patrick.net

yet we have politicians goading people to stimulate the economy by consuming more.

This is so true. The spending is only a short term solution at best. The piper has to be paid sometime, it's just a matter of who does the paying and how painful it ends up being in the long run.

For the uninitiated to the evil twin game, Bull$hitter is Harm's alter-ego.

Where is the Fake S who doesn't like bears?

Are we again in an alternate universe??

I think you are right, SactoQT.

Drat --I've been had!

I've been waiting for the perfect opportunity to resurrect Bull$hitter and try out the 'twisted' emoticons --thanks SactoQt!

Drat –I’ve been had!

I’ve been waiting for the perfect opportunity to resurrect Bull$hitter and try out the ‘twisted’ emoticons –thanks SactoQt!

Sorry Harm

I was afraid others would think it was serious and start a flame war. Unfortunately some people seem to missunderstand things like irony and wit.

But wait! Could Bull$hitter be related to Surfer-X? Where IS Surfer-X? Oops, I hope I didn't say that too loud. :-|

BayQT~

Unfortunately some people seem to missunderstand things like irony and wit.
I'm not naming names though.........:roll:

But wait! Could Bull$hitter be related to Surfer-X? Where IS Surfer-X? Oops, I hope I didn’t say that too loud.

The altered ego of Surfer-X is Waveboarder-Y. 8-)

Don't worry, Bull$hitter would NEVER intentionally start a flame war. He never singles out anyone in particular for abuse. :twisted: He hates all bears equally. :evil:

Hey...do you think we are the only ones awake? Or, perhaps the others are just off formulating their comments? Oooh weee! I wonder what's in store for tomorrow? I can't wait to read more comments on this topic.

BayQt~

I hope it doesn't get ugly... *finger poised over delete button reveling in the feeling of power* :twisted:

Oops... it was Wakeboarder-Y. And it was actually the altered ego of motorcityjim. :oops:

Bull$hitter,
Could it be that HARM is the evil twin. Actually sounds like it could be more fun at Bull$hitter's party. :evil:

Actually, the fear / hate human emotion is more inate than people realise, don't employess hate or fear the boss or the job, doesn't the boss have fear /hate of customers or business situations. They are primal feelings that guide people in every day choices.

So maybe it is not so important the emotions we carry, but the decisions that are made from them.

"...in my mind those are the “worthless parisites”. Returning your own words. How are you helping anything at all? Just moping and not benifiting anyone….certainly not your personal goals…assuming you have any? or for your family at all?

Just curious...who and what are you speaking about specifically? "Parisites"--people who rent vs. buying right now--or those who question the latest "great investment"? It's one thing to intelligently question these schemes (or lack thereof), and it's another to target the speaker. The difference is ad hominem, an annoying and weak defense at best.

Here's the problem I see: If things continue the way they have been, there is NO HOPE for today's children to ever become homeowners. HOw realistic is that? Because if prices keep going up 20% year after year, no amount of loan gimmickry or NAAVLPs in the world are going to help, not unless wages REALLY start to go up. I love NAR's David Lereah's weakest, IMHO, rationale for a continued boom. The so-called "echo boomers' or children of baby boomers will continue to inflate prices into the stratosphere. WHo in hell is he kidding? The majority of young adults today are lucky to get a job in their field that pays the rent, let alone afford a $500K McMansion. Not to mention these kids are already straddled with huge amounts of student loan and credit card debt. What is Lereah SMOKING?

It's always easy to get emotional and upset when you can post anonymously. This should get some emotions soaring:

USA Today

Existing home sales fall in July; price, inventory jump

http://tinyurl.com/cpxcp

Thanks. Volitility, time value and the price of the underlining stock are 3 things that I have trying to tie together on option pricing. Ive made some pretty good trades so far. But the best have been paper trades trying to put a strategy together

Try seeing volatility as the price. It is that important. Time and underlying prices are pretty much boring stuff anyway.

