San Diego Housing Bubble News and Analysis

Why did gold go down? You'd think that it would at least remain steady in times like this. I bought GLD and XOM THE DAY BEFORE this stupid crash. I swear, if someone created a fund to short everything I purchase they'd be very wealthy indeed. I just wiped out 6 months worth of CD returns today. Ugggh.

Gold is for inflation, not recession. It does not produce anything, just 'trys' to keep a constant value. It is also a commodity that depends upon demand from the commercial side as well.

The real question here.. is what is really safe?? Foreign got hit, US got hit, gold took a hit, US Currency has been taking hits...

Wouldn't bond be the safest right now?

The yen is undervalued. Look for a Yen ETF. The Economist says it's undervalued by 30% relative to other currencies. The carry trade will unwind eventually.

1) The Shanghai market tanked on the Chinese government tightening its monetary policy. It had nothing to do with fears of a US recession. The across the board falls in Europe and the Americas were in reaction to China's drop. As everyone on this board should know, correlation is not the same as cause.

2) I feel pretty strongly gold was unfairly punished today, especially considering that the dollar fell. Seems like investors threw out the baby with the bathwater, and there may be a huge buy window.

I pulled out about half of my trading portfolio before half of today's losses had hit. I'm going to be watching closely for a signal to buy back in, but for now I'm happy to keep it on the sidelines.

Stocks, like housing, have reached a permanently high plateau!

The market was overvalued anyway, both here and in China.

Um, my guess regarding gold is that since most folks are buying it via a market transaction it ends up on the chopping block when there is a crash, just like everything else. Don't underestimate how much of trading is automated these days either; I doubt a computer program has much of an emotional involvement with a yellow metal.

The difference I would hope is that gold has a harder 'bottom' than most investments. Still doesn't mean it can't correct like everything else.

I'm starting to think everything is in its own bubble to some extent due to all the equity chasers out and about and we are going to see a major correction across the board.

I haven't seen a market wide decline like this since 2001. I've learned my lesson then, so I'll stay on the sideline w/ my cash until I see a true turn around. The whole market just doesn't crash 3-4% in one day and go back up afterward like nothing happened. Rising tide raise all boats, sinking tide... well, you know the rest.

>I bought GLD and XOM THE DAY BEFORE this stupid crash. I swear, if someone created a fund to short everything I purchase they'd be very wealthy indeed. I just wiped out 6 months worth of CD returns today.

Actually, Borat, there are people who short everything you buy. They are called hedge funds and that's how they make their money. For every winner, there's got to be a loser. Whatever you think or learn today, the professionals thought or learned yesterday. The only way to beat professionals is to do what they can't do. Namely, find something with good long term value, but currently underpriced and likely to stay underpriced for a long time, then buy this something and hold until the price rises to the true value. Professionals can't wait years and years to see their investment pay off, the small investor can.

If you lack the ability to spot undervalued assets, or you lack patience to wait a long time (as in many years) for those assets to rise to their true value, then stick to CDs unless you want to keep making the hedge fund operators rich.

As for what is undervalued today, try real-estate in small towns in the midwest.

Yep, you're right on that one frprovis. In the back of my mind I know this, but every few years I outsmart myself and dip my toe back in with a couple of these "investments". The story always ends the same... ha ha ha. Okay I'm not actually laughing anymore :-(

I'm an optimist:
Bonds had a pretty nice rally today !

Is there any consensus here about what will happen tomorrow?

"Is there any consensus here about what will happen tomorrow?"

The news is reporting that supposedly a software "glitch" caused the DOW to drop a hundred points in a few minutes, which supposedly caused a panic.

If thats truly the case I can see some big gains tomorrow as traders rally to buy back in.

Unless, its a bunch of bullflop.

The meltdown started in China - China is concerned about the rampant speculation occurring in their stock market - poor farmers are hocking their few belongings so they can 'invest' in the stock market (can you say 'bubble' or 'mania'?) - China is taking active steps to curtail this behavior

Here are a few quotes from Stratfor's Global Market Brief today:

> In January, the number of total traders on the Chinese exchanges grew by 1.38 million, an increase of 134 percent from a month earlier

> Third, trading in 800 of the 1,400 stocks on the Shanghai exchange was suspended during the sudden drops Feb. 27; they have a lot farther to fall, even without any engineered drops caused by panicky selling

~

Note in the first quote that the MONTHLY increase was 134%

That last quote makes me expect more declines in China's market - trading was halted in 57% of the stocks today but there was still a 8.5% decline - what do you think will happen when trading resumes in those stocks?

What is safe? How about cash, cash is good.

Josh

I've read on other blogs that Gold was hammered because some big players needed to liquidate because of margin calls.

If it were a Dow systems glitch then I wouldn't expect all the other indices (4Q,R2k, S&P, etc.) to all show the same pothole at the same time. But they do so I call BS on that. Besides, QQQ did 3B in volume today without a real problem and supposedly the Dow clearinghouse has more CPU cycles and more network bandwidth available.

