patrick.net

The ranks of Bubble-Deniers grow ever thinner, per Motley Fool:

"Housing Experts Change Their Tune"
tinyurl.com/bqml9

I’m all for $$$ going back into stocks …. it usually means $$$ going out of real estate, generally speaking with not many exceptions ….

I rather have those $$$ going back into Ty beanie babies... they are so cute!

"...can recall being surrounded/pressured by all the amateur “investors” around me to ‘get in the game while you still can’, it’s a new Paradigm, etc… Any attempts I made at the time to question this investment ’strategy’ were quickly and harshly rebuffed.

Now doesn't the present situation feel so familiar? I actually had a dot-com brokerage business back then, and you could smell the winds of change months before it hit the news. It was so damn obvious then, and so deja vu now.

Yet, despite recent history, why do people fail to see the connection? Try explaining what seems so obvious, and they look at you like you're Gomer Pyle trying to explain quantum physics.

ND does show some characteristics of an uptrend. However, if you look at the bigger picture, the "bull run" is hardly impressive.

Sure it swings bigger than this all the time, but this time it felt a bit faster, since I was actually watching.

Stocks swing all the time. This is why people swing-trade. :)

This is totally OT, but take a gander at what slipped by my dock today:

http://tinyurl.com/8s7vf

There were two of these gunboats, and they appeared to be looking for a watercraft for over an hour, transversing all the local waterways. Who's out there...Al Qaeda on a sailboat?

Mind you, we're about 2 miles inland from the bay.

Just looking at the indices acutally doesn’t give the swing the full credit it deserves. Basically stocks like AMD, AMZN, BRCM all dropped 10% or more in October on the earnings day, whether they beat or missed expectation. Now they’ve all bounced back or even made new high.

Huh?

"I rather have those $$$ going back into Ty beanie babies… they are so cute! "

LOL. I'm afraid that was some of my family members' sole investment vehicle.

Peter P, I thought you were going on vacation? Please don't tell me you're hanging on on this blog from Hawaii or something.

Oh, and I have "inherited" a vast beenie baby collection from a relative, apparently to fund my childrens' college education or something. I'd better hurry up and get those soon-to-be-valuable-again pieces of crap out of my parents' musty basement.

There was apparently a macro fear in Oct. and now that fear is dissipating, justifiably or not.

Probably. The uptrend appears to be minor though, although ND is making higher highs and higher lows.

This just in:

Ameriquest Capital Corp. Lays Off 10% of Staff
"Subprime giant Ameriquest Capital Corp., Orange, Calif., late Thursday announced a 10% companywide layoff, excluding two divisions: wholesaler Argent Mortgage, and its auto finance division"

nationalmortgagenews.com/
(unfortunately, full article requires registration)

Ameriquest Capital Corp. Lays Off 10% of Staff

Looks like AG's money fountain is losing pressure!

Anyone else see the New Residential Construction report from the Commerce Dept. just released? It contains many big negative numbers, some of which are y-o-y changes!

So I guess my October prediction was just off by a few weeks. :)

There are usually far more bubble denyers than in the stock market because by definition, all RE buyers are doing margin trading so the potential loss is more ouchy for them.

When the RE market is 10% down, you typically see a bunch of bubblesitters jump in thinking that it is bottom, and then you'll see another round of popping. So don't get surprised if a bunch of naysayers on this site jumping in next spring because they run out of patience.

To come out ahead in the RE game, you need incredible patience, years of patience to wait for the bottom. Sellers who sell in a down market are usually people who have no other choices, so their reservation price is next to 0.

For East Bay, it already peaked around summer. Some Peninsula and West Valley properties are still rising, although most of them are flat or slightly down since October.

So don’t get surprised if a bunch of naysayers on this site jumping in next spring because they run out of patience.

I highly doubt anyone who has been following this bubble for so many years will jump at 10%. However, there may be some really good deals here and there when the foreclosures start to blossom like spring flowers....but I myself may wait another 5 years if I have to......it's all about the fundamental value.

