patrick.net

Well…..That should just about put the final period on this blog.

Aaaaaaaaaaaaaaaaaaaaaaaw Mom, I want another story!

I didn’t realize that I was in the presence of genius until I read the comedy stylings of Peter, Twit, Prat and Harm. I just had to take a shot of vodka to try and cope. To be so outclassed.. shameful. I just came for advice, I feel so inadequate.

Awww... shucks, folks, I'm speechless!

Thanks --it sounded pretty good to me, but it's easy to laugh at your own jokes. Glad y'all apprciated it!

Although now I think about it, if so many of us on this list are completely wrong about a bubble and the market keeps going up then we might be exiled to the island of cranky dillusional bloggers and have to spend our days arguing about the moon landing, while having tea with Elvis and the Tsar of Russian’s children.

Watch out! Hitler may emerge from his U-boat and ruin our party.

Welcome back, gabby.

Prat, I think, uses time travel. I think he finished at Stanford (just a guess), and controlled temporal displacement is freshman level work.

However, by posting on this blog, he has leaked information about the future, which has somehow changed the very fabric of the space-time continuum, creating a paradox.

The future is uncertain again. The discussion about the bubble goes on...

Controlled temporal displacement-- Freshman level
Traveling parallel universes-- Sophomore level
Faster than light speed travel-- Junior level
How to pick up chicks in bars-- Senior level-- priceless

Sorry
Too much vodka

HARM, can I modify the story a little bit? Let's have a happy ending for our friends:

...

Suddenly, a train ran over them.

The three woke up from the same nightmare. Still shocked, they began to discuss their situation.

The next day, the three hunter joined the campers and they lived happily ever after.

Epilogue

A week later, there were no more amateur hunters. It has been said that some were eaten by Bigfoot and some were scared away.

I, for one, advocate a return to the 475 yard par 5 and persimmon driver.

For now, we will have to bear with 475 yard "short" par 4's.

Personally, I doubt equipments can help much. It is unlikely that my un-coordinated body can produce smooth Ernie-style swings. I will give Tour Tempo a try though. Thanks!

Day-trading anyone?

Btw, I forgot to thank you Jack for your very detailed answer to my question. I think I already had a pretty good handle on your thinking, but it's nice to get some points clarified.

Since I'm new to this blog, I haven't reached the point yet where the repetition has become too overbearing yet. I do apologize if my questions or comments seem tedious at times or force the rest of you to repeat yourselves too often. You've been very gracious in allowing me to play on your course with such a high handicap. :D

Are momentum traders the same as trend-followers?

BTW, I think we might have over-estimated the role of unaffordability in a bubble bust. Stocks are always affordabe (except perhaps BRK.A) because one can always buy fewer and fewer shares as prices go up, but this fact did not prevent the 2000 tech stock crash.

SactoQt, consider yourself very welcomed in this blog. :)

You have added much more value to our discussions than you might have thought.

BTW, I heard that they are going to build condo towers in downtown, is it true?

BTW, I heard that they are going to build condo towers in downtown, is it true?

I'm not sure, I'll have to look into it. It wouldn't surprise me at all. Condo's are just starting to take off around here, so I expect it's probably true. I think this is a sure sign the market is going to go kaboom out here because we are not limited by space. The only reason condo's are being built here is because they're cheaper and the builders are trying to sucker the last 30% out here to overpay for a crap piece of property.

HARM, can I modify the story a little bit? Let’s have a happy ending for our friends:

A week later, there were no more amateur hunters. It has been said that some were eaten by Bigfoot and some were scared away.

Not a bad epilogue, Peter.

I hope you (and Jack, Face & Fake) know it's only a joke. I would never seriously want such a terrible ending for anyone, much less the nice folks who post here. It's meant to be taken as a tall tale --and a cautionary one-- whose characters happen to bear... um... some similarities to some of posters on this blog. (Ok, transparently screaming OBVIOUS similarities, but you get the idea...)

I actually thought of similar alternate/happy endings, but all of them lacked the "punch" that one short sentence delivered. Plus it's basically a re-write of an old joke, and I didn't want to change the punchline.

Thanks for the welcome too!

Exactly. In the article momentum traders are trend followers and arbitrageurs are flippers. The analogy really fits.

Hmmm... I always thought that trend followers suffer more from choppiness than from reversals. Perhaps trend-following is dead.

SactoQt, I finally found the link:

http://www.sactowers.com/

Wow, you're good.

Well, I gotta go for the nite. Gotta get up w/a 19mo old, and all this drinking isn't going to help. ;)

Fyi, this thread seems to be getting a little long in the tooth, so I started "Amazing Bubble Stories!"

"However, by posting on this blog, he has leaked information about the future, which has somehow changed the very fabric of the space-time continuum, creating a paradox."

I was wondering why all my photographs had people fading out of them...

