[stockstradr]

I’m gettin’ a bit scared also. If recession is really nasty, engineers like me get laid off.

As for real estate dropping 70% in real dollars, I don’t think so. In fact, average home in San Diego isn’t going to drop 50%. No way.

Now, downtown condos may drop 50% off their peak, that I’ll agree with.

[stockstradr]

I’m going to short the Chinese stock indexes, but I’m still working out the best way to do that. Anyone have ideas, do please post them.

Bottom line: when a stock market moves from 1100 to 5000 in a couple of years, and the banks of that nation own BILLIONS of subprime loans (which are defaulting at rates above 15%) a stock market crash is inevitable. It is only a matter of WHEN.

One must keep in mind that inside China right now almost NOBODY has heard of “subprime” or has any idea Chinese banks are up to their ears in owning subprime backed securities. It could take months before Chinese investors get wise to that. Obviously the government censors are hard at work keeping this topic MUM.

[stockstradr]

Well, on the plus side. My wife and I lived about 4 blocks from Pienza and saw them develop that area.

We really liked that area of Ranch Bernardo, even though it is not as desireable as many other RB areas such as homes around Bernardo Heights Country Club (where we also lived previously)

The weather is fanastic in that area. We only ran either AC or heat about 3 total days per year.

I love that Lake Poway park that is only about ten minutes drive to the East. When I was in good shape I used to drive over and fun full speed up to the top of Mt Woodson and then run back down to Blue Sky Ecological Reserve, about 9 miles. That was a great run, really wonderful.

[stockstradr]

I think your first mistake is asking a Realtor to price it

I know this may offend some, but I absolutely agree with above statement. Every time I let a Realtor choose listing price, I regretted it, and when I did the comp’s and chose the listing price, it saved me tens of thousands.

One of many examples:

In 2003 I had a Realtor strongly advise my small condo in the far north Chicago suburbs should list for 160k. I could tell she was lying and just wanted her commission FAST.
I then did the comp’s and concluded it should list for 175k.

I had read a book on the “hidden side” of Realtors which explained how they often under-list a home by 5% to yield a quick commission, knowing that it only reduces their commission by a few hundred dollars, but it costs their client tens of thousands

Anyway,
That Chicago Realtor argued with me for 2 hours, and to compromise I finally agreed to list it at 170k.

It sold in 24 hours, for 170k. Also the bidder initially offered 160k. My Realtor suggested I counter at 165k. I ignored that advice also and countered with “the price is 170k, pay it or go away!”

Savings for my ignoring Realtor’s advice: ten grand!
I should have listed that condo for 180k, I could have saved more.

Another thing I’ve seen Realtors do: cherry pick the comp’s so buyer sees a filtered comp list that misleads buyer to list at price Realtor recommends, so Realtor gets commission faster.

I’ve also worked with good ethical Realtors who would never do any of these underhanded things.

One more thing. I had a half-dozen Realtor friends tell me I was CRAZY to sell our San Diego condo in mid-2004, telling me it would continue to appreciate in next few years.

That condo is now worth 25% less, and most of those Realtors had to change careers once they saw real estate market COLLAPSE.

LOL

[stockstradr]

Having sold our house at the beginning of this downturn, my suggestion (learnt hard way) would be – Be more aggressive in pricing down the house. If you are not in the bottom 20% of comparables, both $ and $/sqft wise, nothing will happen and you will chase down the market. Many agents take comfort in placing it near middle. This market is absolute catastrophe and many RE folks are in denial (except all those who lost jobs).

Great advice!

[stockstradr]

“luchabee” writes:

For those going long like stockstradr, how do you time the market going back up?

lunchabee, I think you are mixing me (diehard bear mostly short this market) up with many on this forum who are buy-and-hold bulls in long positions. By the way, I respect the buy-and-hold investors, particularly those good at value-investing.

However, I’ll answer your question about how I time the markets, and when it is purely guessing.

For me, the key is to identify the economic trend or event that is certain to happen, and anticipate how it will hit the markets before most others see it coming. Then you take market positions that reduce risk associated with having to GUESS when that market event will happen.

I read all the forward-thinking analysis (of economic trends) i can get my hands on, and use it to brainstorm “what will likely happen when…” scenarios.

