patrick.net

First!

From time to time I've thought this blog approached group thinking. Mostly it manifests itself by attacks on pro-RE rookies, who immediately get characterized as trolls and perma-bulls and then rained on. Fuzzy Math on the last thread was kinda middle of the road compared to Confused Renter. The counter-points were valid, but the negative emotions displayed can easily be attributed to a bunch of JBRs.

Anyway, I believe there is a bubble (and a huge one in the Bay Area), but it's hard not to notice that many patrick.net posters have memorized the exact same argument. Which can be summarized with, "It's in the bag. The crash is guaranteed to be huge. The dollar will tank and we'll buy McMansions for dimes on the dollar. We're already picking through the rubble." And so forth. Such 'arguments' are really just an inversion of the realtor propganda. I've seen plenty of people take projected data and work themselves into a frenzy for one political party or the other... the group "psyche up" on a blog is no different.

The exceptions are Randy H and a few others who are actually able to provide a meaningful analysis based on real financial theory. I come here for the factual stuff and real anecdotes, but sometimes the rah rah is a bit much. I mean, if the bubble pop is so predictably in the bag, then I expect to see several millionaires come 2008/2009.

Just my two cents.

The decline of the USD is irrelevant as a direct factor vis-a-vis house prices in the US. It is only relevant insofar as inflation. Unless you already have or will earn foreign currency, you will be buying dollar-denominated houses with dollars. If the Fed elects to defend the dollar, then interest rates will rise, making debt-financed owning more expensive. If the gov't decides to defend the dollar (with fiscal policy), then your taxes will go up, effectively meaning you lose tax-deduction power, raising the cost of debt-financed owning.

If inflation rises then owning a home becomes progressively more valuable ceteris paribus* because (a) real estate is a historical safe haven from inflation; it is at worst uncorrelated to inflation cycles; (b) having fixed-rate amortizing loans is valuable in a rising inflation environment. And when the inflation finally breaks, it will be due to rising interest rates, which also rewards the fixed-rate debt holder.

These are the very real factors working against savers and in favor of smart debtors. Unlike many here, I continually harp that debt itself is not a bad thing. Debt can be very powerful if used appropriately and smartly. Simply; it can be beneficial when you can afford it.

Monday's FT: the wealthy top 10% of America have well over 50% of all US personal debt on their family balance sheets. Why? Because their professional wealth managers determine their capital structure and tell them that buying a $20M mansion with borrowed money is cheaper than using cash. Better to put that cash into a VC/HF/PE fund.

Meanwhile saves subsidize that activity, because of inflation.

...how's that. I await calls for my head...

Yeah, i nominate that for comment of the month.

The decline of the USD is irrelevant as a direct factor vis-a-vis house prices in the US. It is only relevant insofar as inflation.

Well, like you Randy, I've admitted to holding a long cash USD position, a position which is likely true with most of the voluntary fence sitters here. Inflation is our nightmare and a plunging dollar would produce it on imported goods at least and likely trickle into wages. We've both said before that if we knew that inflation would get out of control down the line, the best thing to do would be to take out as much fixed rate debt as possible and buy whatever hard goods you can squeeze into your garage. A roof over your head is also a hard good, albeit one with significant running costs, so we should all buy houses if the inflation threat is real.

At a 20% inflation rate, $800K will feel like $400K today in only 5 years. Presumably, your salary will also double in 5 years at 20% (relatives tell me about WEEKLY raises back in the 70s). The ones this hurts the most is suckers (like me) holding cash. And don't tell me that my I-bonds have been protecting me from inflation; I want to buy a house, not a frigging CPI toaster.

I would gladly borrow $200K at a 30yr fixed rate now if I could wrangle it without buying the house. Whatever X might say, this would be a smart debt to take on as it would hedge me at a time of historically low interest rates. If I could claim it on my income tax as well, well then, wouldn't that just be peachy.

