Hysteria

Time to Buy Gold

Gold/Oil ratio going to historic norm at 15/1 with oil not falling... Dow/Gold going to previous lows at 2/1... Gold/Silver ratio going back to 2000-year norm at 15/1... do the math... all these moves will come with upward moves in the metals and not lower moves in Oil/Dow due to the inflationary Fed.

So Much for That Mortgage REIT Bull Market

¨The action makes no sense, but that doesn't mean investors won't flee in utter panic so I want to reduce exposure a bit. Even if it means eating a loss.¨

Thank you for contributing to the UTTER PANIC, as you so say, by your very actions. Indeed, it is exactly this attitude, ¨get me out no matter what!¨ that will cause this crash to be so severe. Thanks for adding to my short positions!

A Bet Against the Banks

I definitely concur with this article.

globalmacro - the pain felt thus far in financials has come as a result of an average 10% drop in nationwide home prices. Granted, not all markets have fallen or need to fall. However, the overall market value of real estate in California, Nevada, Florida, the entire US Northeast, etc, is massive. These markets have more like 50-60% to fall to reach historic price/rent ratios.

Think about it, if all this pain has come from only a 10% drop in nationwide average real estate, imagine when we get to the 30-40% average drop needed to bring us back to historic norms. If you dont believe this is true, just google the Case Shiller National Home Price index. Although a particular house in Kansas may not need to drop this much, the AVERAGE, which includes this house, does.

I just dont see the pain ending until we reach these levels, so Ill also be holding my SKF position for the next 6-24 months, and slowly shifting profits into gold as Helicopter Ben steadily tries to inflate our way out of this mess.

Buying the Oversold Financial Sector

All the pain financials have felt so far has come from only a 10% correction in nationwide home prices. Imagine the level of devestation when prices fall another 30-40% necessary to return to their historic long term appreciation and price/income trends! Buying financials now means you believe none of these historic norms mean anything and that real estate is done correcting, which is obviously false. A simple Google on ¨Case Shiller historic home values¨ shows how far we still have to fall.

My Ten Predictions for 2008

Great post and will be very accurate. May I draw your attention to:

macromarkets.com/image...

Keep in mind, ALL THE PAIN WE'VE SEEN SO FAR is from this 7% drop in home values. To reach historic norms (level 100 on this graph) they have a lot further to drop.

New topic: If the markets verge on recession from a 7% drop in home values, what will happen in the coming 40-50% correction needed to return to historic valuations!

Bear? More like a gang of super-bears who've just tasted blood after a long hibernation.

Media Coverage of the Mortgage Crisis

Amen

Have Bank Stocks Hit Bottom?

Shaun-- great post. All this mess has been from a 7% national drop in home values. Imagine when we get to the 30-50% correction needed nationally to return to historic home values! I'll be holding my shorts til this timeframe...

Housing Prices Expected to Bottom in 2010, 21% Off '06 Highs

Everything is relative. You overlooked the fact that the population is increasing faster than the supply of homes, the fact that there has been inflation through the entire run-up, the fact that the quality of homes is increasing

----------------

Exactly the kind of rubbish sentiment that started the housing bubble in the long run. Remember, in the long run houses retain their value in real terms, they do not appreciate. For this crash to be over prices must fall back to their historic norms, which even with high inflation will be much more than 21%.

Gold Is Just a Brick ('Active Value Investing' Book Excerpt)

The fallacy of this article is most easily visualized by looking at the DOW/GOLD ratio over the last 100 years: home.earthlink.net/~intelligentbear/com-...

The DOW/GOLD ratio should be trending to 3:1 over the next few years. DOW 9,000 / GOLD $3,000/oz is my prediction.

Kudlow & Cramer Deliver Signs of a Market Downturn

Great commentary... Cramer was more like pleading with the Fed to be more aggressive! It is hillarious to watch these guys refuse to acknowledge the trouble we are headed for.