5 replies to this topic

[Douglas]

The first graph below shows the behaviour of the AAII sentiment survey during the 2000 - 2002 bear market, the second graph the same for the 2007 - 2009 bear market and finally the current maybe bear market.  

 

In 2002 at the bottom there were only about 55% bears roughly what was seen a couple of weeks ago, but at the bottom in the OMG the world's coming to an end 2007 - 2009 bear market the bearish sentiment peaked much higher at about 70%, and 55% was hit numerous times as the market stair stepped down.  So if you think we are currently in a smaller Teddy bear market, maybe the low is in, but if you fear a grizzly bear market, the worst in sentiment is still probably yet to come.  You just have to pick your preferred flavor of bear to play.  The awful thing is, who knows, maybe it's a Kodiak, or a Black or even a Polar bear market, and heaven knows how sentiment will behave.  Thank goodness we have Elliott Wave to keep us on the right path  ( /s ). 

 

 

Regards,

Douglas

Edited by Douglas, 20 May 2022 - 09:22 AM.

[beta]

It's the Unicorn-Bear.  So rare, one even believe it exists. 

[K Wave]

Yep, this is the Big Kahuna...

 

CRE is going to be a disaster in 6 months time...

 

I don't think people realize what is going to happen with such a huge percentage increase in cost of carry at the short end. The crazy folks were max levered thinking near Zero was here to stay...was literally a feeding frenzy here in Austin.

 

Just totally insane deals I witnessed being done here in Texas as were completing a 1031 out of 2.9 cap deal on a prime Commiefornia property (also Insane I know). During our 45 day time window, I literally found only 4 properties in the whole state with a reasonably recession resistant tenant mix and a non-insane cap rate, and in good locations, and managed to pull off a 7.9 cap portfolio of 'tweeners (too small for the big reits, and too big for the couple million crowd) after we managed to acquire all 4 of them. All of our backups (all under 6 cap) were gone within a week. Was a crazy experience I wish on no one. One of our new property's property tax assessment just came back at more than 50% over what we actually paid for it. Yeah, that one is getting a protest.

 

We are all cash right now and chomping at the bit to do a big lever up when there is blood in the streets down the road a bit.

 

This chart is the last piece of the Budding Disaster puzzle..

 

A classic final top and then plunge as momo goes through Zero...buckle up...

Cant believe they held it up as long as they did, but I guess that's how bubbles are...

But that bubble is now burst...

 

 

And here is the Monthly look..pretty sure this will end up well below the Covid low...and it may come a lot faster than you think...

 

[Douglas]

K Wave, with half of California planning to move to Austin, do you think its real estate market may be protected a bit in the coming downdraft, or has that migration being over-hyped?  My old haunt, Houston, apparently is also going gang busters driven in part at least by the high oil prices.  It will be interesting to see how it fares given the dynamics of drag from rising rates and the tail wind of high oil prices.

 

Regards,

Douglas

[K Wave]

I do believe that Austin has pretty much priced itself out if we get an extended stock market decline, and the people literally throwing money at things stops at least for a while.

But I do not expect the flood of sane people leaving the now completely insane Left States to stop anytime soon. And Austin, being the blueberry in the tomato soup in Texas is also going to continue to attract some of the craziest from California as well.


So I expect the Austin Market will probably get hit a lot less hard than some of the other markets in the country. Last in, first out kind of thing.

However going forward, I expect places like The Woodlands, where we just got one of our properties, and San Antonio, where we got another one, are going to start attracting a lot more people than Austin itself. As the cost of living is still SUBSTANTIALLY less than in Austin, which is now one of the most expensive places in the whole country.

[OEXCHAOS]

I'm thinking RE is a short here.

I just can't decide if we're about to start the next leg down for the long bond or if we have a big BM rally...

 

M