The data that keeps me firm in my position NOT to buy is the fact that wages of the lower 90-95% of earners have yet to significantly budge over the past 6 years. If wage inflation starts up, you better believe I'll be reassessing the thought of a house purchase. Bernanke claims he's on the ball. That remains to be seen.

-----------------

On a side note from last threat, Fuzzy doesn't strike me as dumb or blind and I too appreciate and acknowledge his candor. Of course, when the smart guys look like they're in a dicey spot...

I don't see much evidence of group think when the discussion narrows down to specific variables at work, and none at all in those moments when we're projecting timetables and outcomes.

When the 'bright guys' focus on single variables and begin constructing syllogisms I'm all ears, since this is where I get a look at verifiable data - how stuff works. Even those if/thens come under a kind of peer review. So much the better.

OT, I may have been the one Claire thought had bailed from equities into cash, and that is only partially correct. The greater part of my assets are in trusts, partnerships and closely-held stocks (family enterprise) over which I enjoy little control, or none at all. That my personal portfolio is now heavily weighted towards cash is absolutely no suggestion my position is appropriate to someone else's individual circumstances or needs.

Screw it.

I'm sick of all you people following the flock & sh-t. What's up with that?
What did God give you a brain for?

One of the smartest men in the world, Alan Greenspan, just said the worst of the housing market price declines is over.

WTF are you all waiting for? Christmas?

Get out there and buy a few houses in San Jo while the pickens are still good.

I'm "all in."

I want to look at the issue from the angle of Mundane Astrology. Too bad I do not know the stars well enough. Anyone?

Well firstly for bearsish people to fall prey to group think that turns out to be totally inaccurate the train wreck scenario is that they will pay the price in the form of opportunity cost.

Those on the bullish side of the equation face financial ruin when group think leads them down the wrong path.

So......assuming there are bullish signs all around us (with a rally just around the corner) and we are failing to interpret them correctly, well....... that's a risk I'm willing to take. It's not that I'm unaware that this is a risk, it's just that if you're cognizant of "survivor bias" then you don't have to worry about it!

Look, while I'm more than willing to give this topic all the breathing room it deserves this is a thread topic for 2003-2004. There are times when I re-read my posts and see them littered w/acronyms like FB, NAAVLP etc. and wonder if I haven't "gone native" my damn self. This is a danger when we (people in general) become too reliant on using labels so readily. OTOH there could be pitfalls to taking up our valuable time detailing just what an FB is!

I've learned that in business, you have to STAND for something! Right now I'm bearish on housing. That's what I stand for and so far, it's working pretty good in guiding my decision making process. Tomorrow that could all change.

When you look at some of the outright assualts (and considerable "insurgency" efforts we've had to weather) is it any wonder we've had to circle the wagons when we're challenging 69% of American's "religion"?

Michael Holliday Says:

> I’m sick of all you people following the
> flock & sh-t. What’s up with that?
> What did God give you a brain for?
> One of the smartest men in the world,
> Alan Greenspan, just said the worst of
> the housing market price declines is over.

If Alan says the worst is over maybe it is a great time to buy Myron Scholes home in San Francisco that sold for $1.7mm back in 1992. Scholes paid $6.5mm for the home in 1998 (just before his tough 100 days at LTC where he lost $4.5 BILLION dollars). With the price of Sholes home reduced from $14mm to $12mm it is well below the “normal” appreciation of $1mm a year we should expect (since they are not making land any more)…

> Get out there and buy a few houses in San Jo while the pickens are still good.

There are some good reasons to invest in San Jose (like the convenience of being able to buy ice cream from Spanish speaking guys pushing carts with bells in front of your house) but I say we stick with SF. As Fuzzy points out it will be easier to rent rooms in a SF house and in SF we have the other option of converting the home to a “medical” pot club and if that doesn’t work we can make some money using Scholes former home as a place of business for the “oldest profession in the world” (just like the 1930’s)…

http://www.bartlettre.com/listings/property.php?p_id=261

FAB,

I must say, that place has had an interesting history (most of it much more colorful than Mr. Scholes). Actually it had been used as an "opium den" for a time!

