[jeeman]

Stan,

I owe you an apology. I hastily read your post and realized you cut+pasted a snippet from a Realtor’s newsletter. So my comments are really directed to that ignoramus, lol.

Jeeman

[jeeman]

HereWeGo,

Thanks for the encouragement. There is money to be made in bull market AND bear markets, bubbles and busts! The trick is the timing, which I am no good at! 🙂

I have been reading piggington.com for about 3-4 years now. I’ve only jumped in and started posting. I’ve pointed so many people to this website and they would not believe that RE can go down in SD. They are starting to believe it, but only to the tune of 10% max. Even with reasoned explanations, I get retorts like “the sun tax” or “everybody wants to live here”, which are emotionally based reasons. I don’t see 300 million people living in San Diego, and until I do, fundamentals matter.

I hope you do well in your real estate hunting in the next few years. I have a feeling I’ll from zero properties to a house and a few strategic condos in 2010.

Jeeman

[jeeman]

HereWeGo,

Thanks for the encouragement. There is money to be made in bull market AND bear markets, bubbles and busts! The trick is the timing, which I am no good at! 🙂

I have been reading piggington.com for about 3-4 years now. I’ve only jumped in and started posting. I’ve pointed so many people to this website and they would not believe that RE can go down in SD. They are starting to believe it, but only to the tune of 10% max. Even with reasoned explanations, I get retorts like “the sun tax” or “everybody wants to live here”, which are emotionally based reasons. I don’t see 300 million people living in San Diego, and until I do, fundamentals matter.

I hope you do well in your real estate hunting in the next few years. I have a feeling I’ll from zero properties to a house and a few strategic condos in 2010.

Jeeman

[jeeman]

“Well, if I intended to purchase a home, I’d do it before interest rates climb any further. And, if I wanted to sell my home, I’d get it on the market before too many buyers are no longer able to qualify for a loan with higher mortgage interest rates.””

Stan,

Are you kidding? Very rarely is the market the best for both the buyer and seller. It’s good for one or the other or bad for both.

If sellers are about to lose a bunch of buyers due to non-qualifying, then they will drop their prices, allowing buyers to qualify for that house again. Sure, at a higher interest rate, but the monthly will probably end up the same with the lower loan amount.

Why did the run-up happen in the first place? Sellers knew buyers could qualify for more with lower rates and they raised their prices as the market was flooded with buyers buying into the social proof that “there is never a better time to buy”. Bull….1996 was the best time to buy. It progressively got worse and reached its worst in 2005.

Jeeman

[jeeman]

“Well, if I intended to purchase a home, I’d do it before interest rates climb any further. And, if I wanted to sell my home, I’d get it on the market before too many buyers are no longer able to qualify for a loan with higher mortgage interest rates.””

Stan,

Are you kidding? Very rarely is the market the best for both the buyer and seller. It’s good for one or the other or bad for both.

If sellers are about to lose a bunch of buyers due to non-qualifying, then they will drop their prices, allowing buyers to qualify for that house again. Sure, at a higher interest rate, but the monthly will probably end up the same with the lower loan amount.

Why did the run-up happen in the first place? Sellers knew buyers could qualify for more with lower rates and they raised their prices as the market was flooded with buyers buying into the social proof that “there is never a better time to buy”. Bull….1996 was the best time to buy. It progressively got worse and reached its worst in 2005.

Jeeman

[jeeman]

Drunkle,

Well, when I said “exploit” it, I really just meant to be aware of what is going on and not fall into the same trap. That is what Charlie was saying because even in his lecture, he says that he himself is susceptible to this manipulation as well. I was hesitant of using the word “exploit” and in hindsight, I shouldn’t have.

I have been waiting for 4 years to buy a house here in SD. Back then, I didn’t want to become a victim of social proof. That $530k house is now $820k. It’s still up a good $300k, 2 years after the peak. My lesson learned was that while the herd creates a bubble, it’s still possible to make money in the bubble, as long as you get in early enough. I just need to go in with eyes wide open.

I won’t follow the herd into the dead cat bounce either :-). Once everyone thinks that real estate stinks, then I’m going in for the kill, hehe…
Jeeman

[jeeman]

Drunkle,

Well, when I said “exploit” it, I really just meant to be aware of what is going on and not fall into the same trap. That is what Charlie was saying because even in his lecture, he says that he himself is susceptible to this manipulation as well. I was hesitant of using the word “exploit” and in hindsight, I shouldn’t have.

I have been waiting for 4 years to buy a house here in SD. Back then, I didn’t want to become a victim of social proof. That $530k house is now $820k. It’s still up a good $300k, 2 years after the peak. My lesson learned was that while the herd creates a bubble, it’s still possible to make money in the bubble, as long as you get in early enough. I just need to go in with eyes wide open.

