The Greatest Financial Mistake Of A Lifetime: Missing The Housing Rebound [View article]
Zoomie Realtor: You and other realtors, home flippers, and nouveau landlords are sounding very greedy right now, just as in 2004-2006. Should we be fearful now?
Prospective home buyers can alternatively borrow money to buy stocks at the lowest margin rates in history. Using your sales pitch logic, the low margin rates make stocks the most affordable in history.
Just because interest rates make homes "affordable" does not make homes cheap relative to history, just as low margin rates do not make stocks cheap relative to history. In aggregate, inflation corrected home prices are more expensive than at any point in the last 100 years except for the bubble years. Have you not seen chart 2, titled "Real House Prices", in the following webpage?
Have you not seen historical charts of the home price to household income ratio? Again, the ratio is the highest in history except for the bubble era.
The intrinsic value of homes in aggregate are expensive. It seems that you need to learn why and how cheap financing distorts the pricing of assets. Such distortions have been responsible for the regular occurrence of overpriced assets and bubbles followed by crashes for centuries.
History will repeat in the aftermath of the Bernanke bubble yet again.
The Housing Market "Recovery" Is A Complete Myth [View article]
You believe that even more rental supply will make the Wall Street experiment in single-family home rentals more sustainable?? That's an imaginative view.
The latest private equity groups are hoping for 6-8% returns on their bulk buys--with no track record in single family home property management. (It has not been attempted in bulk because the oldtimers in commercial property management know the pitfalls.) This has all the makings of the next episode of the Muppet show.
If you believe that Blackstone has a crystal ball for real estate property values, tell me why they spent nearly $50 billion on Hilton Hotels and Equity Office at the peak of the commercial property cycle in 2007. Talk about an unforced error!
The Housing Market "Recovery" Is A Complete Myth [View article]
You believe that a run-of-the-mill historical oversupply/recession in housing can be extrapolated to the aftermath of the biggest housing bubble in 1200 years? Brilliant.
Even with four years of perhaps the greatest economic subsidies in world history, the total number of new detached single family homes sold last year was roughly 370,000--at levels of prior recessions. Imagine if the corporate welfare state didn't bail out their friends in banking and real estate.
I have it on good authority that Satan has become the biggest shareholder of Amazon. And he's using leverage. He lures knowledgeable short sellers into their positions with dreams of easy money, then he pumps the stock price up with massive buy programs each time bad news about Amazon hits the market. Short this stock and he will own your soul. Just ask Paulo Santos. Did you think that it's just a coincidence that his name is "Saint Paul" (translated from Portuguese)?
It Feels Like The Dotcom Craze All Over Again [View article]
"Nothing like the internet ever existed in human history before."
Each generation overrates the technology in their generation. The impact of vaccines/antibiotics and agricultural technology were far more significant. They provided a foundation for the exponential growth of population, which accelerated the growth of science and technology. (More healthy brains = more invention.)
Nothing like commercial airplanes ever existed in human history before either, but if you invested in airlines long-term, you likely lost money.
The 'Too Big Of A Market Cap Stock' Theory [View article]
Quickly think of five computing/software companies that have been publicly-traded stocks for forty years and are still successful. Not easy? You cannot count on any of the stocks mentioned in this article to be successful in 10 years, let alone have dividends, or possibly even exist. There is no moat for such companies. Ask DEC, Burroughs, Wang, HP, etc...or even Apple in 1997.
After the growth era fades, computer tech stock valuation multiples tend to decline over time...often to zero. Comebacks like Apple and IBM are exceedingly rare. Computer technology is no place for dinosaurs. The companies mentioned above are quite possibly nearing the dinosaur phase.
Best Buy's Performance Is Relevant, And Negative, For Amazon.com [View article]
The Amazon promise of profits in the future has not worked, and they are not killing their main competitors. For instance, the e-book market has been a money loser for Barnes & Noble in spite of taking a large chunk of market share from Amazon. When exactly will Barnes & Noble be driven out of business? So far, B&N has gotten more and more investor money from solid backers (John Malone, Microsoft, Pearson), and B&N is receiving preferential product placement from the mega-retailers Target and Walmart.