"Death, Taxes and Group Think!"

I'll "lighten up a little" when I see the last groundbreaking for the last upscale gated community go in, the last 'exclusive' condo project abandoned and cranes sold for scrap iron. When we see some tangible inroads toward lending/MLS/NAR/appraisal* reform I'll kick back a little.

I'm not backing off just b/c we've seen a 10% correction after a 300% run-up.

(Notice I didn't say REIC*)

CNBC just had a Jane Wells piece on Casey Serin and for all of you that posted on his blog, yes you were mentioned too! Jane said that Casey had rec'd a lot of helpful advice from his blog but also a lot hate as well! I guess we know where a*astrid* and txchick57 fit in!

The Caseman is considering doing one of those financial self-help books, "How to go BROKE in Real Estate" is his working title.

"Peter P Says:
I want to look at the issue from the angle of Mundane Astrology. Too bad I do not know the stars well enough. Anyone?"

Look to Jupiter and Saturn - what signs they're in, what houses, and thier angle to each other...

Look to Jupiter and Saturn - what signs they’re in, what houses, and thier angle to each other…

Cool.

Yawn, indeed there are some amateur economists who will have complex explanations.

However, let me take the direct and simple approach. I like Steve Jobs a lot, he had a single question for Sculley that was "do you want to sell sugar water for the rest of your life, or do you want to change the world?"

Cut right to the chase. The population always has a large percentage of people who will stretch their finances right to the limit to afford their Dream Home (tm). The last 5 or so years flat out used up that asset, and some of their friends too who were suckered in with this fiction that real-estate never loses value. What's left are the people who look at their incomes and assets, look at what is a reasonable set of terms to own a house and not be "house-poor" and eating Mac&cheese for the next 30 years, and go nuh-uh!

Quite simple a large chunk of middle America is currently priced out of the housing market, due to it not being in a range they find rational. The last 5-10 years have been devastating to the middle class. Inflation will make NO difference to this population group, as the problem still remains that they look at mortgages with payments a very large fraction of their paycheck and just can't see the benefit to it. Am I victim of group-think? No, I was saying this quite a bit before finding this blog. Few people around me would listen in 2004 and 2005 when the market was booming. The market will correct when prices are more in line with salaries, it really is just that simple.

Well firstly for bearsish people to fall prey to group think that turns out to be totally inaccurate the train wreck scenario is that they will pay the price in the form of opportunity cost.

That isn't a negligible risk. You could argue that much of the local anguish comes from people who want to own a house and have experienced this very opportunity cost themselves. Keynes' "The market can remain irrational longer than you can remain solvent" doesn't apply only to bulls. Being priced out of a house today does not mean you can't be priced out of a house for 25 years. Given lifestyle and family circumstances and lifespan, dismissing it as mere "opportunity cost" is too blasé.

Don't get me wrong. I'm bearish myself. (It will cost me personally, as my own house is up an IMO unsustainable 120% in five years and now around 25% of my net worth. But it's paid off, I like the area and comfort is a non-taxable benefit. So what if the price falls? Money isn't everything.) I'm bearish enough that I don't even believe that a bout of inflation will bail out US housing.

For one thing, inflation in housing is already in current prices. Housing prices are at current levels not because of a population increase or vast increases in real incomes, but because prices are set at the margin by (a) people with little skin in the game and (b) lenders willing to fund them as if they were buying a few pieces of furniture. No money down and don't pay us a nickel for two years is not a sustainable model. The lenders know it and, in fact, the contracts reflect the fact that the lenders know it. The out year resets and the fat margins over funding rates - all in the fine print, if only borrowers could read - are evidence that the lenders know. (Lenders aren't infallible. Relying on collateral that's falling in price will bite some, but let's be serious. Once the front end teaser is done, margins like 5% over funding are plenty to cover the risk.)

