Hysteria

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.

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...