So when I listen to other people who seem to TALK so smart but havent put any chips on the table or wont put any chips on the table (so it seems) because of FEAR, and in return they blame everyone and their dog for causing all these problems…?…

It is not worthless to talk though. Financial advisors and those who sell newsletters make lots of money without risking a penny. ;)

Almost forgot...

I recommend any book on options from Larry McMillian.

I think all these emotions are natural and come from people wanting to feel good about their decisions.

Listen, I have to be honest...I almost bought a house 2 years ago for $645...but passed, was on a busy street and the sellers soured the milk when they reneged and tried to bump the price to $655. Sometimes I wish I owned that house...then I'd have an easy mortgage.

And you bet, if I owned it though I wouldn't become a housing bull, I might be less of a bear. It'd be a lot easier to buy into the demographic justification, that the BA is a special, unique place, that the biotech boom seems to be picking up the pieces from the tech boom, etc. Of *course* I'd suddenly be rooting for price increases!

But I'd be inwardly stressed, too, wondering if I unwittingly caught the last lemming train for the cliff. I owned a condo in Half Moon Bay before all this, and spent a paltry $290k (sold for $390k). Can you imagine a $290k mortgage? I go through that in a weekend today. But even THEN I panicked that if there was a downturn I'd walk away with no job and no house profit.

In the end, quite honestly, I've learned something...the nature of risk. It's all about the idea of living with decisions you make. You can never be content if you constantly say "gee, if I sold that stock one day later I'd have made $5000 more". You didn't know that at the time. You made your decision, and now maybe you know something valuable about making the decision next time. Don't forsake what you did because you couldn't see the future, and don't give yourself deity-like abilities because you got lucky either.

You have to embrace what you believe even if no one else does (e.g. P/E fundamentals), and yet be ready to re-evaluate your belief system (e.g. if Asian buyers throw the normal thing out of whack by wanting a home regardless of the price.). That's a tough but essential balance.

You have to embrace what you believe even if no one else does (e.g. P/E fundamentals), and yet be ready to re-evaluate your belief system (e.g. if Asian buyers throw the normal thing out of whack by wanting a home regardless of the price.). That’s a tough but essential balance.

Very well said!

Very well said!

DITTO!

BayQT~

Ive made some pretty good trades so far. But the best have been paper trades trying to put a strategy together.

Congrats! The next step is to proceed to real trading. This is a very difficult step. There are a few reasons why some people have troubles translating paper profit into real profits:

1. Liquidity (fill prices, bid-ask spread, brokerage competency, etc...)
2. Greed (prevents one from taking losses when they are still small)
3. Fear (forces one to take profits too early "before they are lost again")

The psychological aspect of trading is very though.

So when I listen to other people who seem to TALK so smart but havent put any chips on the table or wont put any chips on the table (so it seems) because of FEAR, and in return they blame everyone and their dog for causing all these problems…?…that makes me mad.

Amazing. SIM, you haven't been a part of this blog long enough to really know who has or hasn't put chips on the table. It may not have been *at this time* but some of us have, and have shared our experiences here. Many of us learned valuable lessons. We don't have to put our money in the fire this time to see if it's hot. Some folks need to.

Are you saying that the reason you didint get involved in RE is because you knew it was over priced and you didnt want to get involved because you were/are afraid your participation would lead to other individuals getting hurt?

IMO, I don't think that is what SactoQT was alluding to, but she can best explain.

As I have said before, I do NOT begrudge anyone (including you) their good fortune in this RE market. The earlier birds surely caught some nice fat worms. But things are changing. What was discussed on the blog VERY early on (in May or so) is now hitting the media as many people in the industry (RE, Fed, etc) are starting to see the transition in the market. So please stop being so ugly about this. We are DISCUSSING...sharing ideas, positions, and educating each other. Is something really wrong with that?

BayQT~

Don’t forsake what you did because you couldn’t see the future, and don’t give yourself deity-like abilities because you got lucky either.

Gee, Matt, I wonder who we could use as an example here... Hmmm, this is a tough one... :roll:

You have to embrace what you believe even if no one else does (e.g. P/E fundamentals), and yet be ready to re-evaluate your belief system (e.g. if Asian buyers throw the normal thing out of whack by wanting a home regardless of the price.). That’s a tough but essential balance.