Amazon is metaphorically like Germany in 1939. They are surrounded by beleaguered companies, big and small and often slow to the battlefield--finally scared enough to see that they have to go all out to win the war. Amazon is just not powerful enough to fend off the massive alliance of competitors.
It's always interesting to watch a bubble in progress. The bubble blowers get more and more confident with the rising stock price, even as the risk skyrockets and the story becomes more and more improbable.
Housing: Plenty Of Reasons To Be Pessimistic [View article]
The smartest real estate bloggers have recently been talking of mini-bubbles in certain regions (e.g., Irvine, Silverlake, and Palo Alto in California). There is a temporary supply squeeze because foreclosures are still being dripped out to the market slowly and because underwater homeowners are unable to sell their homes. There's also some temporary pent-up demand, animal spirits, and the fear of missing the next bubble.
This is likely just a phase of the bouncing along the bottom syndrome. Unless household incomes rise above the rate of inflation, it makes little sense for homes to have a lasting rise above the rate of inflation, except in areas where land is scarce or environmental regulations hinder home development.
Housing Recovering, But Contracting A Lethal Infection [View article]
I find it fascinating that the stock of homebuilder superstar Toll Brothers is currently nearly half it's all-time high price at the peak of the bubble. Yet the Street believes that Toll's future 12-month revenues will be roughly 1/3 of the revenues at the peak of the bubble. It shows how much the housing recovery has been hyped up by the Street.
Homebuilder hype aside, fewer new single-family homes are being sold in America than at any time from at least 1960 to 2008. The "recovery" is as overhyped as the Facebook IPO.
Reasons for selling a stock can be many, but there's only one reason for insiders to buy : they expect the stock to go higher. Looking for a leg-up on where to put some money to work? Here's what a couple insiders have been doing this week: On Monday, Valeant Pharmaceuticals' (VRX) Director, Laurence E. Paul, bought 5k shares of VRX, while on the same day Rosetta Resources (ROSE) Executive VP, CFO & Treasurer John E. Hagale bought 6k worth of of his own company as well. [View news story]
"but there's only one reason for insiders to buy: they expect the stock to go higher."
Untrue. Insiders sometimes buy their own stock as a gesture to stop a pummeled stock from declining further. Insiders know that many people (and HFT machines) reflexively buy when an insider buys. Besides, many insiders are stupid buyers who buy at elevated valuations when the momentum is hot--just like average knuckleheads on the Street.
Yes, They Do: Low Interest Rates Do Make Stocks Cheap [View article]
Chuck:
Are the people who are currently pessimistic on U.S. long bonds losers too? Or are the pessimists about stocks the only losers?
A brief reality check--
As of January 1, 2012, the long bond had outperformed the S&P500 in the prior 30-year period--which means that it has outperformed the large majority of active equity managers with less risk. And long bonds don't extract 1-2% operating expenses per year in doing so, as do your peers in the equity management world.
Your article today--on the heels of a 3-year bull market with 107% gains and profit margins at an all-time high--reminds me of the cocky, yet defensive, attitude expressed by so many equity managers in 2007.
Thanks for the inadvertent red flag. I don't know where you get your media, but the largest outlets that I read contain far more "Buy Buy Buy" articles than cautionary articles--in spite of the fact that, unlike the long bond, the S&P 500 is a money loser adjusted for inflation since the market peak 12 years ago.
Even Cramer's term "Ultimate Growth Stocks" should serve as a warning. I don't think Cramer is as excitable as January 2000, when he top-ticked the internet bubble with his frothy "Winners of the New World" speech. So maybe the market has another 5-10% before the Ultimate Growth Stocks come crashing back to reality.
The Consumer Financial Protection Bureau plans to propose new rules that would force mortgage servicers (including WFC, C, BAC, JPM) to be far more transparent about the costs faced by homeowners and to provide warnings before any interest rate changes. [View news story]
It's getting expensive to be a McBank these days. I'll bet the executives at the McBanks are regretting the day that they wooed Hank Paulson to get them (and indirectly their bondholders and couterparties) a sweetheart deal to keep their banks alive.