Mortgage deals are not going to get better than they already have been. Never rule out the cleverness of a mortgage broker looking to protect his fee stream, but where can they go from here that would drive house prices even higher? No payments ever? I guess that would work but you have to assume that lenders would fund on that basis. That would have to rest on an assumption that lenders are very very stupid. Are there instances of lender stupidity? Sure. Is it a general rule on which you can rely? No.

Loose credit got housing to where it is today but it can't push it any further. Where else could a price push come from? Dollar collapses and foreigners flock in to bargain hunt? That's a minor phenomenon at best. Wages skyrocket? That would seem to depend on giant wage increases in places like China and India. More two salary households? That curve has peaked already. Boomers retire en masse, driving up wages for their kids? ROFL. The average boomer household balance sheet is a train wreck.

Bottom line, if you want to bet, it's my opinion that you should be on the side of waiting to buy (or cutting and running now if you're on the bleeding edge). The economic arguments are all on that side of the scale. But it's still a bet. Sometimes the flipped coin really does stand on end. If you're out of the market, sitting in cash, wanting to hedge against the black swan, there are ways to do it these days. I see a dismissal of I-bonds above (and I assume as a corollary TIPS too) but they're worth considering. Consider inflation indexed bonds in other currencies if a dollar collapse is worrying you. Consider the Case Shiller housing futures that are trading now.

I suggested that real-options-analysis is useful for making financial decisions (in the previous thread).

It is.

If Myron Scholes causes one to have some kind of knee-jerk reaction against the math theorem for which he is partially responsible, then may I suggest simply using the Binomial Model for options valuation in ROA. That way you don't have to dirty yourself with evil Mr. Myron's partial diff eqs.

Randy, both the BS modeal and the CRR model requires volatility as the input. Estimating the "correct" volatility is not much easier than estimating future underlying prices.

I only use these models to calculate implied volatilities.

Brand: Such ‘arguments’ are really just an inversion of the realtor propganda.

Well said.

Vincente,

Yawn, indeed there are some amateur economists who will have complex explanations.

And there will be those for whom "it's just that simple" is all the more reasoning they require. My uncle can show you why Dutch Dairy farmers are destroying US agriculture. His response to any challenge is, "because it's just that simple".

Inflation will make NO difference to this population group [...]

Really. If it's all just that simple, please explain it to a slow wit like myself. In fact, I'd like to see a "just that simple" definition of inflation, let alone how inflation doesn't impact an average middle class, home-owning worker.

But if you're right then we need to change the indexing method of pretty much all fixed-income pensions, funds, and labor contracts. We might want to let someone know about that revelation.

The market will correct when prices are more in line with salaries, it really is just that simple.

"It really is just that simple". Yes. "prices" become "more in line" through a magical process known as the simplicity fairy. It has absolutely nothing to do with needlessly complex economics, fraud behavioral psychology, or imagined mathematics.

Peter P

ROA is only useful when you can determine volatility with a reasonable confidence interval. That almost always means historical volatility data exists, and is market determined.

I can use ROA quite effectively to figure out where to park my dollars, like in a house or in a money market or in gold (oversimplification).

I cannot use ROA to determine whether to buy a pure Deutscher Schäferhund from a breeder in Germany or just adopt a lovable German Shepard mutt from the local shelter.

Punchbowl,

Agree with all you have said but would like to make one minor observation re: opportunity cost.

Many bulls implicitly assume that most of us bears have the option of buying a house now, but are voluntarily abstaining from doing so becuase we don't want to overpay.

This is not accurate.

Here in Los Angeles I, like many other bears, am COMPLETELY priced out of the market. There is NO decent home that I can afford without using a suicide loan.

