This whole issue is annoying to me as well. However, this is why in my analyis I focus more on past cycles in prices and not on the individual details of what transpired. What this does is take the “noise” out of the discretionary analysis. There are always going to be different individual catalysts that create price change. In general, they are unpredictable in advance. However, if we know for example that a 10 year cycle exists, we can focus on the time element and not get buried in the price analysis. This is why I sold in 2005 in the fall, the 10 year cycle. I did not need to analyze the easy money, or the individual items that “extended” the price run. It was not extended at all by cyclical time analysis. Using price to predict price usually does not work consistently. Using that cycle as a backdrop, I got out at basically the exact top, whereas others who got too tied up in the emotion of the components of the run up, jumped out too early. (My recent home purchase is not a timing decision like the exit in 2005 was, it was a bigger picture decision with poor short term timing).
I state all of this for the following reason. It is by this same logic, that a 50% drop will not occur. We have never had one, and we will not have one. You are starting to see the makings of this bailout crap, and it will qualify as a catalyst that was not predictable. There will be other things as well. You do not need to predict them, just focus on what the prior declines have been like, both in price and time, and go from there.
This is why “the different this time” arguments always fail. There is a reason they have failed, these unpredictable types of things like this. We have no way of knowing what they will be, just that they will be there, and will have the effect of containing the cycles as they have done in the past. It is for this reason mainly, that I have stuck to the 20% drop forecast, which I think will barely happen basis the median, if it does at all. The one qualifier I have, is that that 20% is for the OC median not SD, even though I am now an SD resident.
It does look dark right now, but it has looked equally bleak in past cycles of things that have turned around. Most cyclical timing models show 2008 as the first possible low point, which is based on an 18 year cycle that has repeated from highs to lows.