Sadly, stanford's CS department doesn't offer a lot of time travel classes. I think that's more the physics kids. I have, however, written a very advanced housing market simulation program:

int main(int argc, char** argv){
printf("There shall be a 51.2383% housing correction by August 24th at 3:45 PM.");
}

This program firmly establishes that there will be a 51.2383% reduction in housing prices by August 24th at 3:45 PM. I look forward to vindication of my intellectual and programming prowess.

Cheers,
prat

Jack Says:
I guess the three of us too easily represent the vast numbers of people who make up the housing market.

Is that a good thing or a bad thing?

And Jack, the post needs you guys, otherwise it would just be a bunch of people sitting around saying, "yeah, housing bubble, definately a housing bubble."

Fake P, Prat did not say that the code is in C. I guess the language is "Temporal H", which does not have a return facility because the value can only be determined "temporally".

Fake,

Not only that, but remind Prat that he needs to escape a literal percent-sign in a printf format string. So, use %%. A trailing newline would be a reasonable choice, as well.

Also, ANSI doesn't require the args declarations for main(), and since we're not using them they can be omitted.

Sorry everyone. The topic has finally diverged into an area of my expertise. I couldn't pass it up.

ObOn-Topic: We're selling, taking a 300% gain (8 yrs), and choosing to rent for a couple years.

SactoQt, you may be interested in this Sacto story:

http://tinyurl.com/cybaq

Jack Says:
“…….awwww, and I thought you people APPRECIATED….. even NEEDED a little “balance” on this blog to keep you all “honest”. ( But that would be healthy….)

What does it say about the validity of the dialoge if you cant test it against even a few differing viewpoints?

Believe ME, the numbness of repetition is felt on our side of the table also.

It interests me that many of you seem a BIT too uncomfortable with not winning over three measely people. Yet Face Reality, Fake P and me have learned to deal with that every day that we write in here, and we live with it allright.”

Jack,

I hope that wasn’t (partly) directed against me. The “Fable” was just meant to be a bit of fun –I wasn’t trying to be mean-spirited. I don’t think anyone here (least of all me) expects to “convert” you 100% to the Posse/“Dark side” –whatever you like to call it-- anymore than you would expect to convert us. And, yes, we (most of us anyway) do immensely enjoy your (and Fake/Face’s) participation in the debate. You often provide new information and arguments we would never have thought of. As you said, what good is a one-sided debate?

To be honest, I wrote the Fable mainly because I was getting a bit tired of the usual bubble discussions –that “numbness of repetition” you so aptly pointed out. I think I’m developing Bubble Battle Fatigue (BBF). Like Prat, I feel like I’m mostly just repeating the same stats/arguments over and over. I wanted to try out a creative/satiric approach, just to liven things up a bit.

I didn’t mean you any “HARM” by it ;-). Maybe you, Face Reality & Fake P can write a fable about me, Peter P & Surfer-X. You could call it “Goldilocks and the Three Perma-Bears”.

Fake P,
Thanks for a being such a good sport, dude!

Thanks for the article Peter. I Forwarded that one on to my husband. Good info.

When you read stuff like that, you start to think, so it begins..........
At least I hope so.

Without Jack, I wouldn't currently be trying to figure out if we going to an inflationary or deflationary spiral. Don't go, man!

Jack doesn't hold grudge. He will be back. :)

Jack, good point. Too bad I am steering away from affordability arguments because it allows too many intangibles to come into play. :)

Earlier, I have said that:

Stocks are always affordabe (except perhaps BRK.A) because one can always buy fewer and fewer shares as prices go up, but this fact did not prevent the 2000 tech stock crash.

(Grannys bought stocks during the tech boom too.)

My primary talking points will be P/E ratio and PEG ratio. These are infalliable, whether affordability is at 0% or 100%.

"Prat: I observed that you’re merely an amateurish C programmer, you forgot that the main function needs to have a return value of type “int”, if not you will face compilation errors. These trivial mistakes are typical of new learners…:p"

_laugh_

Yup. The not escaping the er, escape character is particularly ghetto. _shrug_ I slave away in java for work, use ruby when I can, and dream about ocaml at night. On the upside, it does compile in gcc, even if the % get's dropped.

_shrug_ I'm an idiot. I've never claimed differently.

Cheers,
prat

Jack - Welcome back, my man!
Glad that TWIT & my story didn't scare you away ;-).

Why are you giving me credit for being such a good sport? I was not being a good sport!

...well, actually that was meant for Fake P (re-read), but it seems to apply to you as well. As for those highly experienced hunters, I was primarily trying to make two points:

1. The hunters had a somewhat inflated opinion of their own skills/knowledge, while they underestimated the Scouts'.

2. Past success (represented as experience) is no guarantee of future success (i.e., the "rear-view-mirror driving" axiom).

