEO’s hand pick the compensation committee and the board of directors shouldn’t someone shine a light on it. And maybe during the light shining process the government will be shamed into prosecuting scum who tell stockholders that everything’s fine while they secretly sell their assetts and borrow $ from the company with forgiveness clauses as a way to skirt reporting criteria ie Ken Lay.
“…that’s [compensation packages] between them and their shareholders and the gov has no business grilling them about it, unless they did something illegal.”
I tend to agree, though it might be worth a review, and if a CEO wants to cite that as an answer then all fine and dandy. This could be more fuel for the anti-bailout fire, one less reason the taxpayer should help struggling financial outfits out, unless the CEOs return all of their bonuses first.
Just one little problem here, the limited liability corporation is a fictitious person created by the government (as opposed to real people who are created by God), for the purpose of shielding corporate executives and shareholders from liability. Corporations are created by government, so government is entitled to determine how they must be run.
If the big shots want to do things their own way they are quite welcome to operate as proprietorships or unincorporated partnerships and put their own asses on the line.
It bears repeating: “the limited liability corporation is a fictitious person created by the government (as opposed to real people who are created by God), for the purpose of shielding corporate executives and shareholders from liability. Corporations are created by government, so government is entitled to determine how they must be run.
If the big shots want to do things their own way they are quite welcome to operate as proprietorships or unincorporated partnerships and put their own asses on the line. ”
This is not a little problem, but a really big one. Corporations have been granted too much leeway in their governance, their stockholders have little or no say, and the damage created by corporate mismanagement is growing by the day.
Beware the Wax Man….
-Jon Stewart
Were I a miscreant, that is the LAST person I would want grilling my arse, for oh, so many reasons. Squirmfests are his specialty.
Dime mentioned yesterday all of the crappy houses he’s appraised that had monster TV’s in the living room. Well, check out the promo for this week’s “Home Extreme Makeover.”
It’s a family of 7 living in a crapshack. But of course, they have a TV the size of their living room.
All of this talk is starting to make me embarrassed that I really want to buy a flat screen…And I’m a well educated professional with a 19 inch TV that is probably 25 years old. I don’t want to do anything that makes me like those people.
In that case, buy the flat screen, but cancel the cable service. Use the TV to watch great artistic performances or documentaries that will expand your consciousness.
And do without access to Bloomberg?
I have a 120″ (10′ diag) video projector that I picked up thru ebay some 6 years ago. The gov’t or some company paid about $19,000 for it (sony vph-1272q). It’s hooked to a Mac Mini computer that has 1500gb of hard drive space. I generally only watch movies (after sundown), but I have to say I can totally stream Bloomberg across the internet from their website. It’s not the highest quality video but it’s better than paying for cable! I’ve also got a gadget called a hd homerun that streams over the air HDTV across the computer network to the Mac Mini (or any other computer) if I really want to watch something like PBS. And of course there is some programming on bit torrent and the like. It works great and I don’t spend too much time watching TV! I think I paid $900 for the projector back when… No regrets. When it comes to people spending $1000 on a TV, think about this. 25″ Zenith consoles used to cost that much when I was younger, and money was worth more. And Americans supposedly spend so much time in front of the TV, it only seems logical. And you get get large rear projection TVs used for $300 on craigslist when people have to move, so that might be another source.
Heck, I didn’t buy my first color TV until 1992 (13″). I now have two 13″ color with VHS slots and no cable (just Rabbit Ears).
Sorry, IMPO=IMHO=in my humble opinion.
Oh man, I felt like such a sell-out when I bought mine. You can make yourself feel better by telling yourself you waited until they’ve become relatively affordable (I bought the same TV my friend bought for 40% less eight months later). Also, instead of displaying it like some monstrous “look-at-me” status symbol, I’ve modified a wall unit so it can stay hidden behind closed doors when not in use.
One of the really nice things about modern technology is how light it is. The new larger TV came on a pallet they forklifted into the garage - that worried me a bit. But the thing was so light I could shift it myself. (All the weight was in the protective wooden pallet.)
I still haven’t figured out how to get the old TV tube out of the house. I may have to rent a dolly or a small crane.
We took the flatscreen plunge a few months back, largely because of the big discount the husband gets for working for Sony (30% discount on last years model). Which meant we could buy a decent one for under $2000.
Matt_in_TX - we had the same dilemma with our old behemoth CRT.
I don’t know if ‘Helping Hands for the Blind’ charity operates in your area, but they organised coming to take it away, and gave us a slip for it as a charity donation (therefore a receipt for tax purposes). Yes, there is something faintly ironic donating a TV to a charity for the blind, but my understanding is they auction off these kinds of things and use the money for funds.
Anyway, many charities will take stuff like old TVs away - just give them fair warning that they’ll need a dolly and a couple of strong backs for lifting and removal. If the charity is set up for large donations, they’ll be more than happy to take it off your hands.
“I don’t want to do anything that makes me like those people”
Don’t live your life based on other people. If you can afford it, and you will get enjoyment out of it, and you are not sacrificing your future for it, why not? Just don’t overspend, and you yourself will have to be the judge on what that means.
‘I don’t want to do anything that makes me like those people.’
I think that’s kinda silly. They breathe, don’t they? Most of them are bipedal mammals? You gonna quit doing THOSE, so you can be different from the riff-raff?
Buy the big screen t.v. already! I looooooove mine. I can watch trashy B movies all Saturday long, if I want, and I do want, and then flip over to some dull educational channel for a bit, to balance out. Use your big flat screen t.v that way, if it makes you feel better.
For the record, I believe you mean a flat panel TV. The term flat screen is generally used to refer to the traditional CRT’s that do not have the curved front screen.
Anyway, I did buy a 40″ flat panel TV about a month ago. I do have a little guilt about it but I’ve been wanting one for eight or so years for prices to come down to reasonable levels. I believe that and the fact that I paid for it in cash separates me from the stupid…
So, with all this advice, I get to pick the ones I feel like following (or none at all, of course), right?
I will do it eventually, of course. I just have some furniture rearranging to do first. If I’m going to get the big screen, I might as well be able to see it from the desk as well as the sofa.
“And I’m a well educated professional with a 19 inch TV that is probably 25 years old. I don’t want to do anything that makes me like those people.”
You could buy a new 19-25″ flat screen!
Even a 30 something inch flat screen is what a basic 27″ cost back in ‘95. What’s the dif?
I’ve been noticing an increase in lease to own offerings:
http://syracuse.craigslist.org/apa/599201696.html
http://syracuse.craigslist.org/apa/598678516.html
I’m also seeing a lot more rent me or buy me whichever comes first listings in the Craigslist rentals:
http://syracuse.craigslist.org/apa/596057244.html
Homes in most burbs rarely show up and when they do most are asking more than triple what my (2002) mortgage was for a similar home. Even after NYS taxes owners on average should net about $400-$600/mo cashflow before maintenance costs. Not knowing much about rentals I’m wondering what landlords on this site think of that amount? (Taking advantage of supply/demand in their favor, or just enough to stay cashflow positive?)
