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randallg99

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lots of news and a little banter on this forum about HELOCs, Reits, Home values... but very little about the Fed, Interest rates, credit risk and the corresponding credit bubble.... its not all bad news, but the changes are coming faster than ever...

lets review what seems like years worth of news all packed in the past couple of weeks...

1. Housing- still in free fall. inventory levels and foreclosures continue to creep up. My opinion is that we aint seen nothin` yet.... I am in the `waiting` camp and may pursue property in the form of low ball offers of 50%+/- the asking prices..

2. Interest rate today was cut by 1/4. Many wanted 1/2, but they will live with it. The concern is not that the rate was `only cut` by 1/4, but the language used in the report... Bomber Ben all but told us flat out not to expect any more cuts and started using inflation (gasp!) as his basis... so what now, Ben? dont worry about the dollar anymore? ... unfortunately, it will take much longer for any positive effects of a lower dollar to take hold than the negative effects on the economy...

3. Looking at new cars for my wife. All German cars are holding firm in value, if not downright increasing in price... what this means? My vanishing US$ is starting to hit the consumer where it hurts...

4. Oil at $94 per barrel. You have got to be kidding me... one slip in logisitics, any more congestion at the ports and any indication of a refinery shut down will send gas prices to the moon.... mark my words. (I have bought slugs of PBT in the past week, mid 15s)

5. Merrill just had the single largest write down in history.... and THEY STILL CANNOT VALUE IT PROPERLY. (Hate to use caps, but if this doesnt freak people out, then I dont know what will...) Friends on wall street are glad they are able to kill this quarter once and for all so they can focus on profits again. But even they admit they freaked out and are not sure all of the bad news has come out because the true cost vs. current basis has a spread so out of whack they dont know which a$$ the dirt is flying out from next...

6. Did anyone see the MasterCard earnings report? This all but confirms credit has ever so quickly shifted the risk from home eq lines that were used as ATMs over to plastic credit.... the problem? for the consumer, higher interest rates/higher pymts and lower net worth. (IMHO, Mastercard will realistically be a strong short when a lot of the dust settles)

7. Default rate at Alt-A levels are increasing... see #1.

In summary- the economic reality of Americans is that they cannot afford all of the above in one full swoop... Lower $, higher oil, reduced home equity/net worth, higher payments... the economy reminds me of a table with a broken leg being held by books...

but who am I? currently investing in gold, silver and bulk shipping companies and recently have reentered the oil/gas arena. So far, so good. good luck to the rest of you.
 

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Edge

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it's gonna be ugly. I have some real low stink bids in there, so low that if they go off, I might be a little concerned about the health of the market!

think loooooooooong term, I keep telling myself.
Randallg, i'm not picking on you but it seems like you are doing all this great research (I always read and appreciate you research) to put the odds in your favor, but I don't understand your execution.

You have been SOOO right about so much going on in the market. Why are you still looking for stocks to hold long for the long term. Wouldn't it be easier to sell short crappy stocks in a crappy market this past year than try to find diamond-in-the-rough stocks to buy long to fight the trend? It's like you've been giving everyone the answers to the exam, and then opting out for a tougher test.

IMO, you've known the market was weak, you've been sharing your pessimism, you should be laughing all the way to the bank today instead of playing defense and looking for counter trend bargains.
 
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randallg99

randallg99

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>>>Your 10-15 percent core gold positions should not have to be mobilized unless you have sustained deep losses in equities or other sectors. If you do not yet possess the insurance policy that gold can be, it is never too late.<<<

indeed. for those joining the heavy metals party, they're really just in time.
 
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randallg99

randallg99

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flattering there have been >10k views on this thread..... at least someone else seems to enjoy my defragmented thoughts:

just a few thoughts about what's happened, what's happening and what's gonna happen. And then what I've done and what I'm doing as a result of what I've learned

there are a lot of presentations circulating and many of them are hard to follow with limited data. But this link presents a phenomenal glimpse into the future- especially after page 35... so wrapped up in someone else's words, this is what's happened, what's happening and what's gonna happen:

T2 Partners


important pages: 52, 65, 70, and 75 (which only refers to stocks)

it should have been added what happens to commercial real estate is that it historically lags behind residential real estate markets up and downswings. Since we are hypothetically only in the 4th-5th inning of the residential market bubble burst, we can only anticipate we are in the beginning stages of the CRE downturn.


