San Diego Housing Bubble News and Analysis

I think I saw a post that the current Auto sales would indicate a 23 year turn over cycle, And that is just one Item that needs replacing at some point.

Home construction is now far below population/home formation growth rates esp for SoCal (and some see that as a future bear indicator, go figure).

I am starting to buy here myself, but I lost quite a bit in 2000 stock bubble so maybe your last point !!.

Now is a great time to be dollar cost averaging into the market. Many stocks are at P/E ratios not seen since Peter Lynch's hey-day.

However, I am definitely not amping up my stock allocation or going "all in" or even in large chunks. Too many things can still go wrong to do that.

I don't know if the stock market will pick up in 2009, 2010 or 2011, but I am betting that 10 years from now it will be largely higher than today.

I do finance for a fortune 100 company on a very big part of their portfolio and have a good window into the pulse of the world economy.

I've considered buying in as well, and may still. I can tell you, though, that the carnage is still ramping up. People will be astounded by both earnings and layoffs in the coming months. The holes have been put in the dike, but the dam will break.

Honestly, though, the U.S. is looking better than the rest of the world. Asia Pacific and Europe are looking really rough. Their stock markets have also taken a bigger beating, though, and the dollar is artificially inflated right now, so I'd say it's a toss up-things may be priced in.

That's a lot of context, but be very, very wary of looking at P/E's right now forward or backward. They make things seem like a much better value than they actually are. Bankruptcies, layoffs, and defaults are just now hitting full steam.

I see this as binary. I wouldn't be surprised to see the dow at 10K or 6K a year from now.

Stan

Even Money Market's are loosing money...

the biggest reason that p/e's are not good guages of value anymore is that they are based on corporate dishonesty as we have seen time and time again. There are much better ways of determining value than p/e's, do some homework before investing based on them. Big picture I think we go much lower but bounces can come at any time due to how short term oversold we are. I would play them as a trade and not an investment if doing them. I am just selling rallies myself with my large accounts and using some shorter term strategies that I use in both directions in the smaller ones. I think we are headed under 6k maybe to 5500 or so before the low gets made. The new PPT team is trying to fight the downmove but even they do not have deep enough pockets, and it is too early to tell exactly what their strategy will be in futures. They have been active the last 2 days it appears.

I would be extremely careful with investing in stocks right now as a lot more bad news will be coming. Once people realize that the new administration will not be able to have a solution for a quick fix the stock market will take another dive. I wouldn't be surprised if the Dow goes down another 1,000 points before recovering.

What do you traders think bringing back the "uptick rule" will do to the day to day activity in the market? Looks like there is consensus on this, just not sure of result.

Ackerman Urges New SEC Chief to Restore Uptick Rule to Regulate Short Sales of Stocks

Congressman also receives letter supporting reinstatement of the regulation from Christopher Cox, the former SEC Chair who rescinded the rule

http://www.house.gov/apps/list/press/ny0...

The best we've gotten so far on this technical bounce has been 9000. From a low of 7400. The record bad news just keeps rolling in. I'm with Chris on this one. The worst is yet to come. The govt is gearing up to spend $3T. Amazing!! Lay-offs are coming in waves. The Dow at 8000 seems too high given the economic devistation at hand and increasing. Historically, credit contractions of this magnitude are very rare and devistating events. One year into a contraction of this level, seem way too early for a bottom.

Read this market ticker for the latest analysis of the market. Karl's been pretty spot on.

http://market-ticker.denninger.net/archi...

That's why I suggested dollar cost-averaging into this market over the next couple years rather than dumping in a lump sum.

Dow in January

How does that saying go?

Oh yeah - as goes January, so goes the year

At 1000 points per month the Dow could be at zero before school starts in September

Buy and hold is so dead as an investment philosophy

And dollar cost averaging - let's see, I'm already in a hole so I think I'll dig it a little deeper ...