*Master Sweet, walk in closet, shower, soaker tub ceramic floors, skylights
Sounds like one suite deal! God save us…
Ya caught that, huh? Yeah we were howling over that one. The inmates are now running the assylum.
I think you should walk into a reant to own place and ask what sort of discount you can get if you decline the “to own” part of the lease. After all, the “to own” part should be valuable since they are offering to apply some of your rent toward a downpayment.
Show me the discount!
Sounds like “Rant to Own”
I remember seeing alot of those rent to own signs around bakersfield back 01, I noticed they werent doing well, then like magic in 03 things went north for no reason I could see. It feels weird seeing the signs around town again I just want to drag anyone who says homes dont get over valued and point out these little things….very telling
San Diego price declines continue and accelerate:
http://tinyurl.com/36muja
“Between January and February, the size-adjusted median price declined 5.7 percent for single family homes and 7.7 percent for condos.”
“From the September 2005 peak of the series, the size-adjusted median price is down 25.1 percent for single family homes and 28.1 percent for condos. The downtrend has accelerated of late, however, and a hefty portion of that decline has taken place in the past several months.”
It seems like just yesterday that even a 2% decline anywhere in the country was beyond the realm of possibility. How time flies - and it isn’t on the FBs side. In the context of recent history, those numbers are huge - how huge do they have to get before panic is acknowledged?
Annualized rates of change for the median price of SD housing from Jan to Feb:
SFR
((1-5.7/100)^12-1)*100 = 50.6 pct / year
Condo
((1-7.7/100)^12-1)*100 = 61.8 pct / year
Not to worry — these rates of decline are not sustainable for long. I expect a bottom will be in after prices are off by 50 pct or so from current levels (maybe by after Super Bowl 2009)…
How’s everybody’s 401k doing this year? I’m really curious. I have ours mostly outside of stocks. A co-worker keeps giving me, “you can’t time the market” and “put your money in an index fund and walk away”. He’s a drone. He won’t tell me how much his account is down this year. My account is down 3.2% after yesterday. Is there anybody that is fully invested in stocks that will share this information? I would love to know what some of the people around me are looking at.
How low can the stock market go? I still think we have plenty of room to fall. I can’t think of a single rally in the past 3 years that was based on anything real. It was all LBO news, short squeezes, housing mania and Fed talk. Wipe out those factors and the market didn’t have much going for it.
My 401(k) is 1/3 us stocks, 1/3 Euro stocks, 1/3 cash. I won’t even look at the total value for another 6 months as I don’t wan’t to screw it up. I expect I have pretty much broken even due to the foreign exchange issues, probably down a bit once inflation is factored in.
I have 25 years to retirement, but nothing seems worth investing in these days.
I have been in Gold and Silver Stocks/ETF’s for about 2 years. It’s a lot of fun watching it.
Not so much fun if you’ve been in gold/silver since the 1970’s though.
Up 3.2 % so far this year:
finpx
dbc
NYCB,
I went out of stocks in Jan of 07. I agree. You can’t time the market. So I got the hell out. I will return when everything has settled down. I look more into dividends, PE, etc. than the “pops and drops”. I’m in money market cd’s and am loosing my ass due to inflation, but at least I’m not in the market and loosing the whole thing.
Roidy
Roidy
Exactly, Roidy. During times like these, people should be more concerned about return OF investment than return ON investment.
The homebuilder rally of 2008 kicked my rear-end. But I didn’t sell. I’ve seen this show before. This week I did take a small position against Merrill. I closed it out yesterday after being up 22% in less than 3 days. I will now sit on that money until the end of the rate cut history of March 18th.
Opportunity is everywhere right now. It is just a matter of whether we have the courage to be open-minded and wrestle it to the ground.
Same here… my HB shorts have been losers so far this year, but this is just a head fake so give it some time. I also been picking up a hundred share here and there of Morgan & Merrill. There will be better opportunities later on, so didn’t go all in at once.
“I’m in money market cd’s and am loosing (sic) my ass due to inflation”
By my calculation all of the stock indexes are down about 15% from their highs. Housing was going down at an 18% yoy clip in the 4th quarter of 2007. Aren’t all of those money market dollars worth a heck of a lot more if you want to get back in and buy hard assets? So what if the price of fake vomit and vibrators is up? Inflation is here. Deflation is over there. It just depends where you’re looking.
It seems to me that what is being taken away with one hand is being given back with another hand. The only catch is that only the responsible, those with money and access to credit, those that didn’t participate in the monstrous mania, will be rewarded. That sounds pretty good to me.
I moved mine 100% into fixed income funds in early November. I managed to lock in a 14% gain for last year, and this year I am just about even (I moved a small amount back into the company stock in December that has deteriorated a bit).
I plan to keep it all on the sidelines until the dow gets around 11,000, and then I will start incrementally rolling it back in.
Same here, capital preservation comes first, with that one really doesn’t need to worry about being there for every single second of the ride back up. And on the side I set up a modest hobby account to mess around - and quite unexpectedly after six months that’s done well too.
I have about $25000 of my ROTH in a ultra short ETF, and that has done well lately…wish I could do some of that with my 401K.
Yes, that’s what I’ve been playing around with too but it is risky. Still, this past month SKF paid for my trip to Japan later this year - so I’m happy. I backed out now until after the FOMC - too much tinkering. I see we can double short gold now with DZZ - at some future point I know I won’t be able to resist giving that a whirl too.
Ok, what is the average amount of money people use to trade.
Hoz, Chick?
Do you take 10k at a time, or invest 100k? Either way with the stocks in my family portfolio, I should never ever invest. Shoot me if I say I’m picking up some bargains.
I reset my spec account to 100K at the beginning of every year. It makes it easy to calculate gains.
My average trade block is 10K. Last year I returned 2.3% on money “churned”, having traded 2.5million total across the year.
I spread my gains at the end of every year across various FDIC insured and physical type holdings.
“Last year I returned 2.3% on money “churned”, having traded 2.5million total across the year.”
That is pretty impressive, almost 50% return on capital. Do you day trade?
I do some day trades, but most of my returns come from trades that last a month or more.
My most dependable trade is the cyclical rise and fall of a few mining stocks.
As Mr. KFI used to say:
“Better than most but not as good as some.”
Is there a time when you say I have enough cash?
I used to buy stocks like I buy lipstick. Then I realized most of cnbc is really for and about portfolio managers. They have to invest.
I have wealth that needs to be preserved.
Kind of like my looks.