Great point that ties in nicely with Veritas's "conundrum":

We are all “True Believers” in our positions, and have adopted them as a quasi-dogma, for which there can be little if any movement without direct impact that will shift our thoughts one way or the other.

It may be impossible to completely eliminate personal bias and the tendency to overweight evidence that seems to support our desired conclusions, and underweight evidence that conflicts with them. However, I believe you can do the next best thing, and focus instead on things that are NOT so easily distorted by emotion. Things like price-rent (PE) ratios, price-income ratios, mortgage lending standards, historical data on use of "exotic" mortgages, cash-out refis, etc. The fundamentals have always been good fundamental indicators of underlying asset values, and I believe they will continue to be in the future.

It's true that we all wear the emotion filter to some degree, but that doesn't necessarily mean we're enslaved to it. As Matt said, keeping an open mind and the ability to question or change our own assumptions if they prove wrong is the key to good decision making.

Was it Peter P or HARM who gave October as the date the market crashes? Reading yesterdays article links:
http://tinyurl.com/7ebgq

"The next U.S. recession will start in earnest on October 17. (If it hasn't already.)

That's the day the new bankruptcy law kicks-in, and credit card banks get hit by a double-whammy of their own creation."

I was speaking to a good friend yesterday who lives in London. He made a fortune (10 million pounds) from RE there - he got out before it started to level off and he was very much in agreement to steer clear of the US RE market at the moment. He was now doing a lot of trading and has also been very successful at it.

He was on the Chicago stock exchange floor a couple of weeks ago visiting with some very successful traders - these are the guys who make 3 mill a year (!). He said it's really interesting watching how they make decisions on trades. Everyone has their own systems but the best seem to not have majorly fancy tools but have a few tried and tested setups and it's really about psychology more than anything. The market is driven by fear and being in the 'Pit' - the trading floor is amazing as you can hear the change in emotions, people even pay for a pit noise feed to get commentary on what's going on and the ebb and flow in the market.

He got home from Chicago and immediately unsubscribed to every publication he belonged to. He said it influenced you to make decisions based on news that was really for entertainment value. I think fear can paralyse you a little too much when making investment decisions. A few years back I wanted to buy another house in LA but my husband, an avid reader of every publication out there was concerned by the predictions of the Economist etc and didn't think things would go up much more. I was far less read but my sense based on other markets I'd invested in overseas showing the same trend as LA (that it was going to rise) said it was a good time. Right now I don't think it's fear, it's now become logical not to invest when the market is so high. Even though we need a larger house we are going to hold off - there is no hurry as I don't think things will go up much more, if they do it won't be much, and if it did go up another 20% then I'd rather rent. I might see an expensive sweater that I really want and it's just that price but it's my decision to buy into that luxury item. Its all about affordability and not being stupid.

Are you saying that the reason you didint get involved in RE is because you knew it was over priced and you didnt want to get involved because you were/are afraid your participation would lead to other individuals getting hurt?

I don't know if this is addressed to me or not, but if it is I'll say this; my lack of participation in the market is because of a combination of factors, but other individuals never entered into the equation. Initially my husband and I were unable to get in because we went to one income when we had children. When his earnings had increased and we could start looking, asking prices had started going through the roof and we just didn't think the prices were justified by fundamentals. Now papers like USA today are saying that the Sacramento market is 54% overvalued and very likely to correct in the near future.
http://tinyurl.com/b8dgq
I have been one of the few to admit that yes, at times I wish we could have bought in about 5 years ago, but having said that, I am not sorry I didn't buy in last year or this year. I do think a change is coming. I also don't lie awake at night worrying about the bills because those are covered and we have a good amount saved toward retirement. I don't think I've been a whiner or complainer. We have left some chips on the table but not all and I think we'll be ok in the long run. Like I said before, the ones who are the most strident are the ones I think have the most fear.