Wake up and smell the coffee, Francis

Buy and hold is so dead as an investment philosophy

w/regards western stock markets, you have made a brilliant statement above.

Here is some useful advice for average investors: dump all your stocks and stock mutual funds.

Next, ignore the market until your morning newspaper headline reads: "S&P500 CRASHES TO 600"

Then buy oil stocks, and medical / pharma, and gold miners, and agri-commodity. Try to buy those in NON dollar denominated issues, such as European companies, or better yet, Asian companies in those areas.

Keep adding to those positions as the S&P500 continues to crash lower to say 500, or worse!

Never sell those stocks, not until you retire. Also read peterb's and Chris Scoreboards posts on the market.

Also, don't own any dollars, except for a $100 bill to frame as a future memento of a currency that died a hyperinflation death. Frame it next to your token Zimbabwe 100 Billion Dollar note.

You'll get rich following those tips above.

One more thing: anyone who wasn't short stocks all through Jan is either a moron, or hasn't been paying attention (to the world), or BOTH.

"Dollar cost averaging" is Wall Street speak for "Take these suckers for a long ride". If you know something is getting cheaper, why buy it now??????? The trick is to buy things that are increasing in value, not decreading!! Sometimes I really questions the US educational system.

Wow, some really bad advice in this thread.

We're 16 months into the recession and 15 months into the bear market. 3.8% annualized GDP decline on front pages of newspapers. Expectations of the worst recession since WW2 fully priced in to the stock market. Unimaginable P/E's on every corner. Government fully committed to print as much money as necessary to turn things around (spending bills passing even despite every single republican voting against).

If you sell today, a year or two from now you'll regret it. If you're all-cash and you don't go in today at least partially, you'll regret it too. Buy miners (but not gold!), buy exporters, buy NASDAQ index funds.

Stay away from gold and gold miners. Anything is better than gold: forex, asian stocks, european stocks, even U.S. stocks. Remember about the ticking time bomb which is the 700 metric tons of gold in vaults of GLD, ready to rush into the market when the recession is officially over.

esmith,

YES, I can understand your pumping and pimping your "miners" to get suckers to buy 'em and push up the price.

After all, you have a LOTTA ground to make up.

You were buying them back in Oct 2008 and advising us do the same:

http://piggington.com/undervalued_stocks

And now your RTP has fallen from your purchase price of $139 down to $86. That's -38%! Nice call on that one.

If you want to get some suckers to buy and push your tanked mining stocks up, maybe you should try a wider audience like make some videos for youtube.com?

Now I suppose I should finish on a positive note.

I have further tortured my mind by looking at a good number of your previous posts, and have concluded you frequently have given VERY GOOD advice on financial markets and investing (with exception of your stinking mining stocks)

However, now, yes NOW maybe MAYBE getting close to a good time to buy those general commodity mining stocks. Even a broken clock tells the correct time twice a day.

You have to remember that the commodities crash has really screwed the general commodity miners. They will go bankrupt if mined commodities continue to stay this low...additionally, mining requires continual and substantial re-investment but the credit markets are frozen, esp. for the miners.

Yet, the gold (and silver) miners are making plenty of money because precious metals never fell nearly as much in price as did other mined commodities.

"15 months into the bear market"

and your point is what?

we just finished a 25 year bull market in US equities - the average bear market lasts 1/4 the time of the preceding bull market

let's see, 25 over 4, carry the naught (remember Jethro Bodine doing math on Beverly Hillbillies?) - that's 6+ years of bear market which takes us to 2013 or so

to think that a 25 year bull market can be corrected in 15 months is fairly amusing

but that's why the average investor typically losses their ass in the equity markets - they don't understand what they are doing and aren't willing to take the effort to learn - instead they follow the advice of some trusted adviser who has a vested interest in separating them from their money

had to go back and see whose comment I was responding to - no big surprise that it would be esmith

Worst January on Record for Stocks

"Historically, stocks' January performance has been thought of as an informal indicator for the market's direction the rest of the year. When the S&P declines in January, the index loses an average of 2.4% in the next 11 months, according to data going back to 1950 from Ned Davis Research."

http://online.wsj.com/article/SB12333163...

