jardine

Reflexivity Driving Risk and Reality

The trick is for an investor or the Fed for that matter to recognize the extremes in risk tolerance and work opposite the reflexive forces. The reason that we had a housing bubble was the reflexive nature of prices. This is now playing out in reverse. The reason that we have a credit crisis is the reflexive nature of investors fear of collapse.

Morgan Stanley's Horrendous Earnings

It is interesting that they moved the large mortgage position to a mark to market status as of 11/30. Profit or Loss going forward will pass directly through the income statement. Considering that the ABX has already started to recover since Nov 30th this trade could produce future profits...

Truck Driver Wisdom Suggests Housing Stocks Are Bottoming

Remember that house price changes are more reflexive than stock prices. If people think that prices are going to rise, they will rise. Tighter lending standards, higher rates and excess inventory are changing expectations for appreciation and therefore the return profile long term. Homebuilders might have been punished enough but lookout for the secondary effects of a prolonged slowdown.

GE Overbought At Current Levels, Likely To Trade Sideways

GE could be overbought for the next week but realize the amount of money flow that it takes to move this stock just a point. Anytime one of the most widely held stocks breaks through long term resistance like today is generally a positive sign. Look at the time XOM broke out to a new high in 2004 after being stuck in a multiyear range.

Capital-Protected ETFs: Seeking Alpha via ETF?

Powershares PRF and new ETFs from Wisdom Tree are just the start. The passive - active managment pendullum is swinging back to active products.

Reflexive Changes in Real Estate

Good comments Paul, especially on the liquidity of a residential property. The need to sell or need to buy impact exagerates price swings(away from fundamental value) when return profile expectations are at extremes. Hence paying through the asking prices that was prevelant in 2004 and ability to buy just under the asking price now. We have yet to see the forced seller that is in panic trying to get out. We might not see him for a long time.