What I've done: For a long time I was a buy and hold investor and this cost me a lot of money in the recent years due to my inability to time the markets. Despite seeing the meltdown as clear as day before it happened, I was early to the game and lost big.

Changing my philosophy was the best thing I have done. I am a buy/holder at heart, but I am a trader initially for survival and now for wealth.

I originally did an experiment by deploying a small portion of my portfolio dedicated to trading (while rest of portfolio was losing) and made significant profits. The momentum of the markets are very powerful and I learned the hard way not to fight the tape and to keep losses tight and let gains run. Granted, we've been in a strong uptrend in the past several months and we're probably due for a downswing, but following my set of rules that I've compiled has me ready prepared.

I am going to continue to trade stocks but just in the last month I have deployed this strategy in the vast part of my accounts, but still using tight stops. There is no reason to change this strategy since uncertainty continues to loom among all of the economic indicators and thus the markets. I am still approx 35% cash.

Regarding real estate, I've not bought any properties for 2 years and this is about to change. I have a list of about 300+/- properties for sale to select from that I am about to put offers on this week. I'll put in offers based on cap rates (utilizing my own criteria) regardless of their asking price. If the offer is accepted, I will use the attorney review period to view property. Rental market among "blue collar" market in my area appears to remain healthy. But, if I can sell the property at a nice profit, then that works even better.

Also regarding real estate ventures, just recently formed a loose, small partnership with like minded guys on wall street with strong ambition.... one of whoms mentor was dean of duke's biz school and has supplied much info. Due to the many factors surrounding our economy today and even highlighted in the presentation linked above, we've concluded that pursuing office, commercial and/or medical buildings are "sexiest" and makes it easier to raise funds.

I have also learned that if you dedicate the time, buying and reselling homes can make you gobs of cash in this market, especially selling to the "starter" market.... which is what appears to be very effective in my area probably because of the tax credits and other incentives available to 1st time buyers. I have not taken this route, yet but it might be a viable option.

Problem with homes in my area >500k is that they are virtually frozen. High inventory and low rate of sales in this price bracket tells me a couple of things: 1. buyer confidence is zero at this level and 2. banks are not lending so freely in this price range. Homes 1mm+ seem to be the ones that will give the banks the most trouble.

As a result of our banking systems' semifailure, there are so many indicators, problems and cracks showing in the economy that it's hard to put in words all of the dynamics affecting our decisions. But as a result, I've learned something else: that macro dynamic paradigm only matters just a little bit when it comes to following a plan to making money.

so in summary, I continue to collect cash flow from my properties I've had for years but the money is made really with sales. I've learned that buying/holding is not effective in this uncertain market environment and capital preservation is very key to success. Trading out of losses quickly saves a lot of money. Real estate will come back, but it has to go down further.

here's to working towards mega millionaire status.... good luck to us all.
 
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randallg99

randallg99

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In terms of #5, there is an excellent article in the most recent issue of Portfolio magazine on the investment banks; it is the cover story on page 178. All the banks are highly leveraged, from 32 to 1, down to 23 to 1 (Merrill Lynch is 23 to 1.) There is some hedging which decreases the exposure, but still the numbers are high. Either way, I think its fair to say that there is more to come.
I am in the camp that we haven't scratched the surface yet while many are speculating that these write downs are a one-time event that will be quickly put behind this quarter.

The main problem is that these companies holding defaulting paper are counting on the residential housing market sustaining status quo but foreclosures and defaults continue to climb.... even today, a report disclosed a 30% rise in foreclosures

these foreclosures are expanding well beyond the "subprime" arena

It's really a shitty time period to be holding debt that was most likely overpaid.
 
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randallg99

randallg99

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Speculation that Merrill still has another 10bil to write off was written in weekend edition of WSJ...

folks, I think we have barely even scratched the surface yet...
 

Russ H

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randallg99-

I have only one observation to make on all of your "facts" and opinions:

For the past 5 years, I read the same gloom and doom predictions on richdad.com. The poster may not have been you-- but the logic was always the same:

FACT: This is happening
FACT: This is also happening
FACT: I read an article that says this . . .
. . . etc.