If I understand the question correctly, it involves liquidity. If so, then my answer is yes. I feel like if I have 1 year’s worth of cash and genuine cash equivalents I’ll be able to whether most any fiscal storm. I’ll take the 5-10% loss from inflation since it’s hedged by gains in PMs.
I trade for my potential grandchildren at this point, and if I do really well I’m going to start my own space program in 10 years or so.
When I finally figured out what was going on, about mid 2005, I moved everything into energy, precious metals, mining and utilities. Alot of this stuff is overseas. Between the pig men and inflation, I figured most stocks, bonds and cash were a losing proposition. So far, I have been quite happy, increasing my net worth by 60%. Of course, this could be blown up at any time by the pols and pig men.
I am down 6% for the year. International fund is up, all the rest are down (small cap, mid cap, balanced).
So much for you can’t time the market (your fund managers). I was up 80% in January (total balance) and another 10% in February. Currently long late spring calls down some. I love the way these jerks disdain people who actively trade.
I hear you Tx, I made 42% in Jan. on my spec. account while my 401K and profit sharing accounts lost big money. The difference between the two? “professional” money management.
Up 24% in trading account, ira hedged with inverse s&p.
NYCB,
In 2008? My IRA is down 1.2% this year but there is a story.
I switched jobs, moving my 401k (and all other stuff) into an IRA. After reading all the stuff on HBB I saw this downturn coming a year before my rep at Northern Trust, and I parked most of it in a Money Market (est 4% return). All along they’ve been telling me to get back into stocks until yesterday, which I’ve been doing as I see the dips coming. Yesterday the jobs report finally turned their outlook, now they have no idea how long this downturn is going to go.
Question/Comment? In my way of thinking, inflation is going to serve the debtors by allowing them to pay back their debt with cheaper dollars. Isn’t inflation also going to translate into keeping stock market prices elevated?
Inflation isn’t useful for debtors unless income actually goes up. When it is only prices that go up, they have to pay the same debt out of less available income (same salary minus higher costs for necessities like food, gas, etc.).
Wage inflation hasn’t started yet as far as I can tell.
It won’t, deflation is on the way.
“Isn’t inflation also going to translate into keeping stock market prices elevated?”
I’ll tell you this is a major concern for me as well. My thinking on this always comes back to the liquidity/solvency issue. It doesn’t matter if a company can charge 1000% of last year’s prices for their product if they don’t have funds to pay overhead.
Inflation is the economy killer, just like real estate licensing classes are the mind killer, along with fear.
What did the stock market do in the 70s and 80s in response to inflation?
“What did the stock market do in the 70s and 80s in response to inflation?”
The P/Es of the major averages went below 10. Many quality issues sold a below book value. Dividend yields were high.
My 401K is 100% Money market & up ~5%. Started selling the rest of my outside mutual funds in ‘06 after interest rates spiked, and finished off in late ‘07. I am 90% in CDs, a bit in BEARX, and international mutual funds. Capital preservation is strong concern. There is no excuse that an investor cannot see the fr!ckin storm coming, NO EXCUSE! Tried in ‘01 to move to “safe” equities, and learned my lesson. The 5% return on the CDs isn’t much, but it sure beats -20% losses last time! The plan is to slowly return in a few years, say add 10 - 20%/year if the given R word != the D word.
“How’s everybody’s 401k doing this year”
Outstanding…although I’m getting hit with inflation.
We were 100% into Wilshire 5000 since 2003, sold off 75% of that in aug-dec of last year. Now most of it is in treasury money markets, getting eaten by inflation. Oh well, at least now I don’t have a panicky feeling when the indexes drop 2% in a day.
I yanked nearly all of my 403b money out of stocks late last year, along with most of my other invested funds. Currently, I have TIAA traditional annuity, a little bit of the TIAA global equities fund, and the rest in the TIAA money market. My current 403b doesn’t offer TIAA, so I moved all of that into the Dreyfus MM fund, which, unfortunately, was the only cash-equivalent vehicle they offered. Rest of my stuff, outside of my brokerage account which I use almost exclusively to trade options (over 80% return last year–thanks homebuilders and financials), is in Vanguard Treasury MM, plus I have a low five-figure amount in a Fidelity inflation indexed stock fund. So, overall, about 80% of my total net worth is in cash. Over the past 15 years I’ve never moved money around like this, but, as they say, it’s different this time. None of my money is in any kind of real estate, needless to say. I suppose I should look at gold, but I really don’t understand metals investments.
I got my matching $3900 and all that went into stock mutual funds. 100% of my 401ks and IRAs are in stock mutual funds. Since I’m more than 20 years from when I want to get access to that, I think it’s foolish to move out to conservative areas. I’m not an old man. My traditional IRA this year is automatically funded $100 per week from my bank account into Vanguard 500 index fund. I like to be able to buy more shares for the same amount of money. I’m getting deals while the cockroaches scattered away when the recession light switch came on.
Bill - those of us you will consider “old”, are not. At this point, anybody with HBB sense who hasn’t gotten out is in for a reason. Quit the patronizing, please.
I don’t have one.
I’m living mostly off of my rolled-over 401(k). Since the beginning of the year I’m up 6% (my target return for the year is 8%). My asset allocation, little changed since January 1st, is as follows:
US Cash (mostly CDs, some TIPs, some Treasury MMF): 56%
Foreign Cash: 10%
Gold and Gold Miners: 15%
Commodities: 10%
BEARX: 7%
Misc. Equities: 2%
I’ve lost 8% from the peak. I moved most into conservative funds last summer. I probably should have moved all of it. Our match is in company stock. I usually sell it all periodically but I got stuck with more than I wanted and the stock went down significantly. In either case, I’m in a lot better shape than I would have been had I left it alone. I was talking last summer with coworkers about moving my stuff around. I think they disagreed with me but they’re now saying they should have done the same thing.
I had a hard time finding conservative funds with my plan. I ended up sticking my money in funds designed for people who are already retired. I was very concerned about the mortgage and interest rate exposure with those. That concern is one reason I didn’t move everything to them. Those funds have definitely stood up pretty well. The actual mortgage exposure seems to be low according to the prospectus and most of the bonds are short term so very little rate exposure.
You know, after answering this question I went and looked up my account. I thought the peak was higher than it was. I’m actually only down 2 or 3% (not including new contributions of course). That makes me feel much better.
Don’t have a 401 but do run a corporate profit sharing plan under basically the same rules, although the plan can purchase some things 401s can’t. I saw the handwriting on the wall 6 months ago & sold all my plan’s stock holdings & converted them to treasury bills or FDIC insured CD’s. (Fidelity offers these CD’s under their brokerage accounts, no fees.) I see nothing in the stock market worth investing in at the moment. These funds have risen about 3% in the last 6 months, I don’t expect this performance to continue due to falling interest rates.
