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Duke Says:
The fact the market continues to rise on bad news just amazes me. Here is my prediction:
In 6 weeks time (May 21) the Dow will drop below 11,500. By years end it will drop Below 10,000.
DOW 10K? That sounds like really bad news, which should make the market go up, no? :-)
Back in grad school we had a professor who used to call investing, "following the bouncing lines"
According to him, you can look at events like the great depression and count on them to repeat themselves. As many here have come to call it, I think we are in the 'dead-cat' bounce.
Many are arguing that the Fed has effectively put a floor under the market. And since the market was pricing in a posssible meltdown and now they only have to price in only a recession.
Umm. No.
The Fed is blunting the worst of a rapid over shoot.
Congress is going to make the decline bi-modal with the stimulus.
But the truth is the fundamentlas stink.
There is a real destruction of the perceived wealth of credit and debt obligations. Mix in some leverging and you have a recipe for contraction. It is true that, to the extent we can, we will export some of this. But a correctly working market represents the strength of the underlying assets. Much as Thailand had no financial reserves for any market down-turn, neither do our banks and 'shadow banking' institutions. And the Fed is not large enough to cover the shortfall. In fact, only a co-ordinated effort of Central Banks can cue what ails the US.
So as for the market as the information stands today: if it growls like a bear, fishes like a bear, and eats honey like a bear. Its a bear.
"You mean like this trio?"
Jimbo, I want to be clear here. I in no way condone the actions of these people (assuming they're guilty). However this confrontation sounds very familiar to me. We lived in a rural area for years and dealing with dirt bikes/quads/off-roaders is endlessly frustrating.
The victim (and he is a victim) claims "there was never once a single complaint". I call bull.
"They were doing 20-25 mph". I call bull.
Yeah it's a little hard to register a complaint with someone that has headgear on, creating a two-story high plume of dust, cranking a 2-stroke engine at 110 decibels and doing 50-60 mph!
They strategically "gun it" when going past "un-cool" (or "problem") neighbors that haven't developed an appreciation for "their" freedom.
At 20 mph (sprinters run at 25-30mph) do you mean to tell me he couldn't SEE a 1/2" , 5/8" piece of re-bar? O.K, maybe he couldn't but with a Bell helmet and high impact face shield I doubt it would have knocked him off the bike let alone caused 500 stitches? Again I don't condone what happened but there's definitely another side. This can be what sadly unfolds when law enforcement refuses to get involved.
Gah.
I just read Patrick's link to George Soros. It seems he and I are in agremet that the market is heading south. Seems he is as spooked about leverage and contraction as I am. Of course, he still frames things in terms of currency.
Any bets as to wether or not he uses leverage?
DinOr.
I remember that event. Los Gatos hills. What was the outcome of the case? I think the 3 people who strung the wire were brought up on attempted murder charges.
I'm sure Soros uses lots of leverage. Didn't he personally buy the present majority in Congress?
With the lowering of peoples' equity, I'm wondering whether statistics on the sale of lottery tickets tracks peoples' otherwise inabilty to plan for retirement.
Bap33,
I can't speak for Cali but Oregon has so many places to ride it isn't funny. We have the dunes out on the coast (Sand Lake) and miles of dunes and other land so scraggly no self respecting cattle would ever graze there.
Have at it boys! I'm all for it.
However terrible this... assault seems, talk to emergency room physicians and they can tell TONS of horror stories of underage riders, lack of supervision and just plain stupidity. We had two young quad riders in Christmas Valley riding double and hit a sudden drop off. The 20 year old girl met a rock (lots of those out there) face first and died on the spot. The guy is a vegetable. The Consumer Federation is moving to have them outlawed. They've had their chance to act responsibly.
"the Fed is still battling a negative feedback loop of tight credit conditions, falling house prices and low consumer confidence." -- Janet Yellen, San Francisco Federal Reserve President
Aaarggghh - what the f*ck is it with economists and their inability to understand that a self-reinforcing trend is a *positive* feedback loop? This is like the third time this year that some kind of economist has been quoted in the MSM with this... someone needs to send Ms. Yellen a Control Systems textbook.
# Duke Says:
So as for the market as the information stands today: if it growls like a bear, fishes like a bear, and eats honey like a bear. Its a bear.
And continuing on that theme, if you see a Bull, it won't be long before you see some b.s. :-)
For all financials, If you are planning to take a big write down, go ahead and take it today. Market is in good mood or on crack.
Th stock market is really beging to annoy me.
Its orinigal function was to serve as a place for capital formation. You can't have a billion dollar factory if you can't raise a billion dollars. In essence, everyone was going long becasue we all wanted the billion dollar plant so, for example, Intel could make computer chips so we could all have computers.
But now.
Hedgies step in and play short all day long. They create models that say your debt burdon, your competition, and market conditions will cause your value (and therefore your price) to fall. Is the money the hedgies made shorting your company helping your competition- re-allocating resources to where they are best used? Or is it just speculation and leakange? Heck, on size alone they can drive price. And not only price, they can kill compaies too. If all hedgies pull out of, say Lehman, how long will Lehman last? Ask the CEO of Bear how fast they can be killed. 3 days.