Does that 25-year bull market you are referring to include the period from 2000 to 2003 ?
From what I remember that was a fairly destructive bear market. At the time it was the worst bear market since the early 1970's. I guess that didn't count.

I'm copying this from another post of mine...

Markets repeat themselves. The DOW hit 1000 for the first time around 1965 and didn't break out above that until 1984. NINETEEN YEARS..There was opportunity in between if your timing was right.

In every market, people chase performance. It usually doesn't work.

Corresponding to the breakout of the stock market in the 1980's was the inception of 401K's starting in 1980... the market didn't break out for no reason.....

The fuel for igniting the stock market to DOW 15,000 was not 1500% growth in America, it was manipulation and greed combined with the explosive contributions of clueless people putting money into something that they did not understand, EXACTLY LIKE BUYING HOUSES.

Stocks have only pulled back about 40%+ from the recent peak, so far.

It's a different world today and comparisons to peak prices in either houses or stocks are simply foolish. Neither mean ANYTHING, except what a foolish person paid EXPECTING that it would go up more...

Markets are fueled by fear and greed, nothing more. It doesn't matter what the product is.
Without manipulation of SOME SORT, markets don't rise by themselves.

The worst is yet to come. Buckle your seat belt, it's going to be a rough ride.

DOW Stock Market History:
http://www.creatingwealth.co.nz/history_...

I'm copying this from another post of mine...

Markets repeat themselves. The DOW hit 1000 for the first time around 1965 and didn't break out above that until 1984. NINETEEN YEARS..There was opportunity in between if your timing was right.

In every market, people chase performance. It usually doesn't work.

Corresponding to the breakout of the stock market in the 1980's was the inception of 401K's starting in 1980... the market didn't break out for no reason.....

The fuel for igniting the stock market to DOW 15,000 was not 1500% growth in America, it was manipulation and greed combined with the explosive contributions of clueless people putting money into something that they did not understand, EXACTLY LIKE BUYING HOUSES.

Stocks have only pulled back about 40%+ from the recent peak, so far.

It's a different world today and comparisons to peak prices in either houses or stocks are simply foolish. Neither mean ANYTHING, except what a foolish person paid EXPECTING that it would go up more...

Markets are fueled by fear and greed, nothing more. It doesn't matter what the product is.
Without manipulation of SOME SORT, markets don't rise by themselves.

The worst is yet to come. Buckle your seat belt, it's going to be a rough ride.

DOW Stock Market History:
http://www.creatingwealth.co.nz/history_...

"period from 2000 to 2003"

IMO that is when the bear market SHOULD have begun - the markets would have corrected by now and we would likely have a healthy, growing economy today

instead, our politicians and bankers fueled the next bubbles by taking interest rates to 1% and holding them there

now we get to correct the original bull market plus the past 8 years of artificial stimulus

that is, unless they succeed in fueling another bubble even bigger than the equity and RE bubbles - I'm not holding my breath

Have you ever lost 100% on a trade? Like the ticker just disappears... well you should try it, with like $100. Whether you lose $100 or $10,000 it's the same feeling (I know). Why would you get in right now? Do you think it's going to skyrocket? If so and you feel like you have a good pulse on the timing - consider options? To get the type of upside you want without risking a lot of dough. I still think a lot of shares are just going to disappear for the average shareholder..

Why stop at 100% loss.... open a margin acct and lose more than 100% ~

It is possible to make money in the stock market, but it's not a real profit until you actually sell and get out.

Until the next bull run, which could be 10 or 20 years, it's just a legalized casino.
If the bull run is only 10 or 20 months away, you may do OK...
Do you feel lucky ?

Writing options is a "conservative risky" way to generate income when you are right and a way to lose money when you are wrong.

