[poorgradstudent]

Anx, while I agree with the long term soundness of some of your shorting strategies, remember that we’re not in a recession yet, so your one week returns probably aren’t going to be very exciting. Honestly, I think retail will be ok through the holiday season, where consumer (over)spending will prop up the economy for one last hurrah.

rseiser, I think you’re right that the market is a little crazy right now. There’s a ton of anxiety thanks to the expensive ongoing war in Iraq, the posturing of Iran, and the tropical storm season (which is ending). Everything’s pretty volatile right now, so the short term is going to be a little crazy.

[poorgradstudent]

Most people aren’t rational consumers.

Marketing creates artifical demand and need. People buy things on credit without thinking about the 20% APR in interest they’ll be paying for it down the line. People buy cars and yes, homes, that they realistically shouldn’t be able to afford.

For the past 10 odd years, the government has relied on consumer overspending to drive the economy. I really hope the consumer spending bubble has a “soft landing”, because if not it would be far, far worse than the real estate bubble’s collapse.

[poorgradstudent]

I’d imagine that there is going to be some softening in the retail sector that the market hasn’t factored in yet. Most of what I’ve read suggests that in a recession it’s high end retailers that suffer. People will still buy toilet paper and deodarant from Target or Walmart (in fact, in a mild recession discount retailers may actually increase market share as more high end consumers feel a price pinch and “scale down” their spending). Places like Williams Sonoma and Restoration Hardware will likely see sales slumps.

“Survive” might be an overstatement. In theory recessions encourage efficiency, and while this is a bigger bubble than in the past, I don’t expect you’ll see too many retailers go under.

In general you should be cautious about any stock trading well above its book value. Sometimes there’s a good reason, so I guess you just have to go on a case by case basis.

[poorgradstudent]

JES wrote: “I suspect they received their media training from the former Iraqi information minister.”

That is so perfect! Although war really isn’t funny, the Iraqi information minister was hilarious during the US invasion. “Tanks? What tanks. There are no Tanks in Baghdad. What are you talking about? All that news coverage is faked. Yeah, that’s it.”

[poorgradstudent]

I’m trying to think of a good analogy for “Listening to the NAR’s chief economist talking about real estate prices is like…”

So far I’ve come up with:
“… Is like listening to a team’s head coach regarding it’s chance of winning before a game.”
“… Is like listening to a director about whether or not his new movie is great.”
“… Is like listening to a White House Press release about anything.”

It’s pure and simple spin, and we should expect nothing less. Hopefully people know well enough not to take it too seriously.

[poorgradstudent]

This seems like as good a place as any to put this thought I’ve had lately:

Would Deflation be such a bad thing?

From my understanding, deflation tends to raise wages and rewards savers while lowering corporate profits and hurting borrowers.

It also does tend to raise unemployment.

Over the past couple years wages have not increased, while corporate profits have been flying high. I wonder if a little deflation would be good for the economy right now.

[poorgradstudent]

I live in UCSD owned apartments in UTC, and I’ve noticed the prices drop in the past 6 months on the external signage on the Venitian and that other complex of conversions on Nobel Drive.

I had a friend who rented in the Venitian (it was actually a relatively good deal) and got booted out when they did the conversions.

The UCSD area has such a housing crunch thanks to the lack of dorm rooms and lack of non-“luxury” condos in the area, (thanks in part to the curse of a “La Jolla” area code), that buying a place with the intention of using it as a rental property isn’t the worst idea ever. You’d have to actually run the real numbers, but at least you know there will always be rental demand in the area. Still, waiting and watching for the prices to drop further couldn’t hurt.

[poorgradstudent]

In my experience, most waitstaff will ask if they can clear your plates. Personally I don’t mind, and I actually enjoy the extra space.

I’ve always assumed it was so that they’d have less dishes to wash at the end of the night. The more they clean during operating hours, the less they need to do at the end of the night.

[poorgradstudent]

“I really don’t think there’s anything wrong with flipping houses for profit. ”

I think ethical flipping would involve buying a fixer-upper, renovating it, and then selling it at a profit. I guess I’m not sure if that even counts as “flipping”.

To me the distinction is between actually adding value and creating something as opposed to just buying and expecting to sell it at a huge profit.

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