So don’t get surprised if a bunch of naysayers on this site jumping in next spring because they run out of patience.

Well, if they lower prices pre-emptively to1997 level I may jump in even though median prices may be down only 10%. ;)

So don’t get surprised if a bunch of naysayers on this site jumping in next spring because they run out of patience.

Personally, I enjoy the challenge and excitement that comes from catching falling knives! Too bad I'm running out of fingers, though... :-(

"So don’t get surprised if a bunch of naysayers on this site jumping in next spring because they run out of patience."

Buying in the spring is probably not a good idea because many owners are waiting for a rebound to occur at that time. Two friends are waiting for spring to unload their RE investments precisely for that reason. I believe after this spring, we will see a much biigger drop.

Also, create ORKUT which is, AGAIN, a copy of Friendster.

Heh. Well, for about two months, it was actually usable. For more than a *year* now, you get server errors every few page loads. Doesn't get any better, ever.
Makes you wonder what these guys are doing with their time besides watching their stock options vest.

Anyone who thinks Google is some sort of innovator is like people buying houses as an investment - idiots.

In two words. F@CK GOOGLE. If this is the best thing to come out of SiVal in the last 5 years, god help us.

Indeed.

I recently did the tally. Of the top 5 people I'd prefer not to work with again, all but one now work at Google. And most of them for the same reason: very, very smart, very eloquent, very arrogant, very easily bored and very lazy.

John Batelle recently did a reading of his Google book at the Google campus in Mountain View. The one question he was asked most by all those young dudes was "What should Google do?". Sounds a bit aimless to me.

I hear that the Google cafeteria is just like the one in college, especially in the evening - the only ones over 30 are the janitors.
I keep thinking of Netscape ca. 1997. That company imploded because of rampant inexperience, rapid brain drain due to people "calling in rich", and of course pissing off the everyone and their brother with their arrogance, making them all very motivated to kill them.

If you have a minute, check out www.google.com/jobs and look at the photos that illustrate what it means to work at Google. Do any of these guys look like they're working? Let's see:
- the piano playing dude
- the roller hockey guys
- smiling mom in front of PC with baby on her lap (ever tried that? Doesn't work. Trust me on this one.)
- the folks checking out the good selection at the cafeteria (all slightly overweight. Hmm.)
- the dude chilling on a bean bag with headphones on
- oh wait, there's the lady who's actually staring into her PC screen. Smiling, though - there's probably something funny on.

IMHO, all the whiny young gazillionaires will hang in there until their last share has vested and/or the inevitable corporate reality check arrives.
Then the wacky geek fun dissipates, and poof, they're gone.

I pity the poor sobs who won't have made money by then and need to clean up the mess afterwards.

In case you're wondering, this is not investment advice. I know as much about Google than everybody else.

@SQT: I’m all for money going back into stocks too.

_smile_ From a totally disinterested perspective, of course.

@iceman: SUNW looks like a buy under $3.70

Hard to bet against the x86 monster at this point. If intel doesn't do it right, amd has shown that it will.

@GOOG Haters: Yeah, terrifically overpriced. All revenue comes from an easily replicated product (ads) that will eventually exist in an extraordinarily low margin and efficient market. Orkut is an embarrassment to software developers everywhere. Still, the maps are kinda cool, although yahoo now has a beta version of maps that is just as good/better.

@PeterP: Don't get cocky kid. _smile_

cheers,
prat

All revenue comes from an easily replicated product (ads) that will eventually exist in an extraordinarily low margin and efficient market.

Google also has these enterprise-level search products, but for the life of me I don't understand who has budgets for products like this:

"Small and medium business: Search up to 100,000 documents for just $2,995"
"Large Business: Search up to 15 million documents, starts at $30,000"

Does it really cost Google that much to run their search portal? I doubt it; huge margin there. I'm sure you can buy a search script for a fraction of those prices.

praetorian Says:
Still, the maps are kinda cool

Yeah, and if the past is any indication for the future, they'll be exactly this cool a year from now because the guys working on it are now bored, want to move on to an even cooler thing and there's no one who can tell them they can't.