Had he let the banks fail, they could be enjoying Mojitos on the sand in Hawaii instead of shuffling paper all day for each new bank regulation that crosses their desks.
Oh wait, they might not have had enough money to retire in king's luxury if Paulson didn't cut them a deal (which kept their stock options and vested shares from becoming worthless).
"It's hard out here for a pimp" -- Terrence Howard
February Consumer Credit:+$8.7B vs. +$12B expected and $17.8B prior. Non-revolving debt (student loans, car and personal loans) up $10.94B, while revolving debt (credit cards) fell $2.21B. The debt total for consumers marks the highest level since April 2009, although the rate of growth was the slowest since last October. [View news story]
Great news! Consumer debt is increasing! Time to Buy Stocks!
Nazi slave labor camps displayed propaganda banners that said "Arbeit Macht Frei" (Work Sets You Free). At some point in the future, I won't be shocked to see America legislate the creation of debtor's prisons in which there will be propaganda banners that say "Debt Sets You Free". The banners might include a likeness of Ben Bernanke's most reassuring facial expression.
The Greatest Financial Mistake Of A Lifetime: Missing The Housing Rebound [View article]
Prospective home buyers can alternatively borrow money to buy stocks at the lowest margin rates in history. Using your sales pitch logic, the low margin rates make stocks the most affordable in history.
Just because interest rates make homes "affordable" does not make homes cheap relative to history, just as low margin rates do not make stocks cheap relative to history. In aggregate, inflation corrected home prices are more expensive than at any point in the last 100 years except for the bubble years. Have you not seen chart 2, titled "Real House Prices", in the following webpage?
http://bit.ly/WUpyxN
Have you not seen historical charts of the home price to household income ratio? Again, the ratio is the highest in history except for the bubble era.
The intrinsic value of homes in aggregate are expensive. It seems that you need to learn why and how cheap financing distorts the pricing of assets. Such distortions have been responsible for the regular occurrence of overpriced assets and bubbles followed by crashes for centuries.
History will repeat in the aftermath of the Bernanke bubble yet again.
The Biggest Lie About The Real Estate Recovery [View article]
The Housing Market "Recovery" Is A Complete Myth [View article]
The latest private equity groups are hoping for 6-8% returns on their bulk buys--with no track record in single family home property management. (It has not been attempted in bulk because the oldtimers in commercial property management know the pitfalls.) This has all the makings of the next episode of the Muppet show.
If you believe that Blackstone has a crystal ball for real estate property values, tell me why they spent nearly $50 billion on Hilton Hotels and Equity Office at the peak of the commercial property cycle in 2007. Talk about an unforced error!
The Housing Market "Recovery" Is A Complete Myth [View article]
Even with four years of perhaps the greatest economic subsidies in world history, the total number of new detached single family homes sold last year was roughly 370,000--at levels of prior recessions. Imagine if the corporate welfare state didn't bail out their friends in banking and real estate.
A Short Short Thesis On Amazon.com [View article]
It Feels Like The Dotcom Craze All Over Again [View article]
Each generation overrates the technology in their generation. The impact of vaccines/antibiotics and agricultural technology were far more significant. They provided a foundation for the exponential growth of population, which accelerated the growth of science and technology. (More healthy brains = more invention.)
Nothing like commercial airplanes ever existed in human history before either, but if you invested in airlines long-term, you likely lost money.
The 'Too Big Of A Market Cap Stock' Theory [View article]
After the growth era fades, computer tech stock valuation multiples tend to decline over time...often to zero. Comebacks like Apple and IBM are exceedingly rare. Computer technology is no place for dinosaurs. The companies mentioned above are quite possibly nearing the dinosaur phase.
Best Buy's Performance Is Relevant, And Negative, For Amazon.com [View article]
Amazon is metaphorically like Germany in 1939. They are surrounded by beleaguered companies, big and small and often slow to the battlefield--finally scared enough to see that they have to go all out to win the war. Amazon is just not powerful enough to fend off the massive alliance of competitors.
