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July 26, 2006 at 2:15 AM in reply to: Sources Needed for “why commodities can’t sustain their bull run” #29655
powayseller
ParticipantChris, perhaps the rally means we have more foreigners needing to park their dollars in Treasuries, as more dollars are flowing overseas as the price of oil has risen substantially.
ParticipantTell us more…
Some people say that after housing goes down, we will see many cases of scandal and abuse, just as we saw after the tech stock boom. I am waiting for some real big cases, like the Lennar home scandal in FL.
ParticipantVCJIM, the entire last portion of the post is QUOTED FROM BILL FLECKENSTEIN. I do not short anything; I am a very simple investor. Shorting and options are way too risky.
To repeat, the following ENTIRE quote is from Fleck:
QUOTE
” Q: What do you think are the drawbacks, if any, of shorting LEND now?
• …that you could get squeezed hard in a rally.Q: With the serious slowdown in MEW (mortgage equity withdrawals) and the obviously slowing housing industry – what do you think about shorting some of the big hardware type retailers?
• Could be a good idea… AFTER the Fed backs off.
there will be more money short the guys who have lent against real estate, IMO… so they are better targets.the long side is way, way, way easier… and the gains can be far bigger.
As for housing FALLOUT, I prefer the lenders against home as collateral. THAT is where the real wipeouts will occur in my opinion, so I decided to do them instead of housing stocks.”
UNQUOTE
The above was entirely quoted by Fleck.
Participantkiki, great idea! I will definitely change my approach with the journalists, because they are just uninformed. But the economists are another story… No slack for those guys, since they are *expected* to know better. Thanks for your ideas.
I made a mistake with Sony – I meant to say RCA? It was a TV factory in Rancho Bernardo.
Participanthipmatt, I am not counting on my next home giving me much appreciation. When will we see the next asset bubble? Well, perhaps we will…. Historically, U.S. housing goes up at a real rate of .4%. Perhaps it’s a tad bit higher in S. CA, but it is the worst performing asset class that I know of. A house should be a place to live, and we should not ever expect it to be more, or we will be disappointed. We make money on our investments, not our houses. The Bubble cities are an exception, but when will we see the next bubble?
Participantcooperthedog – I carefully read your post, but missed your rebuttal to my critique of Gin’s analyis, with regard to the job market, MEW, foreclosures, the 2 year lagging indicator of the median, and the granulated data of various markets which show that homes have fallen by 10-15% (except the high end is 10% of sales vs. 8.5% last year, skewing UPWARD the median). I gave you ONE example for your benefit of someone upside down on their mortgage, but you will find many more by 3 members here with their own blogs, tracking foreclosures in the SD County area. Three families in my son’s school have lost their homes to foreclosure – NOD in very nice areas of Poway, near Tierra Bonita School. These price drops are occurring everywhere, yet the median is down only 1%? Did you guys ever think of asking WHY? Or perhaps you don’t know that prices are dropping because you are not talking with realtors, and are ivory tower educators?
I will not trade the Case-Shiller index, because it is not liquid enough. Chris Johnston, a trader, warned us to avoid these, as they are illiquid.
I do not use the L word lightly, but in Gin’s case, it was well put. I gave you the reasons WHY I called him ignorant or lying. Instead of saying my name calling is childish, go after my arguments as well. cooperdog, rebut me and make me look like a fool!
ParticipantStrickland did a great job of giving an alternate view. Of course, I agree with him, but what is amazing, is that he has the guts to write it.
ParticipantBill Fleckenstein advised a subscriber to NOT short the homebuilders. I posted the question and responses before. I also agree they will keep going down, and many factors can intervene to make the stock price go up, and cause you to lose the money. Veteran mutual fund manager Bill Miller buoght up a bunch of homebuilders, saying they are value plays. We could see consolidation, buyouts, an earnings surprise, and these would cause a temporary price spike. Even the Fed pause can cause a price hike. Althoug the long term trend is down, a temporary price hike, or dead cat bounce, could make you lose your shorts, so to speak 🙂
Chris J, why does Fleck recommend shorting only AFTER the Fed pauses? Is it because we will have a rally? The rally can wipe out your short position, right?
Following is a Q&A, and 2 quotes from a guy who shorts for a living.
Q: What do you think are the drawbacks, if any, of shorting LEND now?
• …that you could get squeezed hard in a rally.Q: With the serious slowdown in MEW (mortgage equity withdrawals) and the obviously slowing housing industry – what do you think about shorting some of the big hardware type retailers?
• Could be a good idea… AFTER the Fed backs off.
there will be more money short the guys who have lent against real estate, IMO… so they are better targets.the long side is way, way, way easier… and the gains can be far bigger.
As for housing FALLOUT, I prefer the lenders against home as collateral. THAT is where the real wipeouts will occur in my opinion, so I decided to do them instead of housing stocks.
ParticipantNext In Line, welcome! Why did you think we would not “take it easy” on you? Several new posters have said to take it easy, so I’m wondering if we’re really rough on people… What questions should a reporter ask? Are you also saying that we should keep track of reporters’ stories? Do you have any examples from U-T writers or others? You could start a thread; it would be interesting to see some of the old stories, and how they compare to today.
ParticipantI e-mailed back to Ms. Wedner as follows
A true investigative journalist doesn’t blindly copy what other people say. They question its validity. The stuff these economists told you doesn’t even make any sense. You are too offended to even consider that you have been duped.
A real reporter of the likes of John Stossel or Danielle DiMartino of the Dallas Morning News asks a lot of questions, and doesn’t take “experts” at their word.
