johnnybigspenda

5 Comments

    • How Much Further Will Housing Fall? [view article]
      House prices (like stock prices) are about future expectations. For example, if you knew that an investment would provide 15% growth for in perpetuity, you would leverage yourself to the max (up until the point where your cost of capital becomes more than 15%).

      House prices were bid up with this type of expectation in mind...combined with very cheap capital.

      Expectations have changed. (obviously) People now expect a house that is purchased today will fall in value 10, 15, 25% depending on who you talk to. Even a house purchased 'below market value' somehow falls into this expectation.... so the tide will sink all ships.

      But wait, there's hope. As buyers (and we know there are lots of them waiting for the right time... pent up demand) expectations change... even to an expectation of 'flat / no growth' for the next couple of years, it will be enough to start the process of restoring confidence that a house is not a place where you lose $50K just by signing on.

      The trick would be, are you lucky enough to time the market? ie. buy when people expect declines, just before the expectation turns to 'flat / no growth'. The *deals* are during the negative growth expectation phase.

      All of this depends on financing availability. If the cost of capital increases, the sum of the cash flows = less NPV . Lets hope the banks can find a way to start lending money again in the near future.       Sep 03 07:31 PM
    • Where Are the Bank Failures in This Financial Crisis? [view article]
      the chicken littles are going to be so disappointed... guess they can keep renting and maybe the next one will supply them with the $25,000 house of their dreams. Sep 01 03:53 PM
    • Fannie / Freddie Reality Check: Here Comes the Big Bailout? [view article]
      these guys are cleaning their closets... get it all out asap so that they can begin to announce 'less negative' quarters asap and eventually the situation will appear to be improving which is the main point... healthy is as healthy appears. Aug 07 09:46 AM
    • The Credit Crunch Is Far From Over [view article]
      all of this is known... its priced in and accounted for... the pros knew this a year ago. Apr 17 11:58 PM
    • What Went Wrong at GE? [view article]
      Wondering if GE is just doing their 'spring cleaning' here? If they have dribs and drabs of crappy quarterly numbers, or even some boat anchors in their closet, maybe now is the time to get it all out?

      Could be clear sailing from here on.... tough to say how deep their problems are.

      My guess is that if they were truly significant they would have alerted. I think they just cleaned house because its en vogue right now.       Apr 13 10:51 PM
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