The underlying tone of those old richdad posts, and yours is:

WATCH OUT! BIG CHANGE IS A'COMIN'!!!

And, "You could LOSE BIG, so BE CAREFUL!!"

You may be trying to say something totally different, but that's what I read in this thread.

******

Here's the thing:

I have a different approach.

I may read/see the same things you do,

but I focus on abundance, and growth.

Not loss and gloomy scenarios.

In that time, while others on the richdad boards were saying "WAIT!!!! BE CAREFUL!!!!", we kept going.

Hard.

So while those other folks were worrying about RE and other market futures . . .

. . . or just "waiting for the right time to buy" . . .

We acted. Moved forward, following our PLAN.

And we made millions.

Yes. Millions.

Just in the past 5 years.

From an initial investment of about $40-70K of our own money (the rest was OPM, using leverage).

Risky you say? Perhaps.

But to me, sitting it out and *not* doing anything is far, far riskier than getting in the game and playing hard.

I just bought another property.

Spent $0 of my own money.

It should be throwing off about $100K in earnings in about 6 months.

The RE we bought last Dec 06 for $0 of our own money started generating $$$ in Sept (9 months later), and has already brought in $35K through the end of the year, with anticipated revenues next year of over $120K.

Will the markets change?

Yep.

Will things all come crashing down?

I doubt it.

Perhaps that's the difference between me and so many of those other rd posters:

I see the future getting better, but have backup plans if it doesn't.

They see the future getting worse, and are afraid to move (or, choose safe harbor investments).

I'm not suggesting our approach would work for everyone.

I'm just saying it's worked-- extremely well--- for us.

Perhaps it's like the surfer who takes the big waves, and skims the edge.

He goes fast, and hard.

While others sit on the beach (or at home), and talk about how the waves are too big.

I see lots of big waves coming.

And I'm looking forward to riding them.

Hard. :)

-Russ H.
 
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randallg99

randallg99

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the financials in the markets are getting slaughtered... may be overdone at this juncture, but speculated liquidity problems which were at one point underlying tones are now surfacing to realities... in the past several months, the problems were simply "write-offs" and ceasing to do subprime mortgage lending. now the faucet has been shut off in several different areas of lending... just heard a horror story on a commercial deal that left someone exposed after the bank did a 180 on him.

I also fail to see how this time it's "not" different... prior recessionary periods in the USA did not have other economic superpowers that can exploit the USA's weaker dollar (besides Japan for the limited time in 80s) .... I am afraid the lower dollar is here to stay for a long time....

and folks, I'll say it again- average consumer's standard of living will decrease unless credit starts flowing again at the rate it did only last year and that may be next year, or it may be 8 years.... only problem with this theory is that it's a catch 22, money printed = lower dollar...

I won't pound the table on this, but my conviction is that gold will be above 2000/ounce within 24 months. do your own DD
 

SteveO

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I am not challenging many of the notions from this post but would like to discuss the article.

Lending on apartments has changed. The securitized money that was allowing people to purchase on crazy pro formas and loaning 95% LTV are gone. That time period was fairly short and the people that purchased at crazy high valuations will suffer.

But, most of the investors that have been in the market for a while did not participate in the frenzy. Sellers are still asking too much in many markets, especially the ones that were going crazy for a while.

The market is normalizing to a degree. Some of those properties will go back to the bank.

I am still getting close to the same interest rates as I did before. I am also still getting 80% LTV, even on under performing properties. The difference is who is loaning the money. There is not a lot of securitized money from wall street these days. People are scared to invest in these types of loans. That money has dried up. Fannie Mae, Freddie Mac, and a host of apartment portfolio lenders are still out there making loans and looking for business.

I am not an interest rate predictor. I go with what data I have. Rates and terms have not changed a lot from my perspective.

If they do tick up, it will have an affect on cap rates. That is not a major concern to me though.

I care about the fundamentals of rent and income growth. There are still going to be plenty of cities that are in a favorable position for purchasing now and in the future. A recession will have some affect as jobs go away but, some areas will be affected more than others.

