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  • Housing - Misguided Optimism Continues Unabated [View article]
    Your absolutely right. Blackstone will dump their inventory of homes far before the average retail investor sees what is coming. Better yet, which they may already be doing, they will securitize these homes and sell the shares to individual investors. Blackstone will then just make money servicing the rentals and pass the risk of falling prices onto other parties.

    Sounds familiar.
    Mar 20, 2013. 05:36 PM | 1 Like Like |Link to Comment
  • Housing - Misguided Optimism Continues Unabated [View article]
    It is great that SF bay area is performing that well today but you also just described the fall of 2005 right before the bottom fell out of the market.

    I would also say, thankfully for about 1,000 reasons, that the SF bay area is not a great indicator of what the rest of the United States is like.
    Mar 20, 2013. 03:11 PM | 2 Likes Like |Link to Comment
  • Housing - Misguided Optimism Continues Unabated [View article]
    No offense but you have nothing to support your assertion that "the consequences are years away".

    Also if you will look at what my article says I acknowledge that there could be additional upside for these stocks in the short term and that data should be positive in the near term.
    Mar 20, 2013. 12:40 PM | Likes Like |Link to Comment
  • Housing - Misguided Optimism Continues Unabated [View article]
    Can you name a comparable time in history when the Federal Reserve had a balance sheet that approached 20% of GDP? There are actually two other instances when this happened in US history. During the Great Depression and again during World War II.

    I am going to go out on a limb and say that across the board things might have seemed a little more difficult for most American's during those two periods than they do today.

    What was GDP growth coming out of both of those periods in our history? I would venture it was significantly better than the 2 to 3% we are seeing now. You can't find any economist worth anything that would suggest GDP growth will ever return to the high single digits as it was in the 1950's after the end of WWII.

    This is relative because you can argue that the Federal Reserve has intervened in the markets before. But never in a time of peace or with such a low GDP growth outlook.

    Main point - historical facts are irrelevant. We are in uncharted waters and neither you nor I (nor Bernanke) knows how the Fed intervention will end.
    Mar 20, 2013. 11:37 AM | 1 Like Like |Link to Comment
  • Housing - Misguided Optimism Continues Unabated [View article]
    Interesting screen name "Seeking Free Markets", with the basis of your post about investing in government subsidized housing.
    Mar 20, 2013. 08:42 AM | 9 Likes Like |Link to Comment
  • Housing - Misguided Optimism Continues Unabated [View article]
    The problem is there is no telling how long it will take for those convictions to be proved wrong. The housing bust of 2005 was at least 5 and probably 10 - 15 years in the making. Most are only focused on the next profitable deal and too easily revert back to the risk taking that caused the last bubble. Again, the unfortunate part of this is that without unprecedented government intervention the housing market would not have come back as much as it has. It is not unfortunate for those whose home prices have recovered until you realize that the underlying fundamentals do not support the recovery. The government is attempting to use policy to recreate wealth that was lost when home prices crashed and in doing so is creating the potential for another crash.
    Mar 20, 2013. 12:12 AM | 2 Likes Like |Link to Comment
  • Housing - Misguided Optimism Continues Unabated [View article]
    I agree that I should better stated the time frame of the shift in down payments to lower amounts. The illustration I was trying to make was that there was a time before the 1930's and the great recession when down payments were 50%. Over time that allowable amount decreased to the point where it was 0 in the run up to the housing bubble burst. With my main point being what is a normal down payment? I vehemently disagree that a taxpayer funded entity such as the FHA or USDA which are now issuing over 20% of new mortgages should allow for a down payment of 3.5% of less.

    Also in what way are you suggesting that private capital in the mortgage market was the cause of the housing mess? Fannie Mae and Freddie Mac were offering no money down loans as early as 2000 or 2001 if I recall. This may have been because private capital entered the market, backed by mortgage insurance, with these 0 down offerings. But Fannie/Freddie certainly did not have to go along with the private capital. Especially in light of their goal being to promote home ownership or access to financing. If there is sufficient private capital in the market willing to lend money for mortgages that seems to give all the more reason for Fannie/Freddie to pull back and take less risk.

