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powayseller
ParticipantDon Harrold’s video (thanks for the link) shows that only 1 out of 4 Dow stocks are above their 2000 prices, and the other 75% are actually in the red compared to 2000. Companies have been buying back stock and doing mergers, so what is the true earnings from operations? There is a lot of fudging with the expectations numbers too, as Fleck explains: companies will give lower guidance a few weeks before their earnings report comes out, and then provide the miraculous “beat-the-number”. This is engineered earnings. If you look at the expectations set at the last meeting, then how does it compare??
The most important indicator of the corporate health is the increase in profits from operations versus last year? That strips away earnings expectation manipulation, stock buybacks, and mergers. Let’s also take away options games.
Maybe you can explain this part, since you are following the stock market so closely. I am curious what is the true health of the companies, not just the spin they can get away with on managing expectations.Participantlendingco: that’s what I said. “If you live in your home for 2 out of 5 years, you are not subject to capital gains taxes…”. It doesn’t matter where the 2 years occur. It just has to be a total of 2 years within the 5 years. I used the example of someone renting out today, who would only be able to rent for 2 years before being hit with the tax at time of sale. I did not mean to suggest you had to live in the house the last 2 years. Sorry if I was misunderstood.
ParticipantIf you live in your home for 2 out of 5 years, you are not subject to capital gains taxes at the time of sale on $250K/person or $500K/couple. So if you rent out your house today, and sell it November 2008, you would not meet the exemption and thus have to pay taxes on the profit from your sale. I don’t know how the profit is calculated (sale price – purchase price – expenses)? Paying taxes on the profit would really suck if you some of the profit was already spent via refinancing.
ParticipantThe downsides to renting:
1) the longer you wait to sell, the lower your house price is going to be. You may have to wait 15 years or more to get back to today’s prices. Your home value will take a big dip after the state regulated lenders have to follow the new lending guidelines and another big dip once the $1 trillion of ARMs reset next year; in a few years, a 2006 sale will seem almost like the top of the market.
2) you can’t release your equity if you rent; selling gives you equity for your downpayment on the new digs
3) if you sell after 2 years of renting, you will owe capital gains taxes on the profits, and if you sell within 2 years of renting you are sure to take a big loss compared to selling todayParticipantThe new lending guidelines are in 2 phases:
1) first phase applies to federally regulated lenders (i.e. depository institutions), and those were released about 1-2 weeks ago. Ex: Citibank, Wells Fargo
2) second phase applies to state regulated lenders, and should be released within the next month. ex: Countrywide, Option One,Until phase 2 is completed, borrowers will go to state regulated brokers for loans, so you are *not* going to see any effect at all, until they are released.
It is only AFTER the state regulated lender guidelines are released, that the impact of these guidelines will be felt.
You are not seeing any impact now, because borrowers are going to Countrywide to get what they can no longer get from Citibank. Believe me, the depository institutions are anxious to level the playing field, so there is lots of pressure to get these guidelines out. The lady in charge of these guidelines said they would be released “very soon”. Only AFTER they are released will you see the impact. I hope I explained it better this time.
ParticipantCan you comment on the new lending guidelines? Have you read them, and how will it affect your business? Great to have you here on the forums!
ParticipantIf you check with the Chamber of Commerce, we have a housing shortage; we’ve underbuilt by 1 million homes in the last 10 years in California. According to Sherm Harmer of Urban Housing Partners, “Many media sources and feature writers would like the public to believe a huge real estate bubble is forming and that the sky is falling in the residential real estate market. Headlines and stories have been reported that sales are down and prices are falling. It is amazing how sales have slowed in direct proportion to the amount of negative press that has been generated.” He goes on to say that the bubble is a fiction in the mind of the media. Then, get this: “…this year, San Diego County will create close to 20,000 new jobs, generating demand for more than 14,000 homes. Based on current projections, the county will issue fewer than 9,000 permits – another year of underbuilding>”
Ok, let me get this straight: we’ve been losing population of 15K, 25K, and 43K people in each of the last 3 years, and population actually declined last year by .2%, but he thinks we have a housing shortage? We have a shortage of affordable housing, not a housing shortage.
jg, did you read in the CNN story, a quote from one of the NAR spinmeisters that inventory is leveling off? They forgot to say that inventory always falls in the winter, and so do sales.
ParticipantSince these are just tract homes, I’d price at 5% less than the most recent townhouse sale in my area. The most recent sale, 1 block away, is a unit only 10 years old with brand new roof and a larger garage, also a corner lot, but smaller (1575 sq ft). Final list price was $440K – $470K, and it just closed a few days ago. Based on that sale, the $495K price seems reasonable. However, if one of the realtors is around, they could better say what it is worth.
ParticipantSorry to keep you all waiting. I’ve got my Excel files open and am plugging away. The more data I get and analyze, the more questions come up. jg and Rich are my inspiration to keep going.
Participant1st listing, MLS 066080619, paid $430K March 2004 (Nov 94, $204K). This one is now reduced to $470K; estate sale.
2nd listing, MLS 066072181, paid $182K, July 1990 (any MEW in the meantime?). Couple nearing retirement.
3rd listing, MLS 061088282, paid $328K, Dec 2002 (Dec 1999, $212K). She’s the one who is relocating and must sell.
We’ve had a few sales, but they were smaller units. The peak price was $588K in January 06 for the 4 bedroom model.
I tried hard to clean up this story, but sorry if it was unclear.
ParticipantI just called Rydex to follow up on this question and guess what: the customer service rep actually connected me to Ryan, one of the portfolio managers! Ryan explained that the Rydex funds invest 5-10% of their cash (depending on the fund) in short futures and swap agreements, so they are investing on margin; the other 90% – 95% of cash is invested in short-term (less than or equal to 3 months) GSE discount notes earning 5%. Thus, the interest earned more than makes up for their fees, and he thinks their return beats the ETF, because in an ETF your brokerage account is unlikely to give you 5% interest on your cash. He told me to call back anytime I have further questions: 800-820-0888.
However, this chart comparing the ETF to the Rydex S&P500 inverse fund shows the ETF performed slightly better.
Also the minimum investment applies only if you are opening the account with Rydex. If you are buying the shares through your brokerage account, you can invest any amount you like.
I think I may have bought this too soon; the stock market rally is continuing. Only a few Dow stocks are past their 2000 highs, but since the Dow is weighted, the entire index is up just because a few of the 30 stocks are up. Maybe this will continue until after the election?
October 24, 2006 at 12:34 PM in reply to: 2 million foreclosures predicted in the coming months #38370ParticipantI wanted to respect the request that I post less, and wanted to let the forums evolve without me. So everyone can decide for themselves if this has been beneficial.
ParticipantI called Rydex and they told me they have put options on the Dow stocks. Your comment is concerning to me. Who told you about the Fannie Mae position? rydex has several inverse funds, and one of them is flexible, i.e. they can be inverse a variety of things; however their inverse index funds are supposed to be just put options on most (but not all I think) of the stocks in that index.
I’m also interested in the ETFs. Do you have any names of inverse ETFs? I couldn’t google it.
ParticipantWhat are the names of the inverse ETFs? Thanks for the information. I didn’t know they existed, but since I want to continue going short the market, I would like to learn more about the inverse ETFs.
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