There is too much money in too irresponsible hands. Instead of going long on another sector or on intra-sector compeition there are people just making big dollars on plain ol speculation. Very unproductive use of money.
This whole Vegas side of Wall Street has to stop. Capital formation markets should not be about winning and losing bets - it should be about putting money in the hands of companies that do something. Then rewarding them or punishing them for how well their something is received in the market.
I'll stop my rant now. I just annoyed at the waste.
What Duke said.
Yeah, I hear you. As hard as it can be to remind ourselves here, this country wasn't built by bears.
Transcontinental railroad? Never happen.
Hydro-electric damns? Bah...
Duke, it's worse than just a terrible allocation of assets.
Duke your frustration is misplaced. It is just a reflection of this stupid herd mentality we keep seeing over and over. Why anyone would want to limit the amount of money, or appoint someone to choose who is more deserving is beyond me.
The underlying problem is that, like in housing, people just don't have any idea how to put a value on something leaving ONLY speculation. You can't fault someone for shorting a company when they believe it is overpriced. And no, the purpose of going public is not to raise money to build a plant, you used to only be able to take a company public if you already had earnings. The reason a company goes public is as an exit strategy for the original investors/VCs to recoup their investment by selling a company they have built up for its future earning power. Yes it does raise working capital for expansion, but Wall St isn't the way to launch a startup merely because an 'idea' has no value to a stock trader. The only thing that should matter is what the earnings are.
To be clear, not saying your point of view is the herd mentality, I'm referring to the behaviors of investors that are frustrating you.
And... what Malcom said!
Make no mistake, Hedgies are here to stay and I don't have any particular problem w/ that it's just that they need to be AIMR Compliant at the very least and likely much better regulated.
Remember, before Bear Stearns went belly-up they had two totally decimated HF's. For life of me I can't figure out how a firm w/ their reputation allowed a manager to run aground like that. IIRC clients only got about 10 cents on the dollar.
"Courts are not ordering properties for sale because of the market," explained Ruben, who said that judges now routinely bring in real estate experts and analyze housing forecasts to decide whether to side with the spouse who wants to sell now, or the one who wants to wait for the market to improve. "We're seeing judges decide to wait, based on the assumption that the market will improve in the summer or fall. It's having a major impact on resolution of these cases."
Analyze housing forecasts... I hope one of the lawyers brings in a chart of Case/Shiller Composite Home Index futures to refute the "real estate experts".
http://www.sfgate.com/cgi-bin/article.cgi?file=/g/a/2008/04/04/carollloyd.DTL
I've wondered what happens in a divorce if one side refuses to sell. I don't see one single fair way to handle that. Obviously if both sides agree then there is no problem but I would hate to be forced to sell something in a downturn. Unfortunately most people don't have the means to buy the other out and even if they did then the argument would be that it wasn't at a fair price and the only way to determine a fair price is to see what the market would bear. Sort of like drowning a woman to prove she isn't a witch, it's hard to undo.
“We’re seeing judges decide to wait, based on the assumption that the market will improve in the summer or fall.
Oh goody - this means more inventory will rush to market _after_ prices have gone down YOY this summer... so far, it looks like even MOM prices are slipping in most places.
Bartender, get that judge a beer and put it on my tab! Is there a smiley for 'rubbing my hands in gleeful anticipation' of unintended consequences?
The worst is when each side has to write a check to cover the loss on the house. Then it gets comical, except that somehow it usually is the poor guy who covers the whole loss, and then on top of it gets to pay the wife's lawyer who she retained with the joint credit card which in the divorce decree gets paid off by the guy.
For life of me I can’t figure out how a firm w/ their reputation allowed a manager to run aground like that.
Hedge funds are mostly for play money, right?
"Then worst part is when..."
Well actually, it CAN get worse!
When you and your MEW-based (and mutually completely underwater) wife decides it's "o.k" if Ramone spends the weekend and would it be alright if you sleep on the couch?
Malcolm,
It's fair for the person who want to be done with the house and ready to take whatever comes/goes with it. It may be a little unfair for one who wants to hold out. But then, you are not sure how long it's going to take to get good price. I think, it's fair to both of them if they can agree on a reasonable time frame of 3-6 months and be happy with they can get.
sa Says:
I did read some time back: Around 2-3 Million divorces every year in US.
I figure that number will go up this year - take away the bubble-goggles and a lot of people will realize their dreams aren't quite coming true - and in the grand tradition of married couples everywhere, they will blame their problems on spouse. :-)
I already know of one couple (neighbor of a friend) who bought last year in Saratoga (iffy neighborhood, near the YMCA). It was one of those "Suzanne" cases, where the wife pushed and finally they caved in last summer. Husband got his layoff notice in January. Sometime in February, cops were called in for a domestic dispute. Husband moved out. Real Cinderella story, circa 12.01 AM.