It's not a question of buying a "fixer-upper," or a place in a neighborhood that isn't as cool or as convenient as I might like -- I am priced out, period.

Well, okay, yes, I could buy a house in a dangerous ghetto with a lot of gang activity, one where the local HS has a dropout rate of >50%. But I think you will forgive me for choosing to rent instead of buying such a place.

In this sense, I have ZERO opportunity cost -- I am priced out of everything. The median price could be $550,000, or $5,500,000 -- it makes absolutley no difference to me, both are completely out of reach.

A lot of bears are in the same boat. Anyway, I just wanted to clarify that b/c I think it is a point worth making.

Punchbowl,

Agree with all you have said but would like to make one minor observation re: opportunity cost.

Many bulls implicitly assume that most of us bears have the option of buying a house now, but are voluntarily abstaining from doing so becuase we don't want to overpay.

This is not accurate.

Here in Los Angeles I, like many other bears, am COMPLETELY priced out of the market. There is NO decent home that I can afford without using a suicide loan.

It's not a question of buying a "fixer-upper," or a place in a neighborhood that isn't as cool or as convenient as I might like -- I am priced out, period.

Well, okay, yes, I could buy a house in a dangerous ghetto with a lot of gang activity, one where the local HS has a dropout rate of >50%. But I think you will forgive me for choosing to rent instead of buying such a place.

In this sense, I have ZERO opportunity cost -- I am priced out of everything. The median price could be $550,000, or $5,500,000 -- it makes absolutley no difference to me, both are completely out of reach.

A lot of bears are in the same boat. Anyway, I just wanted to clarify that b/c I think it is a point worth making.

Max,

Hmmm, did it really play out that way in Argentina? I agree that if you want to sell your home, your purchaser will have a hard time finding the the cash at a fixed rate in a high inflation environment and thus prices should fall in current dollars. That still isn't going to entirely help we fence-sitters as it will be us who will have a hard time getting our hands on a decent loan even for the reduced price unless we're sitting on $800K, although your cash reserves will be handy.

During the inflation cycle, the fixed-rate owner who wants to sit on his mortgage has the burden lifted off his shoulders (and dumped on his lender) and thus once again, the decision to buy a house BEFORE inflation takes off is the right play if you can do it at a fixed rate.

Stagflation is another game. Have Peso wages in Argentina risen at the inflation rate during their troubles? Not a chance on their imported goods, I imagine.

--------------------

For the record, I don't dismiss I-bonds (1/3 of my cash is in them), I'm simply frustrated that they are not correlated to the inflation of the underlying good for which they are earmarked (a house).

Punchbowl,

Hush! (We don't need the gub'ment knowing the comfort and peace of mind that comes with a paid off home isn't being taxed!) I'm surprised at you!

Yeah, in ways I do hear you but the opportunity cost is something I pay everyday! Every time I step into the market and take a position that means there are 9,999 other stocks I'm not throwing money at. Opportunity cost (and the paralysis through analysis it often inflicts) can drive one quite insane if you let it.

I've found that with all of the instant access to just about any investment vehicle of your choosing, having above market returns boils down to what you DON'T own? I know that sounds perverted but just ask any junk bond portfolio manager.

It's the "overlap" that utterly KILLED Janus Funds. In the 90's if you ran an analysis of their "Top 10 Holdings" across all of their funds, they were nearly identical. In the end I'm much more concerned about the redundancy of identical and "substantially similar" investments than I am about opportunity costs.

Your's is a unique and enviable situation. For most Americans (with an avg. 401K of 29k) their primary residence/specuvestment represents about 94% of their net worth. Be glad you're you!

If you are worried how to correlate your yield to house prices, you can do it by simply investing in REITs, builders stocks, housing prices futures, and so on. In fact, set aside a portion of your money for a REIT - it is a simplest solution to participate in the bubble while fence-sitting.