There are still household formations. There are less houses being built. Some areas are still developing apartments. There are still jobs growing in some locations.
 

unicon

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The detail is all great but in order to simplify there are some things that the big picture has locked in what our government must do - They operate a gigantic Balance Sheet.

Think of Productivity as the Income Statement.

We have accrued massive debt and accelerated our standard of living off that debt for the last 20 years. Third world countries have supported the acceleration. Third world countries have increased their standard of living through producing product and services for the US. They have been the producers as we have turned into consumers.

The United States is spending so much that they cannot raise interest rates, they must be lowered to nationalize the debt. This is getting wealthy the easy way, but exhausts credibility internationally.

In other words the years of hard work by americans that have built the balance sheet has been leveraged along with technology and finance (structuring) to milk it for all its worth.

Leverage is not a bad thing but we have run out of debt issuing capacity.

To get rid of that debt it must inflate

They can ease the pain to the individual american by getting them as much cash as possible through home re-financing, one time $600 rebates, less tax, etc

The result is real wealth is no longer created at same historical speeds and hard working international countries are creating the real wealth

There is only one way out, hardship. Getting back to superior production

Getting back to superior production for the United States is not impossible as an infrastructure is already in place, but the new economy demands a new international responsibility and hidden costs.

The Iraq investment in freedom is an intangible investment question at this time and is highly leveraged. The costs are current but the long term change in human behavior may pay off 100 fold in the future.

In the mean time our international buying power will decrease

Our growth must slow as financing is exhausted and politicians do not have the discipline (past, present, or future) to delay gratification. Paradoxically the war spending may actually force the day of reckoning sooner, and face reality sooner.

The US is now walking a thin line in nationalizing as much debt as possible, this is a macro decision and all other detail will probably be moot.

No one knows what level of damage will result, but growth will slow for along time.

The only exception would be some combination of major technological breakthrough (world shaking) and/or a massive injection of behavioral discipline.
 

RJP

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For all the economist on this board. Check out the following charts. Scary .....


This chart shows how much money was left in the Federal Reserve Banking System
reserve accounts in aggregate across the Federal Reserve system when member banks
drained funds from reserve accounts during previous crises versus this one.


This chart shows how much money was borrowed from Federal Reserve Banking System
reserve accounts in aggregate when member banks drained reserves from the
Fed system during previous crises versus this one.

These are directly from the St. Louis Fed's web site.

Check out the web site here http://research.stlouisfed.org/fred2/series/BOGNONBR and hers http://research.stlouisfed.org/fred2/series/BORROW

Also (for a interesting read) go to John William's Shadow Stats site.

I think we (economically) are now the closest we have yet been to the pre 1929 conditions. Of course, this time, the dollar is simply a fiat currency and not pegged to gold, meaning there is nothing stopping the fed from printing their way out of debt. Can anyony say "hyper-inflation".

What to do? I am now mostly in Swiss Franc's, gold, reverse financials (SKF), reverse real estate (SRS) and some money markets. (Still own a lot of H & M, which I have had for about (5) years though). I am looking at some real estate, but in Uruguay (land and/or flats to rent) and other countries.
 
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randallg99

randallg99

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Chart 1: The y-axis says (Billions of Dollars). Is this really US$ or is it the $ amount of securities (treasury bonds, notes) it has on balance sheet? Also, what is the significance of that number now being negative?
As a rule, the Fed supports/protects the banking system by having actual funds on hand in the form of cash in US$ which is unleveraged (supposedly) . the reality is that when funds are depleted, the Fed has the ability to print the money to make up for the short fall. The Fed can also issue notes/Treasuries to make up for the shortfalls.

the bolded part is the serious 64k question that some of us are freaked out about.... our government is running out of money! the disastrous consequences other countries have dealt with have had their economies fail... our govt will need to do several things to build their equity strength- sell more notes (but there are only so many people able and willing to buy them - print more money which leads to devalued dollar - sell gold, but the govt does not have enough gold to sell to offset the shortfalls as the gold standard that was lifted a couple of decades ago eliminated the need for the govt to stockpile anymore - and finally, raise taxes of which can have exponentially negative effects in a slowing economy.


