I don’t have historical perspective, but complement you on your foresight. I told my family to make sure that none their holdings included MBS or any GSEs. Avoid Fannie Mae (GSE).
I anticipate some pension funds will be wiped out by this. They chase the high yields and perceived safety of second deeds of trust and MBS. But there seems to be no data on who holds these securities.
Another point – this time IS different regarding loan losses, because the loose lending standards were applied to the masses. There are more subprime borrowers now than last time, and these tend to default sooner. Combine this with no doc, 100% and 120% financing, and you get more people willing to walk away from their home in a downturn. We also have a large percentage of recent employment growth in real estate fields and consumer spending driven by home equity withdrawals.
The question is whether the stock market will be the next bubble. Forget about gold – that’s pure speculation. It could go way up, it could fall. Based on nothing but speculation. There is no fundamental reasons for its movement. It defies logic. People say it’s a safe haven. Can you ever pay for gas with gold coins? Can you pay your rent, mortgage with it? Can you go to Trader Joe’s to buy milk with gold? No way! Gold bugs are just in love with the flashy metal, with the beauty and allure of it. And if it ever got so bad that money lost value, then no one would go to work, and we wouldn’t have electricity or running water or cashiers at the grocery store, so what good is gold?
The dollar should remain strong, as the spread between interest rates in the US and the EU and Japan stays high; as long as investors can earn more on treasuries, they will keep buying dollars. The euro and yen are poised to pay low interest for a long time since inflation risk is low, and the dollar is going to pay higher interest after 2 more hikes.
I don’t see a dollar demise anytime soon. I’m staying in stocks and am trying to figure out how/if to short homebuilders and retailers. I would love to short MBSs, but how do you do that? My husband’s 401K allows him to buy stocks. Does yours?