I knew a guy that got divorced after like 13 years and after his "southern belle" wife raked him over the coals she bought a house 3 doors down. She CONSTANTLY came over when we were jamming on electric guitars interrupting for this, that or the other trivial thing.
(I secretly suspected she called him by her new (and fit) live-in boyfriend's name just to chap his ass)
The guy was an FDIC auditor for crissakes! What could he possibly done that was so wrong!?
Divorce rate went up quite a bit in Japan after the bubble popped. But we are already at 50%+ divorce rate, anyone is predicting 80% by the time we are done with depression?
That will be fun, when we give wedding gift, we will give his and her wedding gift, just to save them a few bucks over dispute of who gets what.
DinOR Says:
> We had two young quad riders in Christmas Valley riding
> double and hit a sudden drop off. The 20 year old girl met
> a rock (lots of those out there) face first and died on the spot.
> The guy is a vegetable. The Consumer Federation is moving
> to have them outlawed. They’ve had their chance to act
> responsibly.
Liberals can’t seem to understand that things like guns and quad runners are not the problem it is stupid people. Since stupid people tend to vote for liberal politicians they rarely make any laws (like life in prison for gun crimes or loss of a quad runner for illegal use) to punish the stupid people who vote for them. One of these days some liberal politician is going to discover that men in Nike high top sneakers are shooting each other and outlaw Nike high tops to “solve†the problem…
OO Says:
> Divorce rate went up quite a bit in Japan after the
> bubble popped. But we are already at 50%+ divorce
> rate, anyone is predicting 80% by the time we are
> done with depression?
Over 50% of “marriages†end in divorce but a lot less than 50% of “people†get divorced (many people get divorced many times). I just read a study that people with college degrees who get married after 26 years old and come from intact families of the same faith have just under a 10% divorce rate…
NVR,
Oh.. he finally got her goat. He dated this Thai gal whose name I think translated to "I have more sex on accident than most people do on PURPOSE!"
Lord, what a total hottie. Since my wife is asian too they kind of hit it off. I remember Mrs. DinOR saying "You know we really talked a lot and the first thing that struck me is just what a nice person she is".
Yeah honey (that's the first thing that struck me too!) :)
I knew if "I" was thinking "What a lucky guy!" his X was torturing herself endlessly.
Liberals can’t seem to understand that things like guns and quad runners are not the problem it is stupid people.
Perhaps because calling people stupid is "politically incorrect."
Liberal Extremism is not a disease. It is a crime against Nature.
like life in prison for gun crimes or loss of a quad runner for illegal use
Life sentences cost too much. We should bring back the hangman.
On the other hand, youth stupidity is a product of mandatory education.
The only reason the DOW is not at or below 10,000 right now is the influence of the invisible hand in mitigating a cascade of self reinforcing FEAR that has gripped the markets numerous times.
Unsure of the glasses through which history will judge their efforts, but measured by avoidance of margin call wealth cascading wealth destruction their efforts have been an unqualified success. Clearly they prefer not to advertise this success lest the sheeple become aware of added complexity of the casino rigged game.
Housing prices downward slide will be the causal factor dragging down the DOW. As strange as it may seen, it is overlooked that about 90% of homeowners do not think "their" house has lost any value whatsoever. (This was result of survey I read a month back or so, unfortunately no longer have the reference. It went by unnoticed here but think I found it on P's front page)
As house prices really deteriorate in earnest, clearly the worse is yet to come, we will see the herd protecting assets despite amateur comprehension of market vis a vis Cramer Orman educations. Pleas to stay put long term and not panic will go unheeded. Despite low returns, fear will take hold and money will move out. Job loss and fear of job loss will move money out.
The big smart money is sitting firmly on the sideline until the trickle of blood in the streets turns into a river.
And of course fundamentals will continue to deteriorate. The slow parade of bad news will continue unabated. Earning shockers coming across most sectors. Shareholder pressure to reduce human capital expense will create a *positive* feedback loop.
I just read a study that people with college degrees who get married after 26 years old and come from intact families of the same faith have just under a 10% divorce rate…
Faith is the most important part. Although I have zero faith in the parasite called humanity, I have absolute faith in the Supreme Being and myself.
FAB,
Point taken. I 'did' say, have at it (as long as they're *not bothering anyone else) We'll send the meat wagon 'round and pick up the pieces.
It's just that if you talk to europeans they really don't have any concept of what "off-roading" is all about? There really aren't any public lands to go out there and "tear it up". Don't get me wrong, I go out to Christmas Valley w/ friends too, but when your eyes look like to p!ss holes in the snow (time to give it up!)
Isn't it true that there are no stupid questions - only stupid people? :)
I know that beer-goggles make women appear more attractive. Do bubble-goggles have the opposite effect?
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From a reader:
This is pretty amazing. After the biggest runup in prices ever, owners managed to blow all of that equity, and then some. And now they've got rapidly declining prices on top of that.
Patrick