The plan has held some 3% TIPS bonds for the last 5 years, they mature in 4 years. I don’t understand them, but made the purchase to educate myself. The bonds have risen 12% in just 6 months!
There is a lot of talk in the news about bailout plans for the banks/lenders. I think a government bailout is going to be inevitable, note I am not saying I think it’s right just that it will probably happen. I think the people who are opposed to just giving money to the banks should protest these plans but should also come up with an alternative. For instance instead of the government buying crap mortgages at a deep discount (yeah right) from the banks and refinancing them into a government guaranteed loan (the Cramer plan) I think a better plan would be for the banks to issue convertable preferred stock with a nice 8% or so coupon (like SWFs are getting now) and have the government buy that. That way at least the money would be a loan and the government would get some interest and if the banks recover in a few years then they can buy the stock back and no money will have been lost by the tax payer. Having them issue stock would also transfer the losses to the shareholders as it would dilute their equity.
If people don’t propose alternatives then a bailout based on what the politicians and banks propose will be inevitable.
Have you done the math?
Exactly. I don’t get where people think any sort of bailout is even possible.
I think many people don’t look ahead much. This country is plunging into a recession. How are people going to react to anything like this in 6 months when they are out of a job? It really is like saying a bankrupt person can right himself with a credit card. People say, ‘but they’ll try.’ Who cares? Is a failed rescue really a ‘rescue operation’?
I’ve said for years that the government IS the housing market. More government will only make the bust worse. IMO it already has.
“Who cares? Is a failed rescue really a ‘rescue operation’?”
Sadly, it would probably look like Operation Eagle Claw.
http://tinyurl.com/3hank
I don’t think Bu$h and the rest of the fools in power could figure out how to screw a baseball mitt. How are they going to bail us out of this?
Is there anybody that thinks a bailout attempt wouldn’t continue gold, silver, platinum, palladium and oil and their meteoric rises? If you are certain of a bailout then buy them up. And when you get enough money, go punch Bill Gross right in that ugly face of his. His face was designed for radio.
Lines of credit are already being withdrawn, cc’s are next. Maybe they can sell apples…
“I think many people don’t look ahead much.”
This is true and that point really came home to me yesterday while watching C-Span. The Reps grilling the CEOs wanted to know how these jokers couldn’t see it coming. There were no good answers to that question, although in a roundabout way, Mozilo tried to blame it on traders and the complexities of securitization.
The government IS bailing out this securitization problem (it is way beyond subprime loans, MBS, etc.). The FED’s TAF (temporary auction facility) is taking on rolling loans like the small banks used to do pre-R.T.C. days; ” a rolling loan gathers no loss”.
The TAF, which loans money on collateral for 28 days, started at 30 billion, I believe. It will be increased to two auctions, which will account for $100 billion in readily available credit on crappy bonds. There is another 100 billion or so available via other FED mechanisms, such as the discount window.
This 200 billion is roughly 10% of the minimum capital reserve requirements of banks in the U.S. What is happening could be described, with a tinge of horror, as a covert nationalization of the US banking system…
$200 billion? Give me a break. If you aren’t talking upwards of $6 trillion, it isn’t even worth looking at.
‘a covert nationalization of the US banking system’
What do you think the Federal Reserve is? Have you looked at your money? It’s not the US dollar, its a FR note. I wish we could take back the banks.
There is not much the gov can do, with a 1 Trillion+ collection of mortgages, where’s the dough gonna come from? Unless BB cranks the presses? And with the banks losing confidence in the agency backed mortgages recently (the Carlyle fund implosion), even Fannie May / Freddie Mac can’t be used to bail us out. There are very few options left.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aC8o96KiYRh4
The political loonies can only talk the talk in the long term. They will try to walk the walk during the next 8 years and it will be ugly, and they will look foolish. The American sheople who voted for any of the loons in the oval office in the next 8 years and the majority of congress will be saying “shame on me.” The politicos will have to pay the piper in 8 years though.
I agree that something more will be done by govt. The question is how much it will piss everyone off.
However, it will be done.
I’m guessing they will repeat some of the mistakes of the ’30’s.
I hate to say this, however in the end, imop, the USGOV will declare bankruptcy!
I see one and only one possibility that may work.
Like the stimulus plan, but 15x as big. Hand out $2 trillion to “consumers”, but if you have debt, your share goes to pay down your debt. If you make less than medain income, you get 1x income. If you make more than median you get a reduced amount basedon how much more than medain you make.
Combine this with mass regulation on the lending industry to ensure wenever get consumers this far indebt again. Max interest reates, max fees, return to the ability to write it all off in bankruptcy, change accounting rules on when lenders can book profits, etc. Anything needed to get them to return to sane lending.
If you are in a managable amount of debt… say max 4-5 x income.. you get “bailed out”. If you do not have debt, you get a big chunk of cash to compensate for the lost purchasing power this will cause. If you are looking to buy a house, you get money for a down.
If you are 10x your income in debt, you are still fooked. Too much money was lent too peolpe that are fooked, so the lenders will still be punished and hard for their bad decisons.
But, what about the $2T extra debt the govt is in? Mass spending cuts and tax increases. Social Security cuts, lift the cap on contributions, tort reform for medical malpractice to cut Medicare costs, mass cuts to the U.S. Navy and Air Force. Close bases in Europe and bring those troops home. Cut back homeland security.
And, of course, those cuts will be “too painful” to do willingly, so the plan will never happen. Too bad, since I think this is our only hope of avoiding the fork in the road that we are heading for. Banks and the GSEs will go insolvant and then we will have a choice….. global depression or hyper-stagflation for the USA.
I really don’t understand this…the only way to “save the economy” (ie get it back to Goldilocks mode ala 2006) is to trick Americans into spending more than they make. You need to trick them into borrowing over and over and over, because a large portion of the gains we’ve made in the last few years were based on consmers spending with borrowed money (mortgages/helocs, car loans, credit cards, buying mattresses with no payments for two years, etc.)
Any “fix” to get us back to that same economy has to include opening the credit faucets wide again, and letting dead people buy houses, letting people get cash back at closing, letting people borrow more than their falling equity is worth, raising their credit card limits, rolling over the old auto loan into an even bigger 10 year auto loan, etc. etc.
Is that where we want to go? Where does it end. And rest assured it will end, just like when “house price appreciation” stopped. Pretty soon, you run out of crack. Then what?
The fix is to take some methadone, or go cold turkey, work off the shakes, then go forward clean and sober. This “hair of the dog” cr@p only gets us deeper into the mess that got us here in the first place.
(Side note: wage inflation could also get us out of this mess. Does anyone see signs of massive wage inflation over the past few years? No? Anyone think that globalization will help us get wage inflation in the coming years? No? Anyone see some unintended consequences of extreme wage inflation? Yes?)
Foreign and domestic purchasers of govt securities will force the USGov. into bankruptcy, if the US does not first declare it and renounced all govt. debts, .
