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Chris Scoreboard Johnston
ParticipantChris Johnston
PW – I know that you agree with him because he supports your views, and he may be right. The main point I was just trying to make was that he got housing wrong, so do not hang your hat on his housing views. If a person had liquidated all of his RE when he had said, they would have missed the largest windfall of their lifetimes. Would have been right…. that is all supposition. The fact of the matter is he was wrong, you cannot make excuses for why he was wrong.
If you are in the business of predicting, and getting paid for it, you have to be closer than 5 years on a cycle or 1 year on a recession call. If you are off by more than that, timing decisions can be very costly. I think the average duration of recessions has been less than 8 quarters, so if you are off by 6 quarters on that call, what good is it?
If people are going to act on your calls, they need to be fairly timely, you cannot make excuses, they are what they are. When I am off by 2 days I get crucified by clients! Predicting things precisely is very difficult and you need to be prepared to take the heat when you are wrong. No matter how good anyone is, they will still have periods of inaccuracy.
ParticipantChris Johnston
If my memory serves me correctly, he moved out of Newport Beach around 2000 or thereabouts claiming RE prices were going to crash. He sold his home, and moved back east. He had offices on both coasts, and just went back to the one back east. I might be off by a year or so on the date. I also recall that he rented a place back east when he moved.
I am not 100% sure about this, so do not hang me with this. However, he was pretty outspoken at the time as I recall, which is why this story sticks with me. I had never heard of him at the time.
My home that I sold in 05 gained over 1 Million dollars during that time between when he left and my sale, which is now in my pocket. My point is, his timing on this specific topic was quite a bit off, so there is no reason to believe that just because he is still out there making the same comments, that they will be timely. Maybe he has been dead on about other things, I do not know, but on this topic, he has not been too accurate. We have a well known approx 10 yr cycle in RE so being off by 5 years is not very close.
It does appear that the downturn is happening, but in my business, missing by that much does not make for a good call. Most of his views it seems are generally bearish on our economy, so you have to take things he says within that context. Although I am bearish on RE I do not share the extreme views that many here do. However, do not mistake my comments for being bullish. I am not bullish on RE for the next few years, quite the opposite.
ParticipantChris Johnston
Matt, he has been calling for a housing drop for 5 or 6 years. He may eventually be right, but his timing has been awful. Guys like Rich have been much more timely, even if a bit early.
ParticipantChris Johnston
Thanks sdr, we are thrilled to be in it. I just broke the new weed eater this weekend, they have industrial strength weeds at Green Acres(my name for this ranch that my wife hates) LOL!
ParticipantChris Johnston
I agree with this post, the original almost in it’s entirety, and it isolates several of the reasons that I have called for a 20% drop and not much more. I do not believe in the “it’s different this time” arguments. If it is I will be wrong.
ParticipantChris Johnston
I just closed on a home purchase last week and would still tell you not to buy if you know your time frame is at most 4 years. The odds of selling for a higher price in 4 years are very low. Suck it up and rent. I rented for almost 2 years after selling out, and found a very good deal on a buy or I would not have bought back in. If you could find a distressed property in a nice area, then it might pay to buy it. However, the time to look at real estate as an investment is not now.
ParticipantChris Johnston
Something is wrong with that scenario. I have put larger amounts several times into different places, and never once had that happen. The Bank Secrecy Act is the only thing that I know of since 911 that effects the industry of banking and securities, as far as sources of funds go. That should not relate to this. Go somewhere else.
The other comment about the 250k is a legit one, but if you have a good chunk, you do not want to open 20 different cd’s. I think taking a prudent risk going over the limit, which is going to be raised soon, is ok. Just do not do it with a small bank.
ParticipantChris Johnston
I have lived in the Newport Beach area which is right next to Irvine for over 20 years. Irvine is a very nice area, and I believe annually amongst the lowest crime rates in the country. The schools are good, and there is an absolute ton of new product coming on the market. Prices are higher by a fair amount than comparable properties in San Diego. Traffic is not nearly as bad as SD. Prices have begun to come down, but very slowly. I think your rent will be more money than what it would be in SD county by a few hundred for the same thing.
I personally like SD county better than OC which is why I am buying a house down there right now, but you cannot go wrong in Irvine.
ParticipantChris Johnston
I think if you had posted you won the lottery, you would get comments about how you were really only getting half the amount due to tax, so it was not so great. Congrats on getting your house moving.
ParticipantChris Johnston
Have you guys that are fans of Schiff followed him for a long time? If I recall correctly ( and I could be wrong about this ), he used to live in Newport Beach by me, and sold out many years ago fearing an RE crash and relocated to the east coast somewhere. I think he already had an east coast office and he moved to it. He was very outspoken at that time about a pending RE crash, which is just now happening many years later.
The point I am making is that I think his predictions have not been historically very timely. I am sure from his fund if his performance is good, he makes quite a bit of money, but he left millions or itleast 1M on the table when he left Newport Beach many years too early.
He gets alot of press due to his gloom and doom predictions which is always a way to get your name in the news. Maybe he will be right, but I would love to see someone in here analyze his track record to see how good he has been over time.
ParticipantChris Johnston
cawireman
The umbrella policy actually acts as a magnet for lawsuits. They can start with that, and go from there. There are complex asset protection structures that can be built, and insurance is very valuable in these areas. However, it is more valuable in life policies which are harder to get at.
The only way that I know to truly protect your home, is have no equity in it, making it worthless to a creditor, or have it in a limited partnership. The limited partnership is not bullet proof, but is a “reasonable” block to a frivolous lawsuit.
I am no expert in this area, but I have read a few books, and have friends who have set things up for themselves like this.
ParticipantChris Johnston
I feel compelled to chime in on this thread due to my purchase that is due to close on March 23rd. I have debated the financing aspect of this in my head alot. My FICO is 800 and I have more money liquid than the purchase price of the home I am buying. I have decided to put 20% down and do an interest only loan fixed for 7 years on the 80% balance.
I can pay it off at any time, yet I still have the flexibility of having the money left to invest and make gains on. With a good financial profile, which I have, there are still unlimited financing options. I am in complete agreement that if you do not have 20% down you should not be buying in general. Obviously there are exceptions to this.
The biggest concern I always have is paying off a home, and having it sit there as a sitting duck for a lawsuit. I know you can place it in a limited parnership, etc but that is a pain in the ass. It makes we want to basically keep my balance at about what it is worth over time, and leverage the money.
Since I am in the money management business, a lawsuit is always lurking even if it is baseless, and having a limited profile of things for them to come after is a concern.
Hopefully, I have offered a non-standard situation to contemplate. Any input would always be welcome.
ParticipantChris Johnston
jg – I told you to be careful shorting the market down here, it was extremely oversold. This is the type of bounce that although tough to time because it is counter-trend, is inevitable. Thanks for being honest. I get caught on the wrong side at times of things like this to, eventhough it is my business not to. I am waiting for a little more up, to get short on a short term basis.
March 7, 2007 at 1:30 PM in reply to: Remember the New Paradigm, the Soft Landing and the New Normal? #47091ParticipantChris Johnston
I have also heard of the talk of the carry trade unwind. However, as a bond trader I can tell you that there is no way that can happen and also at the same time have 30 yr bonds rally like they are. The unwind would result in heavy sales in the 30 and 10 yr markets, and we are getting a big rally right now.
A friend of mine who is a local in the 10 year pit has confirmed this to me. As a result, we truly are not seeing this unwind right at the moment. Whether we will see it or not I have no idea, but it is not happening right now en masse. There may be some selective selling, but the buying is outweighing it presently. I think this is due to the anticipation of economic weakness ahead.
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