[Chris Scoreboard Johnston]

Chris Johnston

I predict that I will be booed out of this arena for not being as negative as most of the people in here, and thinking that our future is relatively bright after a few hiccups

I predict the stock market will find a short term low by approx mid april, then rally up sharply, then have a sharp decline beginning in about Aug-sept time frame. This decline will in turn set up another buy in Nov of this year.

Housing will decline this year basis the median in OC by less than 5%, SD I will say the same.

I also predict that most people trying to time the low in RE will get it wrong, and be sitting on the sidelines in 08 watching prices go away from them again because they did not drop as much as they thought. This will happen in late 08 which is when I think the housing low will be made.

Roubini will vanish faster than Houdini for being wrong over and over again, but he will not get a haircut and clean up.

I also predict that poway will club somebody over the head once again in a blog for not agreeing with her doomsday views

Gold will not go well into the thousands during this price cycle (the next 3 years).

Predicting is impossible, but those are my best guesses.

[Chris Scoreboard Johnston]

Chris Johnston

Be careful chasing this down, we are setting up what could be a very nice rally that should start in about 45 days approximately, about tax time. Strong bonds on a stock drop is not what crashes are made of. If the bonds had weakened this would be a different story. If you are convinced that you want to be short, just go with put options on the Q’s or SPY’s or OEX. There you get limited risk, but will profit nicely if a crash happens. I think we will work lower in the near term, so it depends on your time horizon. I think we will be higher than where we are now by August.

[Chris Scoreboard Johnston]

Chris Johnston

I am buying a home right now, that should close in 3 weeks. Everyone’s situation for buying is different, so it is impossible to generalize. However, I am in no false illusion that the property I am buying will not decrease in value in the next couple of years, I am not buying it as an investment. We have horses and 3 large dogs ( 160 lbs each ), so we need some property. I have rented since Sept of 2005, and am buying back in for about 900k less than I sold for. Since this was my goal, and I found something that is more of a unique property, I decided to just buy it. Had I been looking for a tract home, I would have stayed on the sidelines. I just am of the opinion that our needs are unique and that even in a severe drop, there is no guarantee I could find something like this no matter what the price.

I have more money in cash than the total cost of this place, so it is not a stretch at all. I just thought I would offer this as an example of someone who is buying right now. I am not a traitor, I still think prices are coming down. Renting in our situation with the 3 big guys and the two horses in a separate place just became too much of a fiasco. I have saved enough to have made it worth the exit and re-entry.

We can even monitor how my value does just to see how much buying early in the down cycle hurts. However, valuing this place was a trick, the comps were hard to find, and all were itleast 200k to as much as 400k above the sale price. As a result, it might be tough to evaluate how much this fluctuates up or down. I am not sure that we really know even now the correct value for this place.

The sellers are in the midst of a nasty divorce, which has effected the price I think. We got to witness live in prime time a battle between them. I am planning on it being worth what it is now or less in 10 years, and it will be paid off before then. Anything beyond that is a bonus. I have never believed that home buying should be viewed as an investment. There is the opportunity cost argument, which is valid, but for the peace of mind for someone in my position, it was a no-brainer decision that I made within a day of seeing it for the first time.

BTW – I have used SD Realtor on this transaction and I highly recommend him. Adam is very thorough and intelligent, and is so superior to the listing broker on this, words could not express the difference. Cheers to Adam for being such a great help, and also being a very level headed professional! I will definitely use him again on my next RE transaction.

[Chris Scoreboard Johnston]

Chris Johnston

I will take the other side of that bet, or the “over” if you want to label it in sports terminology.

[Chris Scoreboard Johnston]

Chris Johnston

HereWeGo – absolutely without question you are correct. This is why I follow the commercials so closely, they represent these large funds, etc.. Us small fries do not determine market direction.

The Gold debate speaks for itself for those debating what I have said, an over $50 per ounce drop with the stock drop. There is no inter-market relationship here from my studies.

[Chris Scoreboard Johnston]

Chris Johnston

This is the most absurd topic I have ever heard, and an insult to everyone’s intelligence who visits here. If you hate the US that much, just leave, the borders are open.