“The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”
14th Amendment
Good luck getting that changed.
I’d rather owe it to ya, than cheat you out of it…
hehehe
This part of the 14th amendment: “No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws” was ignored from 1868 to about 1957 when the President nationalized the National Guard to enforce a Supreme Court decision to desegregate Little Rock public schools. I’m sure TPTB can devise a cunning plan to evade the prohibition on renunciation of the national debt.
RE: But, what about the $2T extra debt the govt is in? Mass spending cuts and tax increases. Social Security cuts, lift the cap on contributions, tort reform for medical malpractice to cut Medicare costs, mass cuts to the U.S. Navy and Air Force. Close bases in Europe and bring those troops home. Cut back homeland security.
LMAO…sorry Darrell. This fooked up town I”m living in, can’t even cut a band program for 5th graders.
Protest groups like ” Soccer Mom’s for Higher Taxes” will scream bloody murder
If you go to Ron Paul’s 2008 site, you may find a Youtube link to a speech where he says that eventually the US government will cutback on its spending, not because it wants to, but because it has to. He says this war in the middle east will have to be stopped because it plainly costs to much!. The same thing will be said of Hillarious’s socialized health care. What a big boondoggle those loons will attempt to pull off again. Rhetoric is to “help the American people,” when basically the money is just not there!
I said it before that the next 8 years will be the greatest amount of socialism the US has had since before Ronald Reagan’s tax cuts of 1981. But after that, Ron Paul’s policies will be adopted because we could not afford anything else.
Fire Sale. Sold in 3/2006 for $320,000
http://gisims2.miamidade.gov/myhome/propmap.asp?app=propmap&cmd=FINDADDR&stnum=180&stdir=NW&stname=64&sttype=ST&stzip=
now on sale for $59K (MLS #: N259418 )
Pretty crappy neighborhood. That $320K smells like massiv fraud.
Yes, but I’m sure Orlando Noriega was a proud homeowner for one brief shining moment in time. Not.
I thought the US Army snatched him from Panama and put him into prison. How did he buy any house?
Lots of people in prison bought houses during the bubble. As well as dead people, kids, homeless (now there’s an irony for you).
Anything in the NW is gang zone in miami off interstate 95…truly worth $59K
Don’t go too far north either…
http://www.theonion.com/content/news/florida_man_beats_out_heart
Here is my answer posed by an earlier poster. I have my about 60% of my money in a long term S & P index fund. The remaining 40% is allocated to short term government notes, corporatebonds and an international index fund. My Roth IRA is divided into 3 equity type accounts. I am holding a substantial cash position in a Vanguard money market account. My personal stock holdings consist mainly of Altria stock with a smaller percentage of Kraft, Nike and Intel. Finally, I have about $10,000 in a bank savings account.
My accounts have lost money and it is frustrating. However, I should have enough time and money to withstand this downturn.
I am invested in Proshares Ultrashort products and so far I am very happy, They go up 2% for every 1% decline in the index market they track. SDS, DXD, EEV they are all up nicely since purchasing them over the last couple of months. Ride the bear market down, don’t just profit on the way up. I say the DOW 10,000 before 14,000 and the S and P has good potential to go below 1,000 depending on all the bailout plans etc.
Check out SRS, too. It’s an ultra short of REITs — the next shoe to drop, IMO.
Dutch housing bubble update:
the Dutch housingmarket is starting to show more of the signs that were familiar on this blog 1-2 years ago. All the cities in my area (low-income, low population density, negative population growth) have started ambitious but financially risky plans for new housing developments, all of them with homes priced at 10-25x median income. Usually the cities have contracts with big developers where the city assumes all the financial risk if things go wrong, and profit (if any, after the builders have calculated all their fat fees) will be shared between city council and private parties. To make things even more attractive, most of the new developments are directly on/near the waterfront and they do not take rising sea levels into account; talk about ‘investment’ …
There is some gnashing of teeth lately because of the long time it takes to sell a Dutch home, so todays newspaper explains what you can do to sell your home if - after 1-2 years on the market and baking a fresh apple pie for visitors - it still doesn’t sell. Of course, it has nothing to do with price or the fact that Dutch homeprices are up 6-10x from 15 years ago. Every Dutch homeowner knows that you can sell a home for at least 10% over the last purchase price (even if you purchased just a few months ago), so price is irrelevant.
In the article the RE mob explains that it is just a matter of taking your time to find the right customer, and one should NEVER drop the price. They also explain that there are attractive solutions for people who are stuck with a double mortgage because their old home has not yet sold. The second mortgage is tax-deductable (for two years), Dutch banks offer extremely low rates for second mortgages (2%, effectively 1% after tax deduction) and you can always rent out the old home at a profit. So why hurry?
Real estate is still the sure bet over here in Europe …
Any way to short Dutch housing?
Maybe there’s time to mimic what some US bear funds did, with a dutch accent.
There are ‘turbo shorts’ (kind of futures without the risk) for Dutch commercial real estate, but not for the private housing market where speculation and downside risk are far bigger.
Too bad, could be the deal of the century - if you have the patience to wait it out …
Comparing the US and the Netherlands problems I would put my money on the Dutch finding a way out of this better than anyone. Go back hundreds of years and you will see the Dutch are some of the best people in the world with money and land, in the netherlands as well as the the entire world. NHZ I know you are Dutch, I an a very proud desendant myself. Another big difference is the quailty of home, most of europe, the homes are built like a commerical building. I not really making a point here just talking about differences and wondering what the end result will be.
Lane
maybe the Dutch learned how to avoid bubble-destruction by studying that little problem they had with the tulips..
I think the Dutch economy has always been relatively speculative, not much has changed since the 17th century.
yes, the situation is different so I don’t know how it will play out either - but I’m sure our bubble is more extreme than the US bubble and ultimately unsustainable.
It didn’t work out well always in history; after the Golden Age the Dutch tried to live the good life without working for it. As a result, the Dutch Empire and its top position in international trade/finance, arts and science vanished - it never fully recovered.
Time for a “Dutch Auction”?
Talking about stocks-from last Thursday(28th Feb) to this Friday-7th march (7 trading days since Heli Ben said banks could fail), I have seen my
WM sink from 16.60 to 9.90
C sink from 25.40 to 21
WFC sink from 31.60 to 28.5
WB sink from 33.50 to 28
A major hole in 7 trading days in a normally slow moving $BKX heavy weight stocks!!!
What the f— were you doing in those stocks?
lol NY, took the words right out of my mouth >; )
I wish I knew! I have been bulldozed in just 5-7 trading days. Now the big question comes-should I wire another 50k & buy more WM @$10,C @19-20? Can they fail? Or may be during Option expiry short covering bounce will recover part of my losses-I will never know!
“should I wire another 50k”
Would you like to lose another 50K?