It is my understanding that the Fed is currently swapping treasury bonds for mortgages and they are depleating the treasuries on their balance sheet at a mind boggling rate.
yep. our Federal Treasury now has an indirect vested interest in the mortgage business. This manuever may or may not be the smartest move ever but what happened is that the Fed is now becoming involved in private enterprise which threatens impartiality.



What happines when they are out of treasuries to swap? My understanding is that they can either create inflation by buying more treasuries, or they sell their gold supply. Option one would be bullish for gold and commodities but bearish for the dollar, the other option would be bearish for gold and commodities and create a stronger dollar.
this is a hypothetical scenario... deducing from the charts above we assume the Fed has no choice but to both sell more treasuries (there have been several `emergency treasury auctions` in the past few months of which the Chinese govt is the largest buyer as they have been for years) ... this increases the Feds debt load but will raise their cash levels.

the other option is to simple print more money which devaluates the existing currency and then inevitably leads to inflation.

if I were the Fed, I would realize that having the cash on hand is much more important than fighting inflation....
 

phlgirl

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Oh, I totally get the thought behind the move (pretty sure ATW does too) but thanks, Russ.

I should have been more clear.

I was just completely unaware that the 'administration' had the ability to pull the plug on certain portions of the *free* markets - without any warning. These past few months have redefined the power of the 'administration' in my mind.

Sorry if that is too political.....not sure how else to phrase it.
 

Edge

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Go foreign....
Or... Go gold, silver or commodities....
and, I'm sure many other ideas I haven't thought of...

Their move to stop short sales is certainly limiting, but ALL the options haven't been taken away.
I'm not saying that I am quitting what I am doing, nor do I feel like all my options have been taken away. I'm saying that the light bulb lit up enough for me to realize I am not in the drivers seat as much as I thought I was.

This isn't just about short selling, it is about keeping markets free. There has been enough intervention in real estate, commodities, and equities (foreign & domestic) for me to say that these markets aren't completely free. Again, i'm not going to stay away from these markets, I just realize that the rules can drastically be changed against you at any moment. These are rules that I can't manage and that keeps me from being in the drivers seat.

Again, i'm not typing this to be some type of sob story, i'm just saying that I feel i've been naive in the past. There's lots of opportunity in insane markets, just don't get a false sense of security that the rules are out there to keep a level playing field.
 

andviv

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Funny.

All that much energy in finding who to blame...

instead of focusing on how to profit from the current and future rules changes.
 

kimberland

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You also have to look at this
from the executive team's perspective.

If you were told
that no one was allowed to short your company
for the next X days,
what would you do?

Me,
I'd report all the stinky news I have been hiding.

It is kind of like when a company has a bad year,
management knows they won't make bonus,
so they bring out all the dead bodies
and make it a REALLY bad year.
Then the next year,
their comps look good,
they make their numbers
and they get their bonuses.
 

Russ H

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JesseO said:
MJ, Russ, Cantwait, AroundTheWorld, etc you guys want to pony up the bill for our government bailing out private companies who should have simply gone bankrupt for their stupidity? :p
You can always leave if you don't like it, Jesse.

Find a nice island somewhere.

You think I'm happy about this sh*t?

You are mistaken, my friend.

But whining about it does not change things.

Whining/complaining is the new great American pastime.

Don't become a party to this stuff, Jesse.

You're way too smart for that.

If you don't like something, and don't want to leave, you have 2 choices:

CHANGE THE PROBLEM

or

CHANGE YOURSELF.

Think about it.

One of these is much easier-- and faster.

Figure out how to make things better.

Changing the PROBLEM is a job for politicians, lobbyists, multi-national corporations, and captains of industry and finance.

Changing YOURSELF is a cake walk compared to this.

You know this. Everything I know about you is about proactive decisions for change.

So please,

Don't mistake my attitude for passive acceptance

and complacence.

-Russ H.
 

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randallg99

randallg99

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the 64k questions are:
1. what happens if the bailout happens - and the variable being when
2. what happens if the bailout doesn't happen
3. what happens if this bailout is just not enough?