Where's the damn smiley face? In the current climate? Not on your life... I definitely don't want correlation NOW! ;-)

The homeowner will enjoy lower costs of the interest, but he’ll be underwater on the principle. There is no free lunch.

So the clown who bought a 4BR in Palo Alto in 1970 for $30K was underwater on his principle when he was getting weekly raises in '78? Cry me a river.

In my personal opinion, the best strategy of someone who anticipates high inflation/USD devaluation is to keep the USD cash/MM, and avoid leveraged assets like RE. High liquidity of cash will allow one to move to other currencies at a click of the mouse.

One click... two click... three click.... +1.5%, alright! -3% Damn! -5% Damn! Damn! Damn!

Vegas has prettier lights that you'll see on your screen.

Joe Schmoe,

Hey Joe! Good to see ya! I suppose the fact that I'm driving several local realtors quite insane over my fence-sitting I never stopped to think that there might be those that really, truly are "priced-out!"

For my wife and I it's as much about wanting to see the industry go through their "great purge" or "witch hunt" as it is about price. Then we can talk about comfort, convenience, price, low-maint., taxes and lastly "prestige" in that order.

Strictly anecdotal but a really nice older place had been on the market for about 375K for the longest time. It had been reduced to 359K and no takers. Well now this Saturday they are having (get this) a "1 Hour Major Price Reduction" to 339K! WTF? What kind of gimmick is this? A 1 hour p/r? Also the listing realtor was keen to point out that the older couple that were selling had been there since 1969! As in, this is NOT a flipper abortion! Well yeah I can sure dig that (now that there next stop is a nursing home) but I wondered if there wasn't a sympathy angle in there too? If I'm not too hungover I'll go down and check it out for a goof!

Instead, I would like us to take stock of the current economic and political situation and pick out key indicators (”sea changes”, as Frify put it) that are game-changing and should necessitate a change in our bearish sentiment.

Never let it be said that it can't be fun to do this, IF you're a political and economic junkie. If not, I strenuously recommend laying off the risk and going back to (a) your day job or (b) napping on the couch.

I mentioned four possibilities above. Max mentioned a couple of other good ones, REITs and home builders' shares. Incisive analysis or group think may make you believe that REITs and home builders have to go in the crapper. Unless you're getting some entertainment value out of watching those markets gyrate - and rationalizing what the market does by reference to your own Weltanschauung - you don't need to care.

Novice investors think investing is about maximizing returns on your assets. Experienced investors think it's about maximizing risk-adjusted returns. Smart investors know that it's about minimizing the risk of being able to fund your obligations.

Be a smart investor. Every investment does not have to work out for you to be successful. If groupthink can cost you, then you can (a) develop an ulcer worrying about what to do if you're a victim or (b) invest in a way that pays off if you are.

I pick (b). Yes, I'm a junkie and love to talk/discuss/argue/post about (a) but I invest as (b). The couch is very comfy.

FormerAptBroker Says:

"...I say we stick with SF. As Fuzzy points out it will be easier to rent rooms in a SF house and in SF we have the other option of converting the home to a “medical” pot club and if that doesn’t work we can make some money using Scholes former home as a place of business for the “oldest profession in the world” (just like the 1930’s)…"
_____

There you go!

See? That's what I'm talking about.

And the important thing is that we go "all in" because you never forget rule 1: real estate ALWAYS goes up!

Well now this Saturday they are having (get this) a “1 Hour Major Price Reduction” to 339K! WTF? What kind of gimmick is this? A 1 hour p/r? Also the listing realtor was keen to point out that the older couple that were selling had been there since 1969! As in, this is NOT a flipper abortion!

It doesn't mean they'll play. They could have heloced out the equity already. The equity could be their entire net worth and they might need it to fund their retirement.

If there is no financial distress, the obvious approach is to lowball them. That pisses vendors off - they have an idea in their mind what the place is "worth" - so let me propose a better alternative. Suppose you would be interested at $250k.

