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patientlywaiting.
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August 5, 2007 at 6:07 PM #70671August 5, 2007 at 6:10 PM #70559
SD Realtor
ParticipantAllan I am not a finance guy but I think the fact that M3 is not reported is quite incredible. It makes one think that the printing presses have been operating for quite a long time. I am not talking conspiracy… it is just kind of… well unsettling (to say the least)… I am surprised more people never seem to talk about that.
SD Realtor
August 5, 2007 at 6:10 PM #70666ParticipantAllan I am not a finance guy but I think the fact that M3 is not reported is quite incredible. It makes one think that the printing presses have been operating for quite a long time. I am not talking conspiracy… it is just kind of… well unsettling (to say the least)… I am surprised more people never seem to talk about that.
SD Realtor
August 5, 2007 at 6:10 PM #70674ParticipantAllan I am not a finance guy but I think the fact that M3 is not reported is quite incredible. It makes one think that the printing presses have been operating for quite a long time. I am not talking conspiracy… it is just kind of… well unsettling (to say the least)… I am surprised more people never seem to talk about that.
SD Realtor
August 5, 2007 at 6:12 PM #70561Allan from Fallbrook
ParticipantHLS: Excellent synopsis. We should also take that one step further and discuss leverage as well.
The real downside risk here is the amount of leverage (generally 10x to 20x) that is at play in the markets right now, and the role that CDS instruments play in backing up (the now nearly worthless) CDO market.
Leverage played a huge role in inflating this massive trio of bubbles (Housing, Credit and Stocks) and the resultant deflation (leverage in reverse) is going to amplify the bust by at least a few orders of magnitude.
August 5, 2007 at 6:12 PM #70669ParticipantHLS: Excellent synopsis. We should also take that one step further and discuss leverage as well.
The real downside risk here is the amount of leverage (generally 10x to 20x) that is at play in the markets right now, and the role that CDS instruments play in backing up (the now nearly worthless) CDO market.
Leverage played a huge role in inflating this massive trio of bubbles (Housing, Credit and Stocks) and the resultant deflation (leverage in reverse) is going to amplify the bust by at least a few orders of magnitude.
August 5, 2007 at 6:12 PM #70677ParticipantHLS: Excellent synopsis. We should also take that one step further and discuss leverage as well.
The real downside risk here is the amount of leverage (generally 10x to 20x) that is at play in the markets right now, and the role that CDS instruments play in backing up (the now nearly worthless) CDO market.
Leverage played a huge role in inflating this massive trio of bubbles (Housing, Credit and Stocks) and the resultant deflation (leverage in reverse) is going to amplify the bust by at least a few orders of magnitude.
August 5, 2007 at 6:32 PM #70563JWM in SD
Participant“JWM: You’re a finance guy, right? Do you find it interesting that they no longer report M3? M1 and M2 are still there, but good ‘ol M3 isn’t. Not trying to put on my paranoid conspiracist hat or anything, but…”
Technically, I’m not Finance but rather accounting (CPA), but you learn most of the same fundamentals in TVM. I did handle corporate finance stuff like NPV and ROI for an automotive component supplier (Borg Warner) at one of their plants in Illinois for a couple of years though. a lot of the investment principles are the same such as hurdle rates and payback. Instead of houses it was two ton presses and tooling and die equipment.
Yes, it’s not surprising that the Fed decided not to report that anymore. However, there are still plenty of graphs depricting what happened relative to M0, M1, M2. Mish Shedlock was where I first read about that. What’s interesting is when you correlate housing prices in SoCal to the growth in M3…take a wild guess at how well they correlate.
I dont know enough about SFAS 140 yet. There is an article by Tanta at CR that about that I will read later on.
August 5, 2007 at 6:32 PM #70673Participant“JWM: You’re a finance guy, right? Do you find it interesting that they no longer report M3? M1 and M2 are still there, but good ‘ol M3 isn’t. Not trying to put on my paranoid conspiracist hat or anything, but…”
Technically, I’m not Finance but rather accounting (CPA), but you learn most of the same fundamentals in TVM. I did handle corporate finance stuff like NPV and ROI for an automotive component supplier (Borg Warner) at one of their plants in Illinois for a couple of years though. a lot of the investment principles are the same such as hurdle rates and payback. Instead of houses it was two ton presses and tooling and die equipment.
Yes, it’s not surprising that the Fed decided not to report that anymore. However, there are still plenty of graphs depricting what happened relative to M0, M1, M2. Mish Shedlock was where I first read about that. What’s interesting is when you correlate housing prices in SoCal to the growth in M3…take a wild guess at how well they correlate.