There's a divot in all their charts within a few moments of each other. THAT looks like a robot trader that barfed sell orders onto the floor. The major indices are not that tightly coupled.

We'll see over the next week or so if this is the much-anticipated unwinding.

Not surprising that the broad market was down; it was clearly due for a correction (followed by a steady march downward). Very surprising that gold was down, given that it didn't move in the Oct. '87 crash nor in the 9/11 downturn.

The good news is that my kids are getting lessons in economics and speculation; at dinner, I shared with them how their smarty pants Dad was proven wrong today, despite his fancy data and graphs that showed that such would not happen.

Our portolio is down 5% this evening. But, I feel very comfortable that gold and gold mining stocks will resume their upward march shortly.

The VIX is a lousy predictor of market sentiment; I graphed it vs. the S&P 500, and it has a nice inverse relationship, but such is coincident and not leading.

Great help that the VIX goes up 64% today; should have gone up such yesterday.

Hi guys,

To be conservative (rather lose less than gain more), since late December 2006, I had trimmed down my holdings in stocks and gold ETFs from my portfolio into Bonds (FTABX, LSGLX) and Money Market fund. I didn't, and frankly not smart enough, to predict a big drop like this; I just thought it is probably going up too fast in too short a time. In other words, the gain does not seem to be sustainable.

Luckily (trust me, it is pure luck), my current portfolio look like this:
47% Cash
10% Gold
43% Stocks

Still, as of today, my portfolio is down 1.9%.

Funny thing, I am currently in a business trip for the first time in New York, sitting in the lobby of Waldorf Astoria to get free internet access. :-)

Maybe I brought the bear from San Diego to NYSE today! ;-)

Masayako

jg,

Which gold mining stock are you looking into? Maybe we can share info here.

The only gold mining stock I have been keeping track of is Newmont. However, I no longer own it because, personally, I prefer GLD ETF a little more.

I have friends who work in China and I think that aside from the stock market, the Real Estate market there is in a bubble of its own. Luxury apartments are being built everywhere. One thing I can say about China is that everything is grand. They like to build things big over there.

Just discovered the beta of google finance...

This is neat!

http://finance.google.com/finance?cid=98...

Great use of ajax.

You can zoom right in and look at the dive. Given the slope it does indeed look technical in origin. But, you are correct, it will take a few weeks to see if this is the real deal or not.

HOAR!

Housing, Oil, Automobiles and Retail. Show me the strength and I'll buy back int this market. I can't see the bulls behind this market anymore. Excess inventory, Record high gas prices, 100K jobs lost, and a bunch of whack jobs at Wal-Mart...at least the "piggites" remember what the trickle down effect does don't we?

Chris Johnston

Yesterday was case in point in a timely fashion in relation to what I typed in here the other day. There is no intermarket relationship between gold and stocks. Do not buy gold as a hedge against stock drops, there is no relationship there. We have now seen live proof of that.

Cool map from Wall Street Journal - it shows the market declines yesterday in all of the world's major markets - check it out

http://online.wsj.com/public/resources/d...

The 8.8% drop in China Market was a good early correction since it was up 130% last year. It can actually prevent the market to crash. The market was almost up 4% yesterday already. The China's Gov't did a good job to warn the speculators not messing around in the market. It's like the flippers in the U.S. housing market. But the only different is that the U.S. kept the interest so long to HELP the flippers to inflate and flip the houses.

I never borrow money to invest and have very diversified portfolio with extra cash flow. The massacre is only for the speculators, not the long term investors. I am sure tons of speculators who bought margins were forced to sell and lost all the money.

New-home sales plummeted by 16.6 percent in January from the previous month. There should be a massacre or crash for housing market, not the stock market since the housing market is way overpriced without any correction.

Figuring out the markets is just such a maddening game at times. Are funds taking profits in gold to buy bargains in the stock market? 3-4% bargains?

Chris,
Would you agree that, for the most part, the markets are driven by the actions of large funds rather than individual investors?

Chris, I beg to differ:

Oct. 16, 1987: S&P closed at 282.70, then closed at 224.84 on Oct. 19, 1987, a drop of 20%. Over those same two days, gold (London P.M. fix) closed up 3%.

Sep. 10, 2001: S&P closed at 1092.54, and market remained closed until Sep. 17, 2001, when S&P closed at 1038.77, down 5%. Over those same two days, Sep. 10 vs. Sep. 17, gold closed up 8%.

Yesterday, gold went down with the market. It must have been due to some odd exogenous variable (to cover margin calls on market drops?) that was not present in '87 or '01.

I feel comfortable that we have a much larger market correction coming. Sure, it's safe to sit in money market funds between now and then. The risk is that you miss out on a rapid rise in gold due to some unforeseen shock. I'm staying 100% in the gold market via VGPMX, UNWPX, and GLD.

Gold Falls on Concern Chinese Demand for Commodities May Ease
http://www.bloomberg.com:80/apps/news?pi...