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NoFate
151 Comments
5 Reasons Stocks Will Keep Falling
Further, Obama's increased likelihood of election didn't cause the crash! That is the most ridiculous thing I ever heard! His numbers went up because nobody believes McCain can fix it ...your causation is backwards.
In addition, I also disagree with the author on oil and the US$ for the same reasons as the first post.
Finally, it just stuns me how much disinformation is out there ...and what you all buy into sometimes! I am a Libertarian and am sick of being lied to by both parties and their media outlets.
How to Handle a Snap-Back Rally (If We Get One)
Back to my trading...
How NOT To Think About Investing
When we can finally read a financial statement for a bank without worrying about "mark to myth" or off the books SIVs ...and actually figure out what they are worth... then there will be no counter-party risk.
It's good to see that you are finally bearish Jeff ...too bad you are still not understanding the root problem.
The Next Bull Market Could Be Rentals
I would also point out that the SUPPLY of houses (and apartments) increased dramatically in the past 7 years also.
So demand for rentals should increase, but supply of rentals should increase as well. I would be very careful with the author's thesis.
I would also point out that the C-S Index is still dropping like a rock and will likely shoot past the mean before it starts to flatten out. Banks are demanding 30% down on rentals because they realize this (i.e. grew a brain). So even if you get positive cash flow, you will likely lose equity immediately (unless you get a really good deal).
I plan to buy houses to rent, but am waiting for blood in the streets. When the Case-Shiller index is almost flat in another year or two I will start looking. Until then I am very happy sitting on cash.
The Media Has Mistaken a Major Re-allocation for a Recession
1. The enforcement of SEC rules against naked short selling will provide stability for the financials.
- Didn't help China much did it? I think it will smooth out the race to the bottom though.
2. Non-financial earnings results to exceed lowered expectations.
- Energy, sure. The others had their expectations lowered about a week ago. We have been in an earnigns recession for a year now with no indication of a turn around.
3. Probable 2% GDP growth announced for 2nd quarter.
- Maybe, because of the stimulus checks ...if you can even believe the government statistics. There will not be the huge growth expected in the 2nd half everyone was predicting though.
4. Evidence of a significant decline in oil demand.
- Oil demand declines when emerging market growth slows down. Think this is a good thing for stocks?
5. Booming exports.
- Somewhat, but this is because the US$ is weak. The exports do not come close to making up for the food and energy price increases.
6. Low stock valuation.
- Huh? The PEs on the S&P are still over 20. The historical norm is around 15 I think and we are overdue for a mean reversion. Oh that's right ...it's different this time!
7. Low interest rates, low taxes, and an additional stimulus package on the way.
- Hmmmm, maybe liquidity trap, reduced government revenues and increased government deficits. Sound like fun?
Anyway, banks have 100s of billions of additional unknown write-downs since they can't even predict how many more foreclosures there will be or how far down home prices will go. Banks margins are going to continue to be stretched. The Fed is damn near out of bullets. The consumer is in debt up to their eyeballs. Unemployment is rising, profits are declining, etc...
Anyway ...SOLD TO YOU!
Stocks Rally on Financial Writedowns: Overly Optimistic?
It will probably take another 2 years for housing prices to bottom ...at which point they will finally be able to "mark to market" all their mortgage backed securities ...and take their final writedowns (if they are not off-balance sheet on SIVs)!
Calls For A Market Ready to "Rocket Higher"
Sure, we hit a bottom ...and subprime is contained ...and the rest of the world will decouple ...and earnings will rebound in H2 ...and if you click your heels together 3 times the economy will fix itself!
Nice job Jason ...any credibility you did have is now gone.
How to Trade This 'Bear' Market - Barron's
Now the rest of the investment banks have to drop to $2 and we might be at a bottom.
Disagree? Great ...SOLD TO YOU!
The College-Educated Are Getting Richer
This is probably due to off-shoring and globalization ...although this should begin to turn around. I've read places like China and India are starting to have shortages of educated workers and this is why their inflation is starting to rise.
I'm guessing more educated workers will further increase the spread over the next 10 years.
Here's Hoping Tuesday's Fed Move Spurs a Recovery in Credit Markets
The College-Educated Are Getting Richer
Very interesting and supports what I have been thinking. I think this is what underlies race also ...more whites/asians have more education (on average) than blacks/latinos ...and on average make considerably more.
Class warfare and Race warfare evolves into ...knowledge warfare!
This is hard to swallow for many people because they can't blame society and have to accept it is their own fault they didn't go to college.
A Sensible and Refreshing Move from the Fed
Is this the right decision? This is what the Fed did for the banks yesterday.
What they should have done is "tough love." Step on their damn necks and tell them to take their proper write-downs (that are hidden on their SIVs or are still inflated due to "mark to myth").
Until there is trust and responsibility, more liquidity will not solve the problem.
Nowhere Near a Real Estate Bottom
I also find I get better information from blogs than from the mass media. These days I trust The Economist and that's about it.
Finally, I will short this bear to the bottom and will probably make a ton of money doing so. That doesn't mean I find it amusing. In fact I find it rather disgusting that we are currently being run like a banana republic. Monoline ratings are a joke, banks are technically insolvent and the Fed is unwilling to make the hard choices required to fix it. Think about it ...if you had a teenager who constantly maxed out her credit cards and didn't make payments would your solution be to double her limits? Nuff said...
Nowhere Near a Real Estate Bottom
Someone now has to eat that debt! Let me repeat that ...someone now has to eat that debt! The money is spent and/or the LTV >100% (and people are walking).
Someone will also have to eat the bad debt in auto loans, credit cards and CRE ...also all ready to go off like a bomb shortly as well.
We are looking at bad debt equal to at least half our GDP (which is $13 trillion). The big question is who will eat the debt?? I think there are only 3 choices:
- Investors in mortgage backed investments. They will eat it if nothing is done.
- Banks. They created the mess, so Bernanke's recommendation has some poetic justice.
- Taxpayers. This could take the form of buying mortgages, insuring mortgages, giving people money, etc.
The banks are the only reasonable answer. If it's the investors the financial system comes unraveled and the banks never come clean creating a Japan style deflation. If it's the taxpayers it creates moral hazard and a host of other problems.
Two huge problems remain though:
1) Bottom line is the banks need to come clean and go public with their true issues or the credit crunch continues due to lack of trust.
2) Nobody knows how low housing prices will go yet ...so nobody knows how many foreclosures ...so nobody can really estimate true losses yet. And prices are sticky ...they take alot of time to drop compared to other investments.
The worst part though is the Fed auctions and interest rate cuts don't address either of these two core issues. Bottom line ...the US is sceeerewed for at least 1-2 years ...much longer if this doesn't get fixed.
Tuesday Was 4th Largest Point Gain in Dow's History
If I counted correctly, it appears only 1 out of the top 12 point gains were in a bull market.
10 out of 12 were during the 2000-2002 recession (and thus sucker rallies).
The final one was today. This would anecdotally indicate that there is a 10/11 probability (91%) we are in a bear market ...though I agree percent changes are better indicators than points.