Anyway, let's say Google makes all 5,000 of their people gazillionaires.
How much effect will that really have on real estate in the valley?
Will these guys really bid up a $hitbox in Campbell?
How much of the gazillions will trickle down into the local economy?

here's a good link that summarizes why we are in a bubble and its outcome....so the next time a troll argues against it, just send him this link.

http://news.goldseek.com/EuroCapital/1132331961.php

Instant waterfront (and back) property.......another reason why renting is sometimes better!
http://tinyurl.com/b33v9

re: Google.

Jealous, bitter, non-shareholders, are we? :) Me too. Except for the jealous and bitter parts.

I still think Google is significantly UNDERvalued. There's a lot of future already priced in, but I think they have even greater potential. They will likely get "corrected" in the short term by a broader shift in market psychology, but they are building a much more ambitious company than most people realize. Their competitors are fighting for the wrong markets, and only a couple have the resources to fight the real battles, even if they wake up in time.

So yeah, dip-waiters won't want to buy either Google or housing today. But both will be significantly more expensive in some tomorrow day.

Not investment advice. Obviously.

I still think Google is significantly UNDERvalued. There’s a lot of future already priced in, but I think they have even greater potential.

Ok, perhaps. But could someone explain to me what their product actually is--a clean search interface with a fairly sophisticated backend script? Sure, the maps are nice, but eventually someone else will create their own version. Perhaps I'm missing something significant here, since I'm sure they have development money, but I've seen this sort of thing 100X before. Silly Valley has always be adept at overselling their market potential...anyone remember a company called Palm?

I think google is highly overpriced and mostly funded by boomer equity cashouts who are trying to time the market so they can get back some of the capitol they lost after the previous stock crash.......... like all other dot bombs, they will explode....how many times does one have to be kicked in the ass before they stop chasing overpriced stocks?

I’ve seen this sort of thing 100X before.

I know. Me too. Honestly, I think GOOG is where it is today because of near-perfect market and media positioning -- not because of its future potential.

But I do think the potential is there, I just don't think the market sees it yet. A little over a year ago, I worked on a business strategy for a media startup. The investor group wanted it to be big, real big, and I did a lot of research. Almost every good tactical plan I came up with was followed by the realization that "oh jeez...google is _perfectly_ positioned to do that" -- leading up to a rather grandiose strategy that would be a gamble for the (very well funded) company I was working with, but almost effortless for Google. And in the ensuing months, almost every move they've made has borne out my predictions. Occasionally, I read news and think: "Now everyone (or at least the four competitors that matter) will see Google's Big Plan and have to start reacting defensively". So far, Yahoo has made a few defensive moves (again, fighting for the wrong markets), but everyone else seems to be deep asleep.

Just as a hint, look at Google's acquisitions. There's substance to be found there. Most of the rest (even genuine, high quality, market-leading products like gmail) are largely feints.

(Fwiw, the venture group I was working with shut down the startup, because they didn't want to be the small fish whose best capitalization opportunity was as an acquisition target (either by Google or (more likely and more valuably) by one of their desperate competitors in the coming "oh-crap-now-we-get-it" frenzy). They put a bunch of money into GOOG instead, where I estimate they're up about $30MM, so I guess I can't fault their logic. And this is why the rich get richer, and the rest of us wish we could play their reindeer games. Alas.)

ARM adjustment article at cnn:

http://tinyurl.com/ck38e

@quesera re goog: Possibly. I've been sand-poundingly wrong before (e.g. not going back to google because I thought the $80 strike price was too high. _smile_), but the whole secret plan thing just isn't my bag. That's one reason why I like buffett: keep it simple.