I dont know enough about SFAS 140 yet. There is an article by Tanta at CR that about that I will read later on.
August 5, 2007 at 6:32 PM #70680Participant“JWM: You’re a finance guy, right? Do you find it interesting that they no longer report M3? M1 and M2 are still there, but good ‘ol M3 isn’t. Not trying to put on my paranoid conspiracist hat or anything, but…”
Technically, I’m not Finance but rather accounting (CPA), but you learn most of the same fundamentals in TVM. I did handle corporate finance stuff like NPV and ROI for an automotive component supplier (Borg Warner) at one of their plants in Illinois for a couple of years though. a lot of the investment principles are the same such as hurdle rates and payback. Instead of houses it was two ton presses and tooling and die equipment.
Yes, it’s not surprising that the Fed decided not to report that anymore. However, there are still plenty of graphs depricting what happened relative to M0, M1, M2. Mish Shedlock was where I first read about that. What’s interesting is when you correlate housing prices in SoCal to the growth in M3…take a wild guess at how well they correlate.
I dont know enough about SFAS 140 yet. There is an article by Tanta at CR that about that I will read later on.
August 5, 2007 at 6:51 PM #70567HLS
ParticipantWhat NOBODY talks about is who/what is at risk, as far as average Joe & Jane investor.
There are multi millions of people “investing” in the stock market via 401K, IRA’s etc for their retirement, without having a CLUE what they are doing, just blindly buying stocks via mutual funds or whatever. It’s what they are told to do, so they have money taken out of every single paycheck.
It’s akin to people who bought homes at inflated prices, without having a clue what they were doing. The end result (again) is that some people will get lucky, others will get burned badly.
It isn’t a myth that only a small % of mutual funds beat the indexes, yet fund mangers collect mgmt fees based on the amounts of the funds.
The pitch of the investment industry is that over time, the market returns 11% on average. Please try explaining that simple sentence to someone who had a million dollar portfolio in tech stocks prior to the dot.com bust. I know of accounts that went from $1 mil to $50k pretty fast.
They had been investing for years, hoping to retire around 2002. Plans change.
The innocence of so many people that have a fair amount of money in stocks for retirement is staggering. No idea of p/e, p/s, market cap, enterprise value, growth stocks, value stocks, etc. just assuming that it will grow to an expected amount due to compounding growth (Because we all know that it’s TIME in the market, not timing)
Hopefully for all, people will not want to cash out en masse, but what some people don’t realize is it also isn’t possible. There won’t be enough buyers. (Sounds like homes today) When/if sentiment changes, there goes the market.
Most will ask the same questions as they do about houses, “how come I can’t sell”Although the major housing losses will be regional, a real downturn in stocks will be national, affecting every single square inch of the country.
Some of the hedge fund money and similar risky investments came from pension funds and average investors Joe & Jane without them even knowing. The total leveraged losses will be covered up by shenanigan accounting for as long as possible.
I read a about a recent pension fund that EXPECTS 8% return year over year. To me it says we NEED 8% or we’re in trouble.
Some of the perps will hope to die before the coverups come to light.
I hope it doesn’t happen. It’s gonna make people wish that it was only as bad as Enron or Worldcom.
August 5, 2007 at 6:51 PM #70679ParticipantWhat NOBODY talks about is who/what is at risk, as far as average Joe & Jane investor.
There are multi millions of people “investing” in the stock market via 401K, IRA’s etc for their retirement, without having a CLUE what they are doing, just blindly buying stocks via mutual funds or whatever. It’s what they are told to do, so they have money taken out of every single paycheck.
It’s akin to people who bought homes at inflated prices, without having a clue what they were doing. The end result (again) is that some people will get lucky, others will get burned badly.
It isn’t a myth that only a small % of mutual funds beat the indexes, yet fund mangers collect mgmt fees based on the amounts of the funds.
The pitch of the investment industry is that over time, the market returns 11% on average. Please try explaining that simple sentence to someone who had a million dollar portfolio in tech stocks prior to the dot.com bust. I know of accounts that went from $1 mil to $50k pretty fast.
They had been investing for years, hoping to retire around 2002. Plans change.
The innocence of so many people that have a fair amount of money in stocks for retirement is staggering. No idea of p/e, p/s, market cap, enterprise value, growth stocks, value stocks, etc. just assuming that it will grow to an expected amount due to compounding growth (Because we all know that it’s TIME in the market, not timing)
Hopefully for all, people will not want to cash out en masse, but what some people don’t realize is it also isn’t possible. There won’t be enough buyers. (Sounds like homes today) When/if sentiment changes, there goes the market.