    Thanks for the comment
    Mar 19, 2013. 11:38 PM | 1 Like Like |Link to Comment
  • Housing - Misguided Optimism Continues Unabated [View article]
    Any good ideas on how to capitalize on that Canadian thesis aside from Home Capital? Thanks
    Mar 19, 2013. 10:45 PM | 3 Likes Like |Link to Comment
  • Toll Brothers: Betting Big On The Future [View article]
    In your opinion, why is it not worrisome that Toll has 32% of their land inventory classified as land held for future communities.

    Effectively they have $1.3B invested earning no return today.

    Home building is a game of how quickly you can turn your assets. In fact the longer you hold an asset (or piece of land in this case) the riskier it becomes because of the up/down nature of home building cycles.

    I am interested why this does not concern you more. My perspective is Toll is telling you they can not earn an acceptable level of profitability if they were to sell houses on that land. Toll does not have massive 1,000+ lot communities like some builders do. They do have the high rise business but once they start a building all of the land associated with those high rise buildings would move out of the "owned for future" classification.

    Would like to know more about your reasoning behind this conclusion.
    Mar 19, 2013. 03:53 PM | Likes Like |Link to Comment
  • Amazon Is Cheaper Than You Think [View article]
    Camerashooter -

    You are saying Amazon is worth between $5B and $10B today. Here is a SA article where someone does a relatively good, albeit bearish, valuation of what AWS is worth in and of itself. This person values AWS at less than $10B today. You can find other DCF type analysis where smarter people than you or I value AWS above $20B today.

    So be bearish but don't shout fire in a crowded theater to make a point. Plenty of those on SA who are short Amazon and have logical reasons for their position would laugh at your $10-$20 share comment.
    Mar 18, 2013. 11:24 AM | 1 Like Like |Link to Comment
  • Samsung Galaxy S4: A Gift To Apple Shareholders [View article]
    chopchop -

    I currently do not own a single Apple product so hardly a fan boy. I love this article below that talks about how Samsung had to hire Lebron James for their Note 2 commercials. They needed a 6' 8" giant of a man to make the phone not look overwhelmingly big.

    More power to you if you want to use that phone.

    http://huff.to/119oycM
    Mar 18, 2013. 09:15 AM | 1 Like Like |Link to Comment
  • Samsung Galaxy S4: A Gift To Apple Shareholders [View article]
    You must have big pockets or a man satchel to carry that Note 2 around.
    Mar 18, 2013. 07:56 AM | 1 Like Like |Link to Comment
  • Amazon Is Cheaper Than You Think [View article]
    Revenue growth is illustrative of the remaining runway a company has to grow profits, cash flow, etc...

    There is not a single person or analyst who values a stock that ignores revenue growth in the context of it being one component of valuing a company.

    Again you are discussing historical FCF growth in your reply. Best Buy had great historical FCF growth, so did Hewlett Packard, and a number of other companies that used to be leaders in their field.

    Historical data is but a minor data point and has no use in the valuation of a company. If it did you would never find companies that trade at less 5 or 6x earnings like the companies I noted above.
    Mar 18, 2013. 07:53 AM | Likes Like |Link to Comment
  • Amazon Is Cheaper Than You Think [View article]
    Timothy -

    You are comparing one company analysts estimate will grow revenue by 22% in 2014, one whose revenue is estimated to grow less than 15%, and another whose revenue is estimated to grow about 5%.

    If you did not know the names of those companies which would you allow to trade at a higher multiple of prior year FCF? Over time additional revenue should equate to additional FCF assuming a constant operating income ratio along with the growth in revenue.

    At the very least the type of analysis your are attempting to give should incorporate an estimate of future FCF for these companies. I hope most people are not investing based on past earnings or cash flow multiples.
    Mar 17, 2013. 09:49 PM | Likes Like |Link to Comment
  • If Amazon Is So Overvalued Why Does Google Want To Be Like It? [View article]
    Your comment could be applied to every stock not just Amazon. If the whole stock market truly is a house of cards built on Bernanke's printing press no company will be spared if that printing press stops.

    I could give you plenty of other of companies that will fall harder and faster than Amazon if the market were to enter a free-fall and interest rates were to rise dramatically. Just start with the companies with huge debt balances and the lack of cash to service their debt as it matures.
    Mar 17, 2013. 01:59 PM | Likes Like |Link to Comment
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