Of course, the notion that people would pay money for something as inconsequential and obscure as an "operating system" was absurd as well, and, no doubt, my kindred spirits were harping away back then.

In short:

_points at self_

_starts laughing_

Cheerio,
prat

the whole secret plan thing just isn’t my bag

I agree. And I don't think there's any real secret to their plans.. Just that they are trading on psychology and goodwill today, and they know that can't last forever. They are making lots of noise, and the press is lapping it up...I think they're as surprised as anyone at how easy this has been for them..

But they're also doing all the right things in the background. No secrets (well, no more than any other company in the spotlight), just strategic decisions that aren't emphasized in press releases. Apple plays the game of outright deception (in their public announcements). Google is quietly building an empire and releasing splashy stuff that is super cool (and mostly monetizable) in its own right, but takes the attention away from their less-clearly-purposed moves. Sometimes I even wonder how much of it was intentional (in the early days -- they've definitely figured out the dynamic now!)

Their competitors are fighting for the admiration of the press and the market. They will make inroads, but before they do, Google will be in a whole different business.

But is $400 sustainable in the short term? Tough call. Investor psychology will backlash at some point, and Google shareholders will feel it. The company won't -- they've already planned for that, too. These are smart people. I wouldn't bet against them.

It's interesting that Google started out as a search company -- helping users cut through the immense volume of unwanted data to find what they are looking for -- yet now they are benefitting competitively from the vast amount of press coverage on the inconsequential aspects of their business, and the difficulty in discerning signal from noise.

On the other hand, maybe that is their overarching business strategy. It would be appropriate.

These are smart people. I wouldn’t bet against them.

_smile_

Exactly. See LTCM. Smart people are great as far as they go, but when hubris comes along, reality usually decides to cock a snook at the whole heap.

Cheers,
prat

"Little parks (perks) can keep a house price up far more than the perks actually cost."

I sure hope not. If the buyers are "thinking" (which many have clearly not been doing), they will realize that a reduced cost of the house is a better deal than those perks. Reducing the cost of the house can SAVE money over the life of the loan. Once the perks are said and done....that's it. And the high housing note is still there to thumb its nose at them.

BayQT~

stupid investment of the week: I-Bonds
http://tinyurl.com/acote

I wonder if you actually read the article. (Do you read the links that you post here?) Your characterization is extremely mis-leading, to say the least.

Haven't a clue as to what you are talking about....explain!

the title of the article is:
Stupid Investment of the Week
Inflation-adjusted savings bonds are a bad idea

Ofcourse I read the article...did you?

what is extremely misleading?

Amazing op-ed by a San Diego area mortgage broker just published in RealtyTimes. At first I thought it might be an practical joke, or maybe a faux paus by the editor, but this guy laid out the bear's case with brutal honesty:

San Diego Real Estate -- A Trend to Go National?
by Bob Schwartz
realtytimes.com/rtapages/20051117_sandiego.htm

"The grand opening long buyer lines, multiple offers, offers above the asking price and homes selling within days of being listed are just fond memories now. However, due to the huge home appreciation all San Diego real estate has seen, with the average home up 100 percent in the past 5 years, combined with the boom in 100 percent adjustable/interest only loans, the stage is set for what is sure to be mind-numbing depreciation.

Yes, we have started on the down leg of the typical 'Bell Curve' and the probability of surpassing our approximate 20 percent drop in San Diego home values experienced from 1990 through 1996, seems assured. Plus, as real estate trends seem to start in the West and then move east, any U.S. real estate market that experienced huge price appreciation the past five years, will experience the same depreciation in real estate residential values."

I was so impressed, I wrote Bob and complimented him on his courage and honesty.

I wonder if you actually read the article. (Do you read the links that you post here?) Your characterization is extremely mis-leading, to say the least.

I'm not going to argue about whether the article is right or wrong, at least not until you answer my question.........What is extremely mis-leading about my characterization?