Often precipitating events make scenarios so certain that one need only guess on WHEN the shit will hit the fan, not IF it will. A housing crash, for example, was inevitable given the toxic loans, speculation, outright fraud that created the bubble.

I saw that a combination of events also meant a major stock market correction (30%) will hit along with a recession.

I guessed that correction would start about Dec06 to Jan07. I was wrong, but since I was guessing on timing I only put about half my portfolio short; however, the market then climbed up over 10% against my short positions. *ouch*

In Jul07, I guessed again the markets had finally topped out. I put the rest of my chips on the table. This time I was right and having increased my position just before the pullback meant I covered my losses from shorting half my portfolio six months early.

After the market fell 10%, I guessed just on instinct Aug 16th the bargain hunters would come in and markets would see a 5% fool’s rally. I closed all my short positions, except my puts (less than 5% of my portfolio)

I guessed right and markets did exactly that and by (Aug 24) I went short again with 30% of my portfolio. By Aug 27 I gained confidence in that guess (bear trend has resumed), so I put the other 2/3 back into short positions. The market fell -280 points the next day (yesterday), giving me nearly a full 5% gain just for that day. (My portfolio was in positions that gave 2X inverse market performance)

Last night I figured the market would continue falling today, so I held all my short positions. I was wrong. The market is up 1.3% as I write this. Win some, lose some.

However, I continue to believe today this is just normal volatility on top of a a nasty bear trend line down, which will take us 5% to 10% lower from here before we see another fool’s rally. Today’s rally is looking quite weak anyway. There is so much fear in the market that INCREDIBLY good news will be required to support a significant fool’s rally, and that kind of news is unlikely. More bad news is far more likely.

I saw that last night the Asian markets took a bit of a tumble. Remember, another pet theory I’m holding is that Asian (particularly Shanghai) exchanges are way way overbought, and currently offer a better shorting opportunity than western markets.

[stockstradr]

In the short run, the Fed can goose the market. In the long run, the Fed will be ineffective in stopping a correction in a recession.

Exactly.

The Fed can only “drop a few more uppers in the punchbowl”

Here is my current allocation:

5% Puts on the S&P500, JAN08 and JAN09 expirations
50% PROSHARES SP500 2X INVERSE (SDS)
35% RYDEX SP500 2X INVERSE (RYTPX)
10% CASH

Of those, I recommmend the PROSHARES SP500 2X INVERSE (SDS) because you can trade it intra-day, which you cannot do with the RYDEX fund. The S&P 500 Puts are too expensive now. I bought mine before July, before volatility increased and was priced into the puts.

Yes, I know mine is an incredibly risky portfolio allocation, so I don’t need to read your scathing replies about how I don’t know how to manage risks. I’m young. I understand the risks. This is extreme gambling. It is also great fun, and since mid-July it has been a great money-maker, putting me well ahead of the indices for the year.

With that allocation you can imagine how much my accounts go up on days like this. I LOVE BAD NEWS for the markets.

My advice for everyone is don’t be long this market. This is a market with such dark vengeful fury that it will mow down anyone holding bullish positions. I see an additional correction of 10% before the end of the year, and it could be bloodier than that.

Yes, if I sound familiar to you old timers, that’s because I’ve been posting on here since about 2004, only under a different nickname that you know well. I switched to this far more anonymous nickname this month to provide myself more privacy. If you figure out who I am, please don’t post the old nick because that won’t be nice.

I’m still looking for a way to buy puts on the Shanghai A Shares index, and I haven’t found a way. If anyone has any ideas, do let me know. I seek puts because I cannot short in my retirement accounts.

[stockstradr]

You’re right. That itulip video is great. Pulls no punches.

[stockstradr]

You’re right. That itulip video is great. Pulls no punches.

[stockstradr]

You’re right. That itulip video is great. Pulls no punches.

[stockstradr]

mgubnyc1 asks:

one thing I don’t understand about Piggington’s why is it everyone loves bad news?

Do my wife and I love reading “bad news” about falling home prices in America..

My answer, said with a *Jack Nicholson Grin*:

YOU’RE DAMN RIGHT I LOVE READING ABOUT REAL ESTATE PRICES GOING DOWN THE TOILET!

