This is no longer a subprime problem

Just looked at a neighborhood in Nortern Virginia that is full of REOs townhomes. 60% off and no buyers. People who bought in the last few years will default no matter what credit rating they have.

"I have great credit, I'm happy in the place that I live. The wife's happy here. The kids have friends in the neighborhood. My income is up 15% over the past few years, so we're comfortable. This darned real estate thingy has got prices down big. Pity I didn't wait a couple years to buy this place. Oh well, I guess I'd better default on the loan!" Does that make sense to you? Is that what YOU'D do? A house is only a payment and a place to live until you want or need to sell it. That's the only time the value matter to you. A drop in prices means nothing, practically to the vast majority of home owners. Mark

yikes ! and those folks, many government workers and power center folks who are doing well, should be better off than almost anywhere. that REO thingee is sumthin folks forget about, too.

yikes !

and those folks, many government workers and power center folks who are doing well, should be better off than almost anywhere.

that REO thingee is sumthin folks forget about, too.

If you think real estate in Northern Virginia is interesting now, imagine what it's going to be like in 7-8 months.

I bought my house in 1980 - for $50K. Last year, houses in my neighborhood were in the $350K price range. I paid my house off over 12 years ago. And yes prices are falling, but it doesn't matter - the house isn't liquid money. What is killing real estate here in Connecticut - is Property Taxes - mine have averaged and 18% increase a year over the past 6 years and are double what they were in 2001 and population is leaving the state - especially retirees - taking their state and teachers union pensions with them - putting further pressure on government to raise and raise and raise taxes on remaining residents. There are more foreclosures in my town than I have ever seen before - which is kinda scarry. Mary Anne

Is this true for stocks too? A drop in prices means nothing, practically to the vast majority of home owners. Mark [/quote]

Mark, you're ruining the bearish illusions here Of course real estate is obsolete and everyone will walk out on the loan within the next 2 weeks. Here is what I want to know. How many people on this board are having trouble paying their mortgage and planning on walking out on their home this year. We should make a poll. Especcially among those bearish on the market. And please save the messages.. "well, people on this board are different, blah, blah blah."

Edited by ogm, 21 March 2008 - 09:18 PM.

I'm not dissing the economic bears.. because I think they're right.. but economics and stock market are not tied at the hips. By the time we head down in earnest, everyone will have thought this problem solved and all is OK. That's what B rallies are all about. I think you're about to see one of the biggest sucker rallies of the entire bull market.

Mark, you're ruining the bearish illusions here Of course real estate is obsolete and everyone will walk out on the loan within the next 2 weeks.


Here is what I want to know. How many people on this board are having trouble paying their mortgage and planning on walking out on their home this year. We should make a poll. Especcially among those bearish on the market.

And please save the messages.. "well, people on this board are different, blah, blah blah."

I respect a number of posters here - its a great forum - with a diversity of opinions - its what makes it great.

Here is my take, based on my lurking for long periods of time - like 7 years with nary a post. One of the things I must say about OGM is his unique take of contrarianism - obviously it works for him - at least in the latest 7-9 months lets say. Its not as if he doesn't have company in Mark - look at the weekly sentiment index, I don't know of a length of time that Mark has continued to hold on to positions (albeit theoretical - I am sure he is making profitable trades in this wildly tradable market) expecting a squeeze - which maybe just a matter of days away.

What used to get me confused (and therefore unable to gain as much insight from the posters' knowledge) is a lack of understanding of the poster's timeframe.
Often, its because its really unclear what it is - for OGM has posted trades expecting to keep them for intermediate to long-term only to change on a dime and liquidate positions on some epiphany he had. So, obviously just relying on his posting his opening trade and lack of follow-up could have got a novice follower into trouble. Don't get the idea that I am complaining - I am not, I certainly learned more positive things from following this board than negativee - but regardless of all the boilerplate about how one should do one's own due diligence etc.. more often than not people are led astray. Witness the mess unfolding on Wall Street for the "best" and the "brightest". Bottom line is that except for a few scientific types here - only Semibizz, NAV and IYB come to mind, no disrespect intended to the others who may fit the bill - it really is tough to identify a repeatable pattern to the other traders. I am not saying there isn't a method to their system, its not quite obvious what it is. Mark is not mentioned as he is the Master of the Universe and I don't want to this him with a mere scientific trader designation.

Now, even NAV, Semi and IYB are often inscrutable in how they actually DO TRADE, enough to confuse the heck out of me anyway - as an example, let me point out that NAV mentioned once or twice about how he has never had a positive trade on Fridays - well maybe not never - but thats the impression I got. However, since he made that post, he has made a at least 3 posts I remember where he tried the same thing on Fridays, the latest being on 3/20 - effectively a Friday since Friday was a holiday - all ending in busts. To me, it was clear, he had made the observation - yet didn't discipline himself - maybe it was his way of sacrificing to the trade gods.

IT is a classic example of someone who is constantly probing - someone who is in a Socratic dialogue with numerous posters making observations out of the blue - often contradictory (the posters not IT). He used to post his thoughts from time to time - really thoughtful observations - he made it seem really simple - but only when he wrote it. I never could figure out for myself what take he would have - for instance - has he changed his mind now at least in an IT sense?

There are some posters who keep it simple - like Insider with all his great swing trades in the current bear. But, I doubt I could have done it even knowing his clearly stated logic and justification for the trades.

All that said, I am beginning to think that this market is really turning into a "bear" to trade. To me, it seems that systemic risks are getting out of control - Semi makes this point from time to time, so does Mark. I am not going to infer from this that somehow more and more people are thinking that bearish extreme thoughts are prevalent and so a market turn is at hand - though I can see how OGM can certainly conclude that. After all, haven't we seen that sentiment alone is never enough to turn the market around?

My last call was a back and forth between 1300 and 1400 a matter of weeks and then to turn down. Well, there was back and forth and turn down. The turn down was nowhere near emphatic as I expected - but it WAS quite scary - which is just as well, since I didn't bother re-adjust my 401k's. Maybe I will get one more chance in the next few weeks - maybe we will get into the high 1300's. LarryT is forecasting a high of 1470 or so around May, and I normally wouldn't be inclined to argue with him - but I can't see how we can get that far.

Sorry about that long drawn out essay to an FF, but there it is.

-- r

Rameshutt, I don't want anyone think I walk on water. I get wrong, particularly on intermediate-term trades. I'm pretty darned good on the day trades, though not as actively so as I'd like. But all of that is irrelevant. What my point is, is that when making calls or predictions of economic future, implying some market action or another, one needs to at least be realistic. It's hard enough to make money when one has the economic future called correctly (ed. not correction). It's virtually impossible when one's emotions have one making wild and unsupportable speculative comments. Now, as for the systemic risks, I'm beginning to think that they are largely discounted. A lot of the street is beginning to think so too, so they've moved prices up. We'll see if they don't have to chop it around a bit more until others begin to agree or if they just take it on up for a while. Mark