I can see why the LA Times is losing readership. The “reporting” that you describe is more like a 6th grader taking notes in a class, than a college senior working on an investigative thesis.
I have investigated this story, and that’s why I know much more about this than you. I tried to help you. Your defensiveness was an obstacle though, so I have to let it go.
July 25, 2006 at 8:35 PM in reply to: Sources Needed for “why commodities can’t sustain their bull run” #29624Participantjepsd, wow! Interesting stuff. Why do you think the Fed will lower rates? With high inflation, how can they do so? Perhaps inflation will be reduced when the recession starts, and then the interest rates can be lowered. Why would that “make things worse”? If the dollar falls, our exports will go up, and that will help balance the economy, right?
One more thing about China that nobody ever talks about: they are printing money like mad, at the rate of their exports to us! Every year, China’s central banks print $600-700 billion or more, of yuan. [Q: do they print the full amount of exports, or only the deficit amount?]
The reason: to keep their currency from appreciating, they cannot exchange the dollars they get for yuan, so they print yuan to give to the person who brings them dollars, and invest the dollars in the U.S. I am sure nobody really understands this, but I know this from reading The Dollar Crisis. So my question is: how is this affecting China’s economy, and how long can they get away with it?
jepsd, why didn’t US consumers start purchasing back in 1921? Why isn’t China taking steps to make their citizens into consumers? Don’t they see the US recession that is looming? Why are they backing themselves into a corner?
Most important, why does China really need the US? They are exporting to us ON CREDIT. Why not “export” to their own citizens? They are making goods so cheap, they could just consume it themselves, right? They get no interest off the Treasury notes they buy, so basically they are giving away all the things we buy from them. If we stop buying from them tomorrow, it won’t affect them at all, since we are not paying them anyway! This is the biggest joke of all. We think China needs us, but we buy on credit, so who needs whom? China can dump their treasuries all at once, and use the proceeds to buy up natural resources all over the world.
ParticipantSan Diego Magazine’s July 2006 issue listed the top 8 high schools in San Diego. ALL FOUR POWAY SCHOOLS ARE ON THE LIST. Poway High School was noted by the magazine for the many teachers with Master’s degrees. I did not read the article, so I don’t know all the criteria that were used.
Two of the 3 high schools in the San Dieguito Union School District, which serves students in Solana Beach, Del Mar, and Encinitas, made the list; La Costa Canyon High, the 3rd school in that district, did not.
“800 Club”
Top High Schools
Coronado CORONADO
La Jolla LA JOLLA
Mt. Carmel POWAY
Poway High POWAY
Rancho Bernardo POWAY
San Dieguito ENCINITAS, San Dieguito Union Schools
Torrey Pines CARMEL VALLEY, San Dieguito Union
Westview POWAYAsianautica, the reason Preuss has high API, is because it is made of parents who value education, because only the parents who took the time to investigate about this school, participate in the competitive entry process, and drive to it, are there. It is the parent’s emphasis on education that determined the school’s API, and as we discussed in another thread, poverty and lower socioeconomic standing and cultural factors make education less important to some groups. So Preuss is an example of selective bias. If you can go in to the lowest-ranked San Diego school, convert it to a Preuss style school, then let’s see if the API score is as high as the score of the “optional” Preuss. Then we can truly see if the difference is the parents or the teachers.
ParticipantI ran this by a business consultant friend. He said that about 200 of these jobs would be local hiring, and the other 100, for high level managers and specialists, would be people moving in. He said that Yuma can easily absorb 100 new people without seeing an impact. The pop is 90,000.
The financial planner told me their strategy is to buy land in outlying areas that have the potential to grow, hold for 5 years until the development grows up around that land, and then be the last parcel to sell. Buy low, sell high. It’s a savvy marketing talk, and my friend fell for it. It worked once because their timing was good, and now they probably put a lot more money into it. The planner told me you can use 401K money, so I think my friend put her retirement money in there; I’m certain that’s what she did. I told her all these problems that I see, and that I am warning her this is risky. I hope she stays my friend.
I will post back any further information I get. Aren’t they required by law to give me a bunch of information and disclosures? They have a feasibility study and appraisal, so what reason could he give for withholding that? He doesn’t have to give it to me, but wouldn’t it look bad for him, if he withheld it?
I want to know how much the land in Yuma appreciated already, to find out if the raw land is also part of the bubble. Yuma residential properties are in bubble territory, as I wrote in the post.
Why wouldn’t this land become more valuable, if Yuma does indeed grow out by 10 miles? He told me the refinery is outside of town (he didn’t say how far), and the parcels are located 4 and 8 miles on either side of the refinery.
I mistrust him a little, because he lied to me. He said the refinery would employ 4000 people. My consultant friend pointed out that refineries are capital intensive, but need very few workers. He said the 4000 figure refers to construction crews, who come and go in phases of several months each. You don’t build schools and shopping centers for a temporary crew of 300 construction workers, most of whom would come without their families anyway. So for 3 years, you’d have 300 temp workers, coming and going, and when it’s all done, you’d have 100 well paying jobs for specialists who are brought in. How would that make the price of that land go up? Impossible!
What happened in Calipatra?
I am fascinated by the way some of these real estate salespeople fool investors. This story, if you follow it, is a fascinating exchange of logic, where clearly the salesman is falling flat on his face. Thanks for helping me through this Bugs. I owe you one!
ParticipantA poorly made video is a detraction, almost. I saw one the other day, that was 15 minutes long! The agent stood there, walking slowly through each room, explaining every feature of that house. Shouldn’t a video be about 30 seconds long? Does anyone really still use dial-up?
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