I won’t follow the herd into the dead cat bounce either :-). Once everyone thinks that real estate stinks, then I’m going in for the kill, hehe…
Jeeman

[jeeman]

Haha, a conservative was elected, but I doubt he would have much effect on the populace.

[jeeman]

Haha, a conservative was elected, but I doubt he would have much effect on the populace.

[jeeman]

“Dear Lord, will we also have to enjoy their universal healthcare, education, lower crime and higher quality of life?”

Right, the universal healthcare and higher quality of life comes about when the rich are paying for your desire to work 3 hours and then take a 3 hour nap and then hopefully go back to work if you’re not too busy drinking your mid-afternoon wine.

Sure, higher quality of life at the expense of those who actually earn the money. But personally it would be depressing to see the lack of motivation and low achievement in those around me. If you look forward to those things, you can enjoy them in France right now. 🙂

Jeeman

[jeeman]

“Dear Lord, will we also have to enjoy their universal healthcare, education, lower crime and higher quality of life?”

Right, the universal healthcare and higher quality of life comes about when the rich are paying for your desire to work 3 hours and then take a 3 hour nap and then hopefully go back to work if you’re not too busy drinking your mid-afternoon wine.

Sure, higher quality of life at the expense of those who actually earn the money. But personally it would be depressing to see the lack of motivation and low achievement in those around me. If you look forward to those things, you can enjoy them in France right now. 🙂

Jeeman

[jeeman]

Recessions are always NEEDED to wash out excesses in business. While it temporarily hurts everyone, it enhances progress in all aspects of life. Look at what happens under socialism/communism…when inefficiences are not cleansed out of “business”, then the whole system becomes unwieldy and uncompetitive.

America was in decline during the late 60s and 70s. Thanks to JFK, he cut the top marginal tax rate from 90% to 70% which bought a few more years. Reagan cut it from 70% to 33%. Only then was an sustained economic boom started which, except for a few years, continues until today. Excesses are found in every market, and that is a part of human psychology.

I am doing a presentation on Charles Munger’s speech of “24 Standard Causes of Human Misjudgement”. The way to profit from this is to understand human misjudgement and their causes and “exploit it”.

http://www.vinvesting.com/docs/munger/human_misjudgement.html

In America, the little guy firmly believes that their fate is in their own hands. However, many Americans on the left are looking to Uncle Sam to be their sugar daddy and they welcome socialist tendencies. Well, if we ever go that route, we can welcome 10-15% unemployment rates and very heavy tax burdens that the european countries generally enjoy.

Even the rich in Europe create bank accounts in other countries to escape the high tax burden needed to make sure the little man doesn’t have to work too hard.

[jeeman]

Recessions are always NEEDED to wash out excesses in business. While it temporarily hurts everyone, it enhances progress in all aspects of life. Look at what happens under socialism/communism…when inefficiences are not cleansed out of “business”, then the whole system becomes unwieldy and uncompetitive.

America was in decline during the late 60s and 70s. Thanks to JFK, he cut the top marginal tax rate from 90% to 70% which bought a few more years. Reagan cut it from 70% to 33%. Only then was an sustained economic boom started which, except for a few years, continues until today. Excesses are found in every market, and that is a part of human psychology.

I am doing a presentation on Charles Munger’s speech of “24 Standard Causes of Human Misjudgement”. The way to profit from this is to understand human misjudgement and their causes and “exploit it”.

http://www.vinvesting.com/docs/munger/human_misjudgement.html

In America, the little guy firmly believes that their fate is in their own hands. However, many Americans on the left are looking to Uncle Sam to be their sugar daddy and they welcome socialist tendencies. Well, if we ever go that route, we can welcome 10-15% unemployment rates and very heavy tax burdens that the european countries generally enjoy.

Even the rich in Europe create bank accounts in other countries to escape the high tax burden needed to make sure the little man doesn’t have to work too hard.

[jeeman]

“ok, i see how prices change as yields change. but why would you sell at all when yield is increasing? are you not taking a loss? you already have a guaranteed fixed income from it…”

Same reason why you would sell a stock that has dropped a bit and seems undervalued. Look at GE….sales and earnings have gone up and the stock has essentially flat lined. You could have made better money somewhere else for the past 5 years.

Why settle for the 2% bond that you bought in 2003 that continues to drop in value? Now, it’s 5.25%, but you might sell if you think it will hit 7. Cash out, wait for yields to hit 7%, and buy back in.

Jeeman

[jeeman]

“ok, i see how prices change as yields change. but why would you sell at all when yield is increasing? are you not taking a loss? you already have a guaranteed fixed income from it…”

Same reason why you would sell a stock that has dropped a bit and seems undervalued. Look at GE….sales and earnings have gone up and the stock has essentially flat lined. You could have made better money somewhere else for the past 5 years.

Why settle for the 2% bond that you bought in 2003 that continues to drop in value? Now, it’s 5.25%, but you might sell if you think it will hit 7. Cash out, wait for yields to hit 7%, and buy back in.

Jeeman

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