Sounds like a casino to me !~ ...HLS

Just to paraphrase 'Yogi': "I'm not your average bear!"

I think few rules will apply in this situation...

Keep in mind with the all recent the job cuts, wage cuts, unpaid vacations, & stopped 401K matching contributions, there will be less money going into stocks to prop them up. Also, those same individuals may need to tap into their 401K or portfolio just to pay bills. This has to drive the market down until those items lost start to return. If housing prices cannot be supported by the previous wages, then current wage trend cannot support any other purchased items as well. Only those items with a fixed demand can hold their prices. I think I will invest in toilet paper and ivory soap.

I just thank my lucky stars that the company where I work is fully booked for 2009 and still proposing work for 2010.

Lucky In OC

"items with a fixed demand"

perhaps these items?

100 Items to Disappear First

http://thepowerhour.com/news/items_disap...

Ah, toothpaste is another good one...

I guess I need to hit up my local $0.99 store.

Lucky in OC.

The problem is that you don't know where the bottom is.

I agree with peterb.

However, sunny88, a bottom-biased form of dollar-cost-averaging can be used effectively like a shotgun to shoot at an anticipated bottoming of stock or commodity. And I certainly DO NOT agree that we never have even a rough idea of where the bottom we be reached on stock or commodity.

Let me provide an example. Consider OIL.

I had a gut instinct a couple months ago that oil would drop to roughly $30/bbl. Now I was going on instinct. However, there were also some very experienced oil analysts were also expressing that opinion, so that helped my confidence.

Now as it turns out I made good money on that trade, but I wouldn't have made one thin dime had I waited for $30/bbl before buying my double-long crude oil ETF's. $30/bbl never came.

Instead, I used a bottom-searching method of dollar cost averaging, where I started buying significantly BEFORE values reached my anticipated bottoming price. When oil first slid to $37/bbl earlier in Dec, I started my dollar-cost-averaging on the crude oil ETF's, like "UCO."

But then oil dipped to $33/bbl, and I added to my position in the crude oil ETF's. On either side of Christmas they really hit bottom and I was buying.

"UCO" then went from $10/share at Christmas, up to $18/share on Jan06, for a net appreciation of about 80% in one week. It was the attack on Gaza by Israel that really sent oil back up to $50.

DISCLOSURE: I made two mistakes on that trade that limited my profit:
1) I only bet about 3% of portfolio. I should have gone with maybe 5% or 10% once oil reached $33 (extremely oversold).
2) I ended up selling "UCO" at about $13, which was WAY to early. My actual average net gain was about 15%. I should have used a trailing stop loss order and let UCO run all the way up to $18.50 and stop out at about 17.50.

Anyway, sometimes it works to use a "shotgun" approach to hitting the bottom. When our investment target starts to get near our anticipated bottoming price, we start our bottom-seeking dollar-cost-averaging, and we INCREASE our buys as the investment price nears our target, to lower our average share price.

Of course, one must use PRUDENT RISK CONTROL when using any method involving increasing our bets when an investment is moving further out-of-the-money. You don't want to lose all your money in case when you are WRONG on where the bottom is.

NOTE: I presently own no oil investments of any kind at the moment. I believe OIL will continue to go lower, oil futures curve will continue to flatten into lower prices. I'm now guessing $25/bbl,even $20/bbl within 2009 year.

When "UCO" gets to $9, and hopefully even $7, then I will be LOADING UP on both the double-long crude oil ETF's and also the big oil stocks like XOM.

NOTE: nobody in their right mind would bet more than 5% or 10% of an entire portfolio on an extremely risky bet like a double-long or double-short crude oil ETF. I certainly do not wager more than 10% of my portfolio on such bets.

I thought we were talking about the stock market here. Stocks went through a cyclical bear market that lasted over 2.5 years, dropping about 45% from mid 2000 through March 2003
What are you talking about ?