It's always interesting to watch a bubble in progress. The bubble blowers get more and more confident with the rising stock price, even as the risk skyrockets and the story becomes more and more improbable.
Housing: Plenty Of Reasons To Be Pessimistic [View article]
This is likely just a phase of the bouncing along the bottom syndrome. Unless household incomes rise above the rate of inflation, it makes little sense for homes to have a lasting rise above the rate of inflation, except in areas where land is scarce or environmental regulations hinder home development.
Housing Recovering, But Contracting A Lethal Infection [View article]
Homebuilder hype aside, fewer new single-family homes are being sold in America than at any time from at least 1960 to 2008. The "recovery" is as overhyped as the Facebook IPO.
Reasons for selling a stock can be many, but there's only one reason for insiders to buy : they expect the stock to go higher. Looking for a leg-up on where to put some money to work? Here's what a couple insiders have been doing this week: On Monday, Valeant Pharmaceuticals' (VRX) Director, Laurence E. Paul, bought 5k shares of VRX, while on the same day Rosetta Resources (ROSE) Executive VP, CFO & Treasurer John E. Hagale bought 6k worth of of his own company as well. [View news story]
Untrue. Insiders sometimes buy their own stock as a gesture to stop a pummeled stock from declining further. Insiders know that many people (and HFT machines) reflexively buy when an insider buys. Besides, many insiders are stupid buyers who buy at elevated valuations when the momentum is hot--just like average knuckleheads on the Street.
Yes, They Do: Low Interest Rates Do Make Stocks Cheap [View article]
Are the people who are currently pessimistic on U.S. long bonds losers too? Or are the pessimists about stocks the only losers?
A brief reality check--
As of January 1, 2012, the long bond had outperformed the S&P500 in the prior 30-year period--which means that it has outperformed the large majority of active equity managers with less risk. And long bonds don't extract 1-2% operating expenses per year in doing so, as do your peers in the equity management world.
Your article today--on the heels of a 3-year bull market with 107% gains and profit margins at an all-time high--reminds me of the cocky, yet defensive, attitude expressed by so many equity managers in 2007.
Thanks for the inadvertent red flag. I don't know where you get your media, but the largest outlets that I read contain far more "Buy Buy Buy" articles than cautionary articles--in spite of the fact that, unlike the long bond, the S&P 500 is a money loser adjusted for inflation since the market peak 12 years ago.
Jim Cramer's Ultimate Growth Stocks for 2012, which boast "the kind of rapid yet consistent growth that’s coveted in an environment where economies around the globe seem to be slowing." But buy only on a pullback: AAPL, SBUX, CMG, ROST, AGN, CELG, LULU, MNST, NKE, MCD. [View news story]
The Consumer Financial Protection Bureau plans to propose new rules that would force mortgage servicers (including WFC, C, BAC, JPM) to be far more transparent about the costs faced by homeowners and to provide warnings before any interest rate changes. [View news story]
Had he let the banks fail, they could be enjoying Mojitos on the sand in Hawaii instead of shuffling paper all day for each new bank regulation that crosses their desks.
Oh wait, they might not have had enough money to retire in king's luxury if Paulson didn't cut them a deal (which kept their stock options and vested shares from becoming worthless).
"It's hard out here for a pimp" -- Terrence Howard
February Consumer Credit: +$8.7B vs. +$12B expected and $17.8B prior. Non-revolving debt (student loans, car and personal loans) up $10.94B, while revolving debt (credit cards) fell $2.21B. The debt total for consumers marks the highest level since April 2009, although the rate of growth was the slowest since last October. [View news story]
Nazi slave labor camps displayed propaganda banners that said "Arbeit Macht Frei" (Work Sets You Free). At some point in the future, I won't be shocked to see America legislate the creation of debtor's prisons in which there will be propaganda banners that say "Debt Sets You Free". The banners might include a likeness of Ben Bernanke's most reassuring facial expression.