[privatebanker]

Managed Futures/Commodities funds have been outperforming the market for the last few years. Be really careful with trying to play the futures/commodities markets on your own. It’s far different than buying/selling stocks. You can get really stung. Look for a money manager that specializes in this area. Managed Futures Funds may be a little on the expensive side but it’s a good specialty asset class that has very low correlation to other standard investments (stocks/bonds).

http://www.theprivatebanker.blogspot.com/

[privatebanker]

Here’s probably the most interesting and sensible article that I’ve seen on the Realty Times:

http://realtytimes.com/rtapages/20051229_topmistakes.htm

http://www.theprivatebanker.blogspot.com/

[privatebanker]

While we’re talking about real estate’s demise, has anyone noticed the 10 yr. TSY yield has really broken through it’s resistence levels? It closed at 4.855% yesterday. That is killing long term mortgage rates. My bank’s 30 yr fixed with 0 points was around 7% yesterday. There appears to be a major uptrend occuring.

http://www.theprivatebanker.blogspot.com/

[privatebanker]

With regards to Option ARMs, if the borrower only pays the minimum due and the loan balance grows and exceeds a certain percentage, the borrower will receive a scary letter asking for a loan balance pay down. The bank usually just goes off of originating LTVs. I don’t think they reassess properties’ LTVs unless there was delinquencies or something to that tune.

[privatebanker]

I believe your right on if a property drops 20% on an 80/20, the heloc essentially becomes an unsecured loan. However, they still have (on paper) a lien on the property. It’s almost like comparing preferred stock to common stock in the event of a liquidation of a company. I do know that, for example, if a borrower has an option arm and the loan balance exceeds a certain LTV from the originating value, the borrower will need to pay down some of the loan. Almost like a margin call. I’m not sure if all lenders require this but I know my bank (that I work for) requires this.

[privatebanker]

Here’s another interesting fact regarding MBS per PIMCO:
“MBS are the Largest Segment of the U.S. Bond Market
With $5.6 trillion in mortgage-related debt outstanding as of June 30, 2005, mortgages are the largest segment of the U.S. bond market, accounting for 22.9% of all bond market debt outstanding, according to estimates by the Bond Market Association. For comparison, corporate bonds account for 20.4% of the market, and Treasury debt accounts for another 16.3%.”

“Mortgages are also among the most actively traded securities in the U.S. bond market. Primary dealers-the large banks authorized to deal directly with the Federal Reserve-traded on average more than $260 billion per day of agency MBS in 2005, according to data from the Bond Market Association and New York Federal Reserve Bank. For comparison, primary dealers traded about $20 billion per day of corporate bonds with maturities of more than one year in 2005.”

I’d be curious to see how this changes going forward.

http://www.theprivatebanker.blogspot.com/

[privatebanker]

You bring up a good point. Many of the portfolio managers for these funds use derivative strategies to limit risk. Through the use of credit default swaps, in theory, should protect a debt instrument from losing value. I do not believe that they’ve been fully tested in a real panic situation though. As for money funds, the risk is far less than just an average bond fund because of the extremly short duration and maturity time frame usually up to 60 days. Also, money managers are acknowledging the fact of a possible MBS meltdown and should be watching this market very closely. This is one of those things (MBS market) that we haven’t really seen before. Maybe the “Plunge Protection Team” will do their manipulation if things got real ugly!

http://www.theprivatebanker.blogspot.com/

[privatebanker]

According to Ziprealty, there are 178 properties for sale in 92117. That number includes 121 SFRs and 57 condos.

http://www.theprivatebanker.blogspot.com/

[privatebanker]

What the?!! I’m spellbound! How can this be approved for public dissemination? Regulators really need to crack down on these realtors and so called economists.

http://www.theprivatebanker.blogspot.com/

[privatebanker]

Classic example of a naive reporter. I really don’t know where to begin with this. She’s simply regurgitating a bunch of figures and putting a little spin on it. She is right on one thing though, we are going to see a record for housing this spring. It won’t be in existing sales and price appreciation, it will be in a record level of “For Sale” inventory on the market!

http://www.theprivatebanker.blogspot.com/

[privatebanker]

To add to what you are saying with regards to home prices falling 40%-50%. I think that will be the median price. There will be greater price drops in “hot” areas. And then there will be areas that really haven’t increased in price at the pace of all the “hot” areas. Buying a home right now for the common middle class person is essentially a financial disaster in the making.

http://www.theprivatebanker.blogspot.com/

[privatebanker]

One is better off buying an undervalued asset with a higher interest rate vs. buying an overvalued asset with a low interest rate. Reason being: first the obvious, better opportunity for appreciation over time with an undervalued asset. Second, you will have a better opportunity to refinance going forward as rates may become more attractive. Taxes: you will have a higher tax deduction on a higher interest loan and you will also be paying lower property taxes on the lower purchase price. Locked in: you will most likely not be locked in your home for a very long time because you would ideally be gaining equity vs. losing equity to market depreciation. Bottom line, now is not a good time to be buying real estate.

[privatebanker]

I wouldn’t be surprised if these guys were manipulating the market like that. I know for a fact that they’re hurting bad financially. I have information to confirm that too. A lot are seeking private investors and are selling off units of their companies just to try to stay a float. I feel sorry for those who are committing capital to these “dogs”. They won’t be around much longer.

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