Tancred

Real Estate Bubble Is Only in 4 States: CA, FL, NV, AZ

What a nice piece of financial poetry. Good job!

It is error to judge future market prices by past performance (a phrase you may recall reading elsewhere and often). This is particularly true of markets highly leveraged with borrowed money (e.g. mortgages) when the likelihood is great the availability of that borrowed money will be substantially reduced going forward, with leveraged prices dropping in proportion. Think 1929 in stocks and bonds. Or 2007 in real estate.

The real bottom will be "in" only when everyone has finally given up looking for it. Until then, we're still in the "hope" stage of a bear market, which will endure until final capitulation -- when blood is in the streets and virtually nobody wants to buy real estate ever, ever again.

Freddie and Fannie: Living in the Past

"Wild Capitalism" is an oxymoron. People putting their own capital (which is to say savings) at risk are typically very conservative in lending.

People who put other people's capital at risk are bankers, not "capitalists".

People who grant bankers an exclusive license to issue unlimited quantities of fictitious money out of thin air are politicians, not "capitalists".

People who do not understand these vital differences are patsies.

Rob Arnott's RAFI 1000 Fundamental Index -- Not An Index At All (ETF: PRF)

Taking the Fundamental Index at face value, it does not confine itself to investment alternatives limited to stocks, so I'm having some difficulty understanding a criticism that rests on an apparent assumption that's the entire universe of available investment alternatives.

To the extent one is "investing in the index", that is likewise no more than an investment strategy. Arnott is simply pointing out that ordinary indexed-weighted strategy will measurably underperform because it more favors investments showing recent outperformance rather than those possessing fundamental merit (which are not necessarily mutually exclusive).

Perhaps his greatest single argument is that the past is no guide to the future and that ordinary cap-weighted index investment tends to disregard that eternal truth.