“Can they fail?”
Yes.
maybe you should wire another 50K
IN PUTS
Can you take a synthetic short against your long position? If yes, do it. If no, would a tax write off be a good thing?
“What the f— were you doing in those stocks?”
But Crammer guaranteed me, just last week, the Financials had no where to go but up. Should I not listen to Mad Man Crammer, whose own
portofolio bought these puppies?
losing a sh%Tload of $$$
oy vey did you buy thornberg as well
NEW YORK, March 7 (Reuters) - Fitch Ratings on Friday cut its ratings on Washington Mutual Inc (WM.N: Quote, Profile, Research), and said it may cut Bank of America Corp (BAC.N: Quote, Profile, Research) and Citigroup (C.N: Quote, Profile, Research), due to their exposure to residential home loans.
http://www.reuters.com/article/etfNews/idUSN0736629620080307
These financial stocks right now are still only fit for traders. Anybody investing in them is going to be put through the wood chipper.
Kevin,
Sorry to hear about your losses on the financials.
FWIW, Hoz and others have been saying that the financial have about 12 more Quarters of writedowns ahead, so I would think that many of the financials you listed in your post could sink further from here….beware of catching falling knives….
The latest number from AP: $325 Billion Hit up Ahead
http://news.yahoo.com/s/nm/wallstreet_losses_jpm_dc
If that headline gets around, monday is going to be interesting.
Yes, but you also had the DCB runup from January lows to those levels reached on that Thursday,
As a short I’ve watched positions take a beating and now they are really stating to pay back big time.
Welcome to the blog, Newbie.
In talking to second home sellers here in Vilas County, I believe we have a long way to go before we see the bottom. Most of these “Chicago ” people truly believe real estate never goes down in value. County wide, we have over 1800 mls listings. Last week there were only 6 transfers in the entire county. based on the dollar amount, they were all small parcels under 50k. So what are we going to do with all these 400k lakes homes for sale? Also, numerous winter events here, down by 1/3 in attendance. Gas is 3.39 gallon.
The spring real estate market is going to be very interesting. With 70 real estate agents in the Eagle River area alone, sombody’s going to be flipping burgers for a living soon!
NEW YORK (Reuters) - Wall Street banks are facing a “systemic margin call” that may deplete banks of $325 billion of capital due to deteriorating subprime U.S. mortgages, JPMorgan Chase & Co (JPM.N: Quote, Profile, Research), said in a report late on Friday.
…
The JPMorgan report included a revised bleaker forecast for subprime-related home prices. The bank now sees prices falling 30 percent, from its prior 25 percent forecast. Those prices have declined 14 percent since mid-2006, JPMorgan said.
http://www.reuters.com/article/ousiv/idUSN0832645120080308
I’d say we are at cat 2 on the Saffir-Simpson scale, headed to cat 5.
Too bad Boom Boom’s expanded March TAF is less one third the size of the margin call estimates.
Maybe he is hoping the SWF’s will make up the difference. I wonder how much longer they can keep up the TAF charade?
Anyone familiar with regulation on this:
I’m rather sure that a bank can’t take a synthetic short on its own underlying but is there a way for a bank to take a proxy short? I’m sure there are leveraged instruments that woud allow a bank to take a synthetic position on its proxy.
SIgn of the apocalypse.
http://www.azcentral.com/business/articles/0307biz-outproperties0308-ON.html
Out Properties LLC, a St. Louis development firm, hopes to change that by marketing a unique lifestyle to this niche group it calls “gayby boomers,”
“Imagine a place where your neighbors are just like you. They share your interests…” That’s not all they share-not that there’s anything wrong with that.
Yeah, and most mainstream gays have pretty good taste overall. Which rules out anything in Surprise.
Bfffaaaahahahah!
The other thing that gets me about that is that I have noticed that partnered gays tend to move into heteroville, away from the gay community. Perhaps away from temptation? Well, at any rate that’s what I always thought until I was married myself and found that it’s more about having more in common with our straight married friends than with with some narcissistic goth/punk/artiste/bohemian types in trendy coffee shops.
But seriously, living in an all-gay community would be about as much fun as going to a single sex college. Gag me with a spoon already. The reason gays cluster in certain ‘hoods in big cities is 10% for protection, and 90% to get dates. Get real.
(PS–I hate to say it, but any kid raised in that suburb is going to need major therapy. I’m not knocking gays raising kids; hell, my great uncles did it! I’m just saying that raising mostly heterosexual kids in a world without heterosexual role models will screw them up just as surely as being one of those unlucky gay kids who grows up in rigid fundy communities where homosexuality is unspeakable.)
We bought our first house from a gay guy who was dying of AIDS. Go ahead and accuse me of sterotyping, but the guy and/or his personal interior designer had incredible taste. You experienced it rather than just saw it as you walked through the house. We changed some details, but it would’ve been impossible [for me, anyway] to improve on what he’d done to the place. We felt a deep admiration and appreciation for it during the years that we lived there.
My BIL bought 2 houses at the peak for around 250K each. This week he learned similar homes are selling for around 125K. Should he buy more homes now?
Double down, OH YEAH!
Just be thankful your wife didn’t inherit his bucket of stupid.
Is he dollar cost averaging?
I’ve never heard of that with homes, but if he’s got the money…..
Is this a theoretical story problem for middle schoolers? Should he buy more homes now? (yes/no) (worth 10 points)
If he does, how long of a snorkel will he need? (calculate in feet) (worth 5 points)
The problem is I told him at the peak he would be able to buy similar homes for 50 cents on the dollar. He bought anyway. Guess what? Similar homes are selling for 50 cents on the dollar.
There is nothing more destructive to family harmony than giving correct advice.
That is great.
It’s pretty amazing when you examine the psychology/emotions. During the peak, there was no reluctance on his part. He had to buy it. Today, however, with prices down 50 pct, he is unsure.
Sure!! Buy 2 more.Then when they sink below $100K he will have four precious houses.Then 10-15 years from now he can flip them for a few grand, that is if he can hold onto them that long.
I am still amazed by those that do not see the financial MELTDOWN we are facing.
Got a begging letter from the university that gave me my last degree this week. It was meant to be an irreverant plea to the younger alums (though I am not that young, just got the degree kind of late).
The title? “A Guide To (Not) Giving” Inside it is mostly a collage of ways to make excuses not to donate including such categories as biological reasons (I just ate a rancid clam), repressed childhood reasons (The tooth fairy isn’t paying what she used to), infrastructural reasons (Sorry, I’m not carrying any change), etc.
But under the category of “Fabrications” is one that I bet isn’t much of a fabrication for some people:
“The adjustable mortgage on my ski and beach houses are skyrocketing right now. Sorry.”