Someone from Ben's blog submitted the following poem to The OC Register:

"Inventory is starting to swell.
Appreciation is dwindling.
By October, there'll be no more doubt:
Pop! goes the bubble."

"The equity has all been drained
so no more refinancing,
but we've got nice granite countertops
when Pop! goes the bubble."

Inflation or deflation? The verdict is...

Error 3347. Please refer to the user manual for information.

Jack, let's be prepared for both. The era of passive investment has past and we must be proactive.

As far as knowing it all, I SURE DONT.

Never meant to imply otherwise, Jack You'll notice I made you (and Fake P) sound considerably more open-minded & reasonable than, um... your "leader." Anyway, it was just a bit of fun --don't read TOO much into it ;-).

I am not “rooting” for house prices to go up or even stay up. I simply think what I think about them, and I can honestly say that I dont have an ax to grind... I dont want the world to end for anyone... Some on this blog probably have motives.

Well, you're probably right about some of us (including the Posse) having an axe to grind, to some degree. Personally, I'd like the market to return to sanity someday so my wife and I can buy without having to resort to an NAAVLP(tm) or being forced into speculator-driven bidding wars. But, aside from the g**d-mn greedy speculators/flippers, I'm not wanting to see anyone get wiped out (though sadly, many overextended FTBs will).

So until sanity/fiscal responsibility returns, and the PE-rent ratio makes sense, I proudly remain a renter/saver.

"Non-recourse" has a lot of if's, but's, and maybe's. AFAIK cash-out refi's will invalidate that. Also, the protection may not apply to investment properties.

BTW, with a foreclosure on you record, your next mortgage will be a lot more expensive even if lending standard is loose. Good luck renting a good apartment. Who will rent to someone with a history of housing abuses.

Woody,

I have to "third" mororcityjim & Peter on the Non-Recourse foreclosure scenario. Regardless of whether the mortgage is of the recourse or non-recourse type, that buyer would almost certainly be on the hook to somebody --most likely the government-- for a sizeable % of the lender's write-off/loss.

If the loan is a non-recourse type (most primary residence non-refi mortgages), the buyer will be taxed for "capital gains" in the amount of the lender's write-off. If it's a "recourse" type (HELOCS, refis, investment property), the buyer is subject to "cancellation of debt income". And to add insult to injury, having your credit ruined will make living anywhere much more difficult, as Peter explained. I don't know if the new Bankruptcy law (due to go into effect in October) will make matters worse for mortgage debtors, but it sure won't make them any better.

Here's the full article I used as a source (SF Chronicle, June 5th):

"Selling house at a loss could have nasty tax implications"
tinyurl.com/cnsja

This is conventional wisdom but as a former owner of 300 apt units I can tell you, you would have no problem getting a decent apt.

Well, you seem to be an expert on this subject, so I'll take your word for it. Even so, having bad credit still costs you more in the long run, not to mention that employers now routinely run credit/background checks.

Also, it is not that difficult to get a mortgage with a foreclosure. I have sold houses to prior forclosees. They pay a bit more and jump through a few more hoops is all. I stand by my position that most people would by much better off by having $100,000 in the bank + foreclosure history versus zero net worth + no foreclosure.

That may be true today (with rampant use of NAAVLPs, $0-down no-doc specials, etc.), but what about after the crash? Will lenders still be willing to lend any amount to almost anyone who can "fog a mirror", as they are today?

In AZ, all SFH loans are nonrecourse whether for investment cash out or whatever. I do not know if the same is true in CA but AZ law is usually based on CA.

See my comments above.

The lenders know they are making risky loans, which is why they won't keep them on their balance sheet. Ultimately it is the buyers of the mortgages Fannie/Freddie and institutional buyers that are facilitating the bubble.

I think the GSEs have had a huge role in this whole credit/housing bubble mess --see the "Too Big to Fail" Thread (from the main page). Of course this works out great for banks/lenders until a GSE defaults. Then it gets very "interesting"...

Woody, your strategy is not bad. I have actually advised my friends regarding the non-recourse "free option". It is not a bad deal, just difficult to do for me personally. I rather keep my credit spotless. :)

I would not be surprised if the pendulum would swing completely in the other direction, as it did with commercial real estate in the early 1990’s.

They always do. Credit is available only when you do not need them.

SAN JOSE, Calif. — Hewlett-Packard Co. (HPQ) is widely expected to cut thousands of jobs next week as part of a long-expected restructuring that will attempt to bring the computer maker's costs in line with business and its rivals' numbers, according to industry analysts.

The exact timing and number of layoffs isn't known, though observers speculate layoffs could range between 5,000 and 25,000 positions.

I wonder how this might affect the real estate market?

Jack, I think you are thinking of Kathy(?) or the other one who recently moved into the Bay Area?