🙂

My wife and I bought a home we could afford, in San Diego. We then saw a real estate market go insane with speculation. We sold. Greedy friends made fun of us for selling, and gave us their unsolicited “advice” for years about how we are missing out on all the future appreciation, blah blah blah. Ahh, but that anticipated additional appreciation never came.

We practice fiscal responsibility. We don’t need bailouts, and don’t go begging US taxpayers for them either. Essentially by taking our half-million out of our home we bet that PRICES WILL FALL. We did it by selling and putting money in other investments.

To renters, news on falling home prices isn’t “bad news” but instead is GOOD NEWS, and we don’t apologize for that perspective.

I want home prices to fall. I want to see “blood in the streets” and homeowners stunned stupid at how much they have lost in equity.

NO APOLOGIES!
🙂

[stockstradr]

mgubnyc1 asks:

one thing I don’t understand about Piggington’s why is it everyone loves bad news?

Do my wife and I love reading “bad news” about falling home prices in America..

My answer, said with a *Jack Nicholson Grin*:

YOU’RE DAMN RIGHT I LOVE READING ABOUT REAL ESTATE PRICES GOING DOWN THE TOILET!

🙂

My wife and I bought a home we could afford, in San Diego. We then saw a real estate market go insane with speculation. We sold. Greedy friends made fun of us for selling, and gave us their unsolicited “advice” for years about how we are missing out on all the future appreciation, blah blah blah. Ahh, but that anticipated additional appreciation never came.

We practice fiscal responsibility. We don’t need bailouts, and don’t go begging US taxpayers for them either. Essentially by taking our half-million out of our home we bet that PRICES WILL FALL. We did it by selling and putting money in other investments.

To renters, news on falling home prices isn’t “bad news” but instead is GOOD NEWS, and we don’t apologize for that perspective.

I want home prices to fall. I want to see “blood in the streets” and homeowners stunned stupid at how much they have lost in equity.

NO APOLOGIES!
🙂

[stockstradr]

mgubnyc1 asks:

one thing I don’t understand about Piggington’s why is it everyone loves bad news?

Do my wife and I love reading “bad news” about falling home prices in America..

My answer, said with a *Jack Nicholson Grin*:

YOU’RE DAMN RIGHT I LOVE READING ABOUT REAL ESTATE PRICES GOING DOWN THE TOILET!

🙂

My wife and I bought a home we could afford, in San Diego. We then saw a real estate market go insane with speculation. We sold. Greedy friends made fun of us for selling, and gave us their unsolicited “advice” for years about how we are missing out on all the future appreciation, blah blah blah. Ahh, but that anticipated additional appreciation never came.

We practice fiscal responsibility. We don’t need bailouts, and don’t go begging US taxpayers for them either. Essentially by taking our half-million out of our home we bet that PRICES WILL FALL. We did it by selling and putting money in other investments.

To renters, news on falling home prices isn’t “bad news” but instead is GOOD NEWS, and we don’t apologize for that perspective.

I want home prices to fall. I want to see “blood in the streets” and homeowners stunned stupid at how much they have lost in equity.

NO APOLOGIES!
🙂

[stockstradr]

Looking back, isn’t it bizarre people bought 1450 sq ft homes like this for close to 600 grand, expecting them to just keep going up in value? Six-hundred grand for a 3 bedroom SFH in a so-so neighborhood!; it really shows the level of insanity and speculation. But I guess it can be understood in the frenzy of hoards of sheep (buyers) all running in the same direction and believing prices will just keep going up and UP.

I remember when our 3 BR/2BTH, no garage, 1200 sq ft condo in a so-so part of RB went over four-hundred grand on price. I saw it was insanity. That condo was an apartment convert and such a POS. That valuation had completely lost touch with reality.

[stockstradr]

Looking back, isn’t it bizarre people bought 1450 sq ft homes like this for close to 600 grand, expecting them to just keep going up in value? Six-hundred grand for a 3 bedroom SFH in a so-so neighborhood!; it really shows the level of insanity and speculation. But I guess it can be understood in the frenzy of hoards of sheep (buyers) all running in the same direction and believing prices will just keep going up and UP.

I remember when our 3 BR/2BTH, no garage, 1200 sq ft condo in a so-so part of RB went over four-hundred grand on price. I saw it was insanity. That condo was an apartment convert and such a POS. That valuation had completely lost touch with reality.

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