I’m just not sure the begging office (Office of Development) should be assuming that no alums have adjustable rate mortgages. Maybe they are just assuming that that subgroup will never donate anyway, but it is a heck of a risk - insulting the financial competence of people you want to give you money.
Lately, I’ve started to worry that the lessons of the current housing bubble will be lost to history. In 100 years, no adult reading this blog today will be around to relay what they’ve learned from it to younger generations.
In order to prevent this from happening, I propose the creation of a catchphrase. Members of the REIC have been extremely successful with their exploitation of the “American Dream” catch phrase, so the question becomes: is it possible to create a phrase to prevent people from committing economic suicide in the future?
I think the answer comes from boating. You may have heard the phrase, “Boats are a hole in the ocean (that you throw money into),” and repeated it to your children. Of course, plenty of people still buy boats but, because of this common saying, realize that boat ownership comes with significant financial responsibilities.
Ok HBB’ers, can you come up with a similarly effective catchphrase for real estate?
How about: Want to work for a bank? Buy a house.
“”tis better to be house-poor than in the poorhouse.” –joeyinCalif 2007
There is no question lessons will be forgotten.
Why we forgot the lessons the last time this happened in mass and it’s only been 80 years.
History repeats?
“Norman pressured the heads of the central banks of France and Germany to inflate as well, but unlike Strong, they refused.[15] Rothbard says American inflation was meant to allow Britain to inflate as well, because under the gold standard, Britain could not inflate on its own.”
http://en.wikipedia.org/wiki/Great_Depression
Spring never comes
“They are not running out of Joshua Trees” - newbie 2007
“In order to prevent this from happening, I propose the creation of a catchphrase.”
It will happen again. Assume your “catchphrase” exercise becomes a wildly successful marketing campaign (ala De Beers and Diamonds), and “everyone knows real estate sucks as an investment”. RE values will then tank even further under the trend line, and some contrarian fools will start buying RE at a deep deep DEEP discount, and start making money on them by renting them out. Some of these people will write books and put on seminars on “the REAL secret to real estate”, and some other contrarians will follow. They will make some money, and possibly a little appreciation on the houses, and THEY will write books and seminars. And so on and so on. Then some bank or investor will get the bright idea to loosen loan guidelines “just a little”, to capture some of that growing business. Other Banksters see him making money and do the same. After all, with property prices so low and investments “cashflowing”, how much risk could there be. The easier loans means the contrarians can buy even more property, leveraging even more, and make even more money.
Soon you reach a point that people are buying real estate not for the monthly income potential, but for the possible appreciation. Banks loosen up lending standards because, hey, real estate only goes up.
Then things get really out of hand.
As far as catchphrases, how about:
“Don’t buy now, or you will be priced in forever”
“It’s your savings, you don’t want to just give it away”
your savings ??
Some lessons will be lost over time.
Witnessing the purchases in certain areas and the questions about buying “right now”, tells me there are still many that are about ready to be educated soon.Those about to learn a lesson may not forget but it will be to late for them.
How about; Buy a home and spend more than you make.
Next week will be very interesting!
http://www.marketwatch.com/news/story/fbi-probes-countrywide-possible-securities/story.aspx?guid=%7B4145FC3B%2D8CBC%2D4030%2DA8A8%2DFEE8B2C879F7%7D&dist=hplatest
His days are numbered. I’m gonna grab me a bottle of Schadenfreude and put it on ice. I can’t wait for the perp walk.
On how my investments are doing, how should I know? Statements don’t come until some time after the end of the quarter.
I do know that I have the majority of our savings in T-bill funds, which are losing a couple of percent a year to inflation at this point.
WT, I like it when smart guys are in Tbills. Now, I don’t feel so bad. I never want to lose 10k at a time in stupid investments.
Switch to brokered, insured CDs. They now yield 200 BPs over T-Bills of the same term. Just stay within the FDIC limit. If you’re worried about the FDIC look up 12 USC 1825. If the FDIC needs cash it doesn’t have to wait for an appropriation. The FDIC, on its own, can issue full-faith-and-credit US debt obligations.
Ex socal mortgage writer rants!
“Witness the wonder of the real estate/mortgage industry, who was more than happy to hold up the economy via low interest rate loans that let people refinance their houses so they could continue to buy consumer goods (which the electronics industry was more than happy to provide - I’m looking at you Apple, Sony, and Nintendo) and go to overpriced movies and shop at Whole Foods instead of actually facing up the fact that they could no longer afford their standard of living on their current wages. It also let people afford houses that kept going up outragously in price, but that was okay, because the industry came up with “creative” financing, and, hey, as long as your house is going up in value it’s all good, right? Plus, now you could refinance and buy one of those new hybrid cars they were coming out with. And the government kept helpfully lowering the interest rate, and everyone was happy…
“But then there was the New Century scandal (and a whole bunch of other companies, but they were first) and everyone (in general) suddenly realized just HOW the mortgage industry was keeping this economic shell game going… and then it was all torches and pitchforks, and next thing, everyone in the industry (including us) was labeled as evil, greedy, good for nothings, even those who just pushed paperwork for barely more than minimum wage while the loan officers made all the good money. If you had the word “mortgage” or “real estate” on your resume last year, trust me, it was the kiss of death. It might still be…”
First he wants the world to wake up and be realistic, then he wants “minimum wage mortgage paper pusher” to be a job magnet on a resume.
Torn between 2 white liberal guilts
http://www.ocregister.com/opinion/hillary-guilt-black-1994695-historical-obama
“”People will have to choose which of America’s sins are greater, and which stain will have to be removed first. Is misogyny worse than racism, or is racism worse than misogyny?”"
Freakin US citizens should pick the person they think will do the best job…and this is coming from a “brown person”.
Hey, if some ‘tards want to vote for Obama out of ‘white guilt’, let ‘em. He’s the only candidate I have any emotional connection to and he’s a far sight better than Hillary FIRE-Economy Clinton or Give ‘Em Hell McCain.
It’s sad, I used to actually respect McCain, before he decided that we should be fighting wars on five fronts until the end of time. Sorry, I’m 28 years old and I didn’t sign up for the Götterdammerung. Go shuffle off to a rest home where you can bitch about the Amtrak budget to the underpaid help.
I’m a huge Amtrak supporter, btw, and McCain is the opposite, but I would have voted for McCain in 2000 despite that. Bush turned out to be worse for Amtrak than McCain probably would have been, anyway. W & Jeb have done their darndest to destroy rail transit and increase our dependence on foreign oil.
Well, anyway, like I said, McCain now scares the s*** out of me, and the Clintons are Wall $treet whores. Obama actually cares about, you know, the country, and the people who live in it, without going into some PTSD fugue state where he’s shooting up Viet Cong all over again.
How can you outrank your father as CiC if you don’t have troops fighting in your theater?