[Chris Scoreboard Johnston]

Chris Johnston

Yesterday was case in point in a timely fashion in relation to what I typed in here the other day. There is no intermarket relationship between gold and stocks. Do not buy gold as a hedge against stock drops, there is no relationship there. We have now seen live proof of that.

[Chris Scoreboard Johnston]

Chris Johnston

Quite a day today, I would love to say that I predicted this but I did not. In fact, I went long on the gap down open in my short term trading account and got stopped out for 14 pts/contract in the S&P, a five digit loss. I did mention that we needed a decline into March/May to setup a buy for a rally into a summer high. I did not expect something this sharp, so it remains to be seen if this down move will effect the fundamentals enough to eliminate the buy signal I was anticipating.

My big picture timing model has still not generated a sell signal, which makes me think we will rally back up, but I do not know if we will go down more first. Drops this sharp do internal damage that is tough to assess after just one day. Do not be a hero when volatility gets like this, if you place any trades, trade smaller than you usually do to take into account the volatility increase.

Hopefully the commercials are buying this drop, it will be interesting to see the next COT report.

[Chris Scoreboard Johnston]

Chris Johnston

Gold was at 790.90 on 10/23/87
Gold was at 684 in 9/88
Gold was at 592.6 on 6/90

These are the front month prices on futures. That October period marked the very top of the market, and the beginning of a multiyear decline that would have been devastating to have been long through. Gold may or may not rise from here, but it will have nothing to do at all with what equities do.

That is “sallied” along just fine? An almost $200/ounce drop. Please people, do your own research and don’t listen to this kind of disinformation.

Unbelievable

[Chris Scoreboard Johnston]

Chris Johnston

Not by my research Josh, just go look at a CPI graph overlayed on a continuous price chart of Gold and you will see what I am talking about. I have run many tests on other ways of correlating this and they all come out the same.

Has this Mish guy ever made any money trading or is he an economist? I hear his name alot but do not know his background or much about him.

[Chris Scoreboard Johnston]

Chris Johnston

Gold has not always held up during stock market declines, you might want to check 1987 and a couple of other periods. Gold began a huge decline shortly after the Oct 87 meltdown in stocks.

Inflation drives the price of gold.

[Chris Scoreboard Johnston]

Chris Johnston

So be it JWM, maybe you should not jump another poster so quickly if you do not have much conviction behind your views. I suspected your response would be along the lines of a pass on my offer. The offer stands to anyone else about the OC medians fate during the downturn.

None of us knows what the future brings, my opinion is no better than anyone else’s. Make no mistake, if we get 20% it will be a brutal recession we are facing, with widespread unemployment. I think alot of people fail to take into account the broader effect even a 20% equity erosion would have.

I lived through the last one up here and saw many friends part with millions of dollars. It could very well happen again.

[Chris Scoreboard Johnston]

Chris Johnston

I am talking about the median, which dropped 17.6% in the 90’s decline. The median as we know is not a great measure. Individual properties will vary, with some dropping much more. In general things are down about 10% now even though the median does not show a decline. I am willing to bet on this with you JWM, let’s put some cash on this. I will take 20% or less basis the median, you take the over. Name the amount. Let’s have some fun!

[Chris Scoreboard Johnston]

Chris Johnston

Never, it will not come down to that level in OC ever in my opinion. We will be lucky if it drops 20% from the 646k high.

[Chris Scoreboard Johnston]

Chris Johnston

Cashman – It is unfortunate the your exit timing was not too good, but it is water under the bridge. If you study the cycles, the 10 yr cycle in RE has been the most reliable over time. It is very unlikely that a huge ramp up in price will occur now, regardless of what rates do. My studies of rates over time have not shown a dead on relationship to RE pricing, other things have been much more closely correlated, like existing home sales to name one.

Just by being in here it is clear you are doing your due diligence as far as your next buying decision goes. Keep the emotion out of it, and never do anything that does not fit your own financial comfort zone. Chasing a momentum move in any asset class is a dangerous game. Once the music stops, there are never enough chairs, so do not rely on the music like so many people have in recent years.

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