Everyone has their own systems but the best seem to not have majorly fancy tools but have a few tried and tested setups and it’s really about psychology more than anything.

I can attest to this... fancy tools do nothing but to enrich snake-oil salesmen.

I have been one of the few to admit that yes, at times I wish we could have bought in about 5 years ago, but having said that, I am not sorry I didn’t buy in last year or this year.

Well said.

I wish I had done a lot of things... but I would not have done those things given the circumstances and information I had in the past. We can only act according to the present and a reasonable projection of the future, but not the past.

I like complaining that house prices are too high but I'm not complaining that others are making money. Good on them, they took the risk and they should get the reward. I've done ok on a couple of RE investments which were prudent buys and while I may not have made a ton of money I'm comfortable.

If the market goes south, I can only imagine what real whining and complaining sounds like. I've been on this blog for a while and at times I hear us kick ourselves that maybe we should have bought more years ago - that's normal but not a lot of real whining. I'm more amazed at the people entering into ridiculous mortgages that they can't afford that are really illogical and put them into a very leveraged scary position.

Good on them, they took the risk and they should get the reward.

I only complain about people who profit through illegal means. I have no problem with rule-benders but I would hate to compete with law-breakers!

Peter P - I completely agree. I was actually pretty shocked to read the comments about the predators using scams to get houses at Mish's blog:
http://tinyurl.com/dkbty

To quote some of it:

Foreclosure "rescue" scams fall into three main categories:

• Phantom help: The "rescuer" charges outrageous fees for light-duty phone calls or paperwork that the homeowner could easily do, none of which results in saving the home. This predatory scam gives homeowners a false sense of hope and prevents them from seeking qualified help.

• The bailout: In this scam the homeowner is deceived into signing over title with the belief that they will be able to remain in the house as a renter and eventually buy it back over time. The terms of these scams are so onerous that the buy-back becomes impossible, the homeowner loses possession and the "rescuer" walks off with most or all of the equity.

• The bait-and-switch: In this scam, the homeowners think they are signing documents to bring the mortgage current, but instead actually surrender their ownership. They usually don't even know they've been scammed until they're evicted.

I've seen those late night commercials about how to profit from foreclosures but if this is what people are doing then I'm horrified.

Gabby, I too don't wish ill on those who have recently sold their primary residence or even a long-term investment property and made money. On the other hand, I personally can't wait to see speculators crash and burn, and I don't think it's wrong for me to feel this way.

These are the people who helped to create/inflate this bubble to ridiculous heights, making many areas (including virtually ALL of California) unaffordable to working class families, who just want a place to live. IMO, they deserve to suffer harsh consequences for their selfishness and greed, and I hope the market obliges.

I guarantee that these same greedy, bragging arrogant jerks who are now flipping condos and insulting everyone else for being too "afraid" or "stupid" to buy now will be the first to DEMAND that the taxpayer bail them out for their reckless behavior.

They will also be first in line to file lawsuits against their Realtors, brokers and appraisers, because when they lose money, it's always "someone else's fault". When they're making money, of course, it's due to their sheer genius and raw courage.

Such is human nature, I guess....

Gabby, these people are bad and unethical. I surely hate them. However, apprasial fraud and mortgage fraud are arguably more harmful. At least the above scams are avoidable if one remains sharp and smart. Apprasial/mortgage fraud distorts the entire market.

I'm just glad that there are forums like this one that tell people about the scams Gabby mentioned. I'd assume if you are alert and read carefully before you sign anything you'd be ok, but some people are so slick you can't be too careful.

I hope those who are guilty of morgage/appraisal fraud get slapped down hard! That kind of greed hurts everyone.

I’d assume if you are alert and read carefully before you sign anything you’d be ok, but some people are so slick you can’t be too careful.

Very true. But generally, if something looks like cheese and smells like cheese, it is probably a mouse trap.

(BTW, they are opening a new mouse trap in Hong Kong, China this year.) :mrgreen:

BTW, they are opening a new mouse trap in Hong Kong, China this year.

To clarify, it is a people trap operated by mouse.