Find a straw buyer and let him/her lowball under that number, say $225k, with the contract assignable before closing. Pay the straw buyer $1 for an option to force assignment to you at, say, $235k.

Only two things can happen. (1) The vendor is desperate, bites and you own a house for less than you than wanted in the first place. (2) The vendor refuses and sits around for another rainy gray winter. In February, DinOr appears with checkbook, willing to pay $25k more than the only serious looker in the last three months. I think you stand a good chance of closing.

I had this happen to me six years ago trying to buy in a soft market. Unfortunately, I wasn't smart enough to be second in line. I just paved the way for #2 by lowballing in November. I've since met the fellow who benefited from my failure to appreciate game theory and told him that he owes me fifty grand. We laughed.

But I'll know better next time.

ROA is only useful when you can determine volatility with a reasonable confidence interval. That almost always means historical volatility data exists, and is market determined.

Historical volatility data exist for stocks. Historical price data exist too. They are not very useful.

The Digital Revolution
Oh my goodness gracious,
What you can buy off the Internet
In terms of overhead photography!

A trained ape can know an awful lot
Of what is going on in this world,
Just by punching on his mouse
For a relatively modest cost!

From The Poetry of Donald Rumsfeld

SP,

I know you don't want commentary on "Groupthink," but I must say that what's mistaken for groupthink here is really a confluence of opinion about the current housing market, ie bearish. Most everyone here has thought about these issues a whole lot more than your average Joe, and they came to conclude the market is out of whack. That's why they're on this board. There are very very few (are there any in fact?) "Converts" who came here doubtful and drank the "Housing Bear Kool Aid" and were swayed into the "cult." On the contrary, there's really an underlying base assumption here about housing, not a groupthink herd kind of thing. Kind of like an "entry criteria." What happens is then some troll or newbie comes along and spouts the usual RE bull crap, or the scared FB crap, and it's all stuff that we've moved beyond over a year ago. It becomes irksome, and many posters gang up on the newbie and/or troll. This gets perceived as "groupthink."

SP,

Indicators that would change my bearish sentiments?

1) Signs of significant inflation (increasing wages, increased inflation measures, even though they are doctored, Fed out-and-out starts raising rates again, rents increasing a lot closer to mortgage payments for equivalent units) would make me worried about cash positions and inflation eating away at both cash savings and loan balances, making debt more appealing.

2) Spring inventory low enough to be comparable to levels in 2003-2004

3) Surfer-x buys a stucco $hitbox in San Jose using an NAALVP.

speedingpullet Says:
Look to Jupiter and Saturn - what signs they’re in, what houses, and their angle to each other…

Affordable houses, I presume -- they must have bought before it went up...

$ signs

their angle to each other? orientation is important to catch the sun during the day -- as long as they're not looking into each others living rooms...

"Experienced investors think it's about maximizing risk-adjusted returns"

Amen Punchbowl, amen. You have no idea how many presentations I have given where the vendor in line before me had spewed that BS. Like Randy H says "false and rigid" perceptions! It's really up hill b/c they JUST NOW got their mind wrapped around that little tidbit of misinformation.

"We realize your portfolio/defined contribution is down YTD!" But the broader market is down 12% and you're only down 9% so on a risk-adjusted basis........ yada yada. Or it's the old "upside/downside capture" schpeel.

Oh and I liked your lowball strategy too! I'm not sure what empty nesters would do with a 3,600 sq. ft. home (which you couldn't have known) but the strategy is perfect!

Max,

"It's like even the firmest RE bears have been zombified"

I'm not taking offense to that by any means but would you care to elaborate?

Perhaps after I hear your explanation I'll be offended but.....

Max,

We cool.

@ Different Sean

....LOL....sarkey bastard. :-)

As for Groupthink - at least the Groupthink here agrees with my version of reality! For me, that's much more comfortable than hanging out at the SCDIA Message Board....