You’re right on about Amtrak! Amtrak’s budget is a barely measureable sliver of what taxpayers give to airlines, the auto industry, and trucking. Yet, the way the decider howls about Amtrak you would think it was tied with the Pentagon for funding!
How about these college murders, a guy needs an ATM card so he murders a girl in a car. It’s nothing new, but it is sounding MadMax.
The Real Carnage of Housing Bubbles has started on the streets.
http://news.yahoo.com/s/ap/20080308/ap_on_re_us/auburn_student_slain;_ylt=AuhBrZWYCGcVuxS_xgP0pbJvzwcF
Both cases are being called “random crimes.” The MSM would never think to label them “hate crimes.”
I wonder what nhz would say about this:
Sounds incredible to me … in Holland we are told that most of the US mortgage debt of ING (portfolio about 30 billion) is on the books of its US subsidiary ING Direct. Supposedly most of that debt is related to Alt-A loans, but I don’t know any details. They have admitted relatively small mortgage losses a week ago, on the order of 1% of the portfolio. That sounds incredible, unless they have insured the risk with another party.
Similar stories apply for the other big Dutch banks: they have reported US mortgage losses that are FAR smaller than those from the other EU banks. Either the Dutch bankers are extremely clever / cautious, of they are not telling the whole story. With their activities in the Dutch mortgage market ‘cautious’ can be ruled out right away.
Okay, you have confirmed my intuition about this fish story.
I have already moved my emergency fund to a local credit union which seems sound. I trust FDIC but I am prepared to have what remains in ING frozen for 12-18 mos. It’s my “buy a house” fund and I’m not buying for, oh, four years.
Credit Unions are “protected” by the N…. something, not the FDIC. But I’ve never heard anyone mention that. Have no idea how solvent they are, though.
Clearly they have avoided the subprime problem by cornering the market on Alt-A
Oil $300 a barrel?
http://www.cnbc.com/id/15840232?video=677004421&play=1
I’m not at a computer to get the audio of that video, but I think $200 to $300 per barrel in the next ten years is likely. I put a link to an article from Bloomberg magazine where oil industry and auto industry representatives were seriously contemplating the $200 to $300 price range.
Those of you who do not believe in peak oil should do the opposite extreme and buy a slightly used H2 or two from a FB at a discount and drive them as much as possible. I double dog dare you!
I have the TV on in the background and a commercial just caught my attention.
Some law firm is telling anyone that lost lots of money in the stock market to call them! They named a number of investment banks… Sounds like a class action is brewing!
San Diego City Schools to cut up to 1,115 jobs.
http://www.cbs8.com/stories/story.120444.html
This comes after 189 jobs lost in Carlsbad schools and about 500 in Chula Vista.
New Realtory tv show:
Serf-vivor
A dozen Realtors ™ are let loose in Slavic Village, Oh., with their only possessions being a few hundred business cards, (each with the best possible likeness of them on it, naturally) and a cell phone.
The winner gets voted off the island of misery…
WTF is a “systemic margin call,” and what makes JPM think the global central banking cartel is not burning the midnight oil this weekend cooking up a plan to stop it in its tracks? (I cannot say whether this will work — just know they are working on a plan, as a matter of my faith in the cartel…)
Banks face “systemic margin call,” $325 billion hit: JPM
By Walden Siew Sat Mar 8, 9:24 AM ET
NEW YORK (Reuters) - Wall Street banks are facing a “systemic margin call” that may deplete banks of $325 billion of capital due to deteriorating subprime U.S. mortgages, JPMorgan Chase & Co (JPM.N), said in a report late on Friday.
The Croesus Chronicles
Totally Uncharted Waters
Robert Lenzner 03.07.08, 12:10 PM ET
It’s never been the case that so many financial markets are so seriously troubled and not operating smoothly or, in some cases, at all.
Subprime mortgages and part of the prime mortgage market are AWOL. Collateralized debt obligations and collateralized loan obligations, portfolios of mortgage-backed bonds and leveraged corporate loans are shunned like lepers.
Structured investment vehicles await more drastic write-downs. The municipal bond market suffers. Plain, “vanilla” corporate loans are challenged. Over $300 billion in auction-rate notes have no liquidity.
The reality was underscored during Federal Reserve Chairman Ben Bernanke’s testimony several days ago, when Sen. Charles Schumer, D-N.Y., asked him, “How can you mark to market when there is no market?” What he meant was that there are markets lacking in a transparent pricing mechanism that’s dependable. And Bernanke admitted he didn’t know how to fix it. Then, he passed the buck to the Financial Accounting Standards Board, a rather pathetic cop-out.
We’re living in avalanche territory. In a telephone interview this week, Schumer told Croesus in no uncertain terms, “We’re in totally uncharted waters. The fact that you can’t value credit is far more damaging to the economy than what’s happening to the consumer. People don’t know what to do.”
Indeed. People don’t know what to do. Better take some time to absorb that sentiment while you anxiously wonder where the next disaster will strike the markets. As Croesus’ admirable friend James Joslin, chairman of TPC Financial Management in Boston, put it in his February letter to clients:
“As these financial services firms (whose stocks, in total, add up to roughly 30% of U.S. equity market value) attempt to rebuild their balance sheets, if not struggling to avoid bankruptcy, home and common stock owners in the U.S. and abroad are also paying the price. Virtually all asset-class valuations are being marked down. The negative ripple-effect has been, is and will, for the foreseeable future, continue to be pervasive.”
Ah, yes, the ripple effect. Try American International Group’s (nyse: AIG - news - people ) wake-up call in revising its loss on some derivative contracts to $5 billion, driving its stock down under $45 a share. Or Credit Suisse Group’s (nyse: CS - news - people ) admission that an unexpected write-down of mortgage-backed instruments would take out almost $3 billion in profits. Or hedge fund operation Man Group, whose trader in wheat futures lost a measly $140 million, taking Man Group’s shares sharply down. Keep posted, as the deluge in financial stocks losing their high-flying value still have a way to go.
What could have prevented this horrible denouement? Not Fed Chairman Bernanke, who got the subprime crisis completely wrong. On May 17, 2007, Bernanke said, “There is a sense that, although there is always a possibility for some kind of disruption … the financial system will absorb the losses from the subprime mortgage problems without serious problems.”
Without serious problems, huh? Tell me another one! Bernanke assured the nation the subprime problems would have no significant spillover to the rest of the economy.
Indeed, Timothy F. Geithner, president and CEO of the Federal Reserve Bank of New York explained this week that the credit crisis “exposed a range of weaknesses in risk-management practices within financial institutions in the United States and throughout the world.”
Geithner went on, “The most common failures were in how firms dealt with uncertainty about the scale of losses they would face in less benign economic and financial environment; the scale of the cushion they built up against that uncertainty; how well they managed the internal tension between risk and reward; and how quickly they moved to mitigate risk as conditions deteriorated.”