Most will ask the same questions as they do about houses, “how come I can’t sell”Although the major housing losses will be regional, a real downturn in stocks will be national, affecting every single square inch of the country.
Some of the hedge fund money and similar risky investments came from pension funds and average investors Joe & Jane without them even knowing. The total leveraged losses will be covered up by shenanigan accounting for as long as possible.
I read a about a recent pension fund that EXPECTS 8% return year over year. To me it says we NEED 8% or we’re in trouble.
Some of the perps will hope to die before the coverups come to light.
I hope it doesn’t happen. It’s gonna make people wish that it was only as bad as Enron or Worldcom.
August 5, 2007 at 6:51 PM #70686ParticipantWhat NOBODY talks about is who/what is at risk, as far as average Joe & Jane investor.
There are multi millions of people “investing” in the stock market via 401K, IRA’s etc for their retirement, without having a CLUE what they are doing, just blindly buying stocks via mutual funds or whatever. It’s what they are told to do, so they have money taken out of every single paycheck.
It’s akin to people who bought homes at inflated prices, without having a clue what they were doing. The end result (again) is that some people will get lucky, others will get burned badly.
It isn’t a myth that only a small % of mutual funds beat the indexes, yet fund mangers collect mgmt fees based on the amounts of the funds.
The pitch of the investment industry is that over time, the market returns 11% on average. Please try explaining that simple sentence to someone who had a million dollar portfolio in tech stocks prior to the dot.com bust. I know of accounts that went from $1 mil to $50k pretty fast.
They had been investing for years, hoping to retire around 2002. Plans change.
The innocence of so many people that have a fair amount of money in stocks for retirement is staggering. No idea of p/e, p/s, market cap, enterprise value, growth stocks, value stocks, etc. just assuming that it will grow to an expected amount due to compounding growth (Because we all know that it’s TIME in the market, not timing)
Hopefully for all, people will not want to cash out en masse, but what some people don’t realize is it also isn’t possible. There won’t be enough buyers. (Sounds like homes today) When/if sentiment changes, there goes the market.
Most will ask the same questions as they do about houses, “how come I can’t sell”Although the major housing losses will be regional, a real downturn in stocks will be national, affecting every single square inch of the country.
Some of the hedge fund money and similar risky investments came from pension funds and average investors Joe & Jane without them even knowing. The total leveraged losses will be covered up by shenanigan accounting for as long as possible.
I read a about a recent pension fund that EXPECTS 8% return year over year. To me it says we NEED 8% or we’re in trouble.
Some of the perps will hope to die before the coverups come to light.
I hope it doesn’t happen. It’s gonna make people wish that it was only as bad as Enron or Worldcom.
August 5, 2007 at 7:19 PM #70585Participant“I hope it doesn’t happen. It’s gonna make people wish that it was only as bad as Enron or Worldcom.”
Yes, and look what happened in response to those two issues:Sarbanes Oxley. The effing bane of my existence or any other publicly held or considering going public company in the US right now. The pendulum swung too far in that one and the credit crisis makes those two look like small change. How far will the pendulum swing in the lending market after the scope of this problem becomes more obvious??
Anyone who thinks that SD home prices can’t decline as much 50% doesn’t know WTF they are talking about because they do not understand far reaching impacts of the credit markets and how they will react. This is why I take issue with those giving advise to would be buyers posting here that it is only an emotional issue and if you can afford to buy and you have a long term view it wil be okay. That is utter bullshit because this is unprecedented and nobody knows how bad it is going to get…only that it has the potential to get really ugly.
Ayone looking to buy a home right now in SD might as well have been standing at the shoreline in Phuket when the tsunami rolled in. You Just Don’t Get It.
August 5, 2007 at 7:19 PM #70699Participant“I hope it doesn’t happen. It’s gonna make people wish that it was only as bad as Enron or Worldcom.”
Yes, and look what happened in response to those two issues:Sarbanes Oxley. The effing bane of my existence or any other publicly held or considering going public company in the US right now. The pendulum swung too far in that one and the credit crisis makes those two look like small change. How far will the pendulum swing in the lending market after the scope of this problem becomes more obvious??
Anyone who thinks that SD home prices can’t decline as much 50% doesn’t know WTF they are talking about because they do not understand far reaching impacts of the credit markets and how they will react. This is why I take issue with those giving advise to would be buyers posting here that it is only an emotional issue and if you can afford to buy and you have a long term view it wil be okay. That is utter bullshit because this is unprecedented and nobody knows how bad it is going to get…only that it has the potential to get really ugly.
Ayone looking to buy a home right now in SD might as well have been standing at the shoreline in Phuket when the tsunami rolled in. You Just Don’t Get It.
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