I won't make any hard predicitions.... financials will probably not like the bailout plan as much as it was originally intended, but it's the best medicine today.

if we don't have a bailout soon, the markets will probably react terribly... credit markets are still all but frozen... so knowing this, the politicians are under the gun and the bailout is probably 99% going to be finalized tonight or tomorrow morning before the markets open.

anything after tomorrow, the gyrations will probably be incredible

all in all, I believe we are still headed for a down market regardless of the bailout.... there have already been HUGE amounts of liquidity injections into the markets and they have not averted recessionary pressures.... another 700bil may or may not do it, but that's a HUGE price tag....

in regards to the US$, the 6 year steady decline was a direct correlation of emerging markets, Japan, China, Canada and Europe thriving while the USA was status quo. a lot of question marks were hanging over the dollar's ability to consume much at the expense of debt. We know now how it's done: leverage, leverage and leverage some more. When the well dries, print more money. Currency traders spotted this trend miles away (and years ago)

if there's anything we should learn from this mess is that politicians should refrain from making fiscal policy
 
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randallg99

randallg99

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Fed cut a half point - short term bullishness prevails as futures did a turn about face.... went from under 150 to over 150.... good save by the Fed even though he claimed very recently the interest rate cut was not in our best interest. Again, the short term mentality shapes policy making regardless of long term plans and best intentions.


As I type, the futures are red hot and my strategy for getting back into the market is not for the faint of the heart, but if we get a strong rally, ie 500 points, I will pick up inverse ETFs ie DUG and SRS .

I will also sell my JPM into this rally.
 
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randallg99

randallg99

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wow - futures up 350!.... trying to figure out why.... LIBOR is the same which indicates the credit freeze has not thawed out....

maybe a good day trading session, but not a good day to go long, IMO.
 

PaulRobert

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no way recession "ended" yesterday when ben announced it. What pompous talk....
+1, Lets see how we end this year and then we say if the recession has ended. If history repeats itself, we have grim months ahead of us.

September 12, 1930 -- "We have hit bottom and are on the upswing." - James J. Davis, Secretary of Labor.

November 1930 -- "I see no reason why 1931 should not be an extremely good year." - Alfred P. Sloan, Jr., General Motors Co.

June 9, 1931-- "The depression has ended." - Dr. Julius Klein, Assistant Secretary of Commerce.


 

Andrew

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In terms of #5, there is an excellent article in the most recent issue of Portfolio magazine on the investment banks; it is the cover story on page 178. All the banks are highly leveraged, from 32 to 1, down to 23 to 1 (Merrill Lynch is 23 to 1.) There is some hedging which decreases the exposure, but still the numbers are high. Either way, I think its fair to say that there is more to come.
 
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randallg99

randallg99

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Like EGLE?

It's been doing fine lately!
I have traded in and out of EGLE and could never keep it as a long term hold.. it has performed well and its distributions are very healthy but secondary offerings and greedy management turned me off. I have also traded in and out of Diana Shipping for same reasons. Oil shipping such as Frontline got me into this arena initially.

I hold long term DRYS and Golden Ocean Freight (Norway) and recently, long and short DRYS calls.
 

Edge

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lots of news and a little banter on this forum about HELOCs, Reits, Home values... but very little about the Fed, Interest rates, credit risk and the corresponding credit bubble.... its not all bad news, but the changes are coming faster than ever...

lets review what seems like years worth of news all packed in the past couple of weeks...

1. Housing- still in free fall. inventory levels and foreclosures continue to creep up. My opinion is that we aint seen nothin` yet.... I am in the `waiting` camp and may pursue property in the form of low ball offers of 50%+/- the asking prices..

2. Interest rate today was cut by 1/4. Many wanted 1/2, but they will live with it. The concern is not that the rate was `only cut` by 1/4, but the language used in the report... Bomber Ben all but told us flat out not to expect any more cuts and started using inflation (gasp!) as his basis... so what now, Ben? dont worry about the dollar anymore? ... unfortunately, it will take much longer for any positive effects of a lower dollar to take hold than the negative effects on the economy...

3. Looking at new cars for my wife. All German cars are holding firm in value, if not downright increasing in price... what this means? My vanishing US$ is starting to hit the consumer where it hurts...

4. Oil at $94 per barrel. You have got to be kidding me... one slip in logisitics, any more congestion at the ports and any indication of a refinery shut down will send gas prices to the moon.... mark my words. (I have bought slugs of PBT in the past week, mid 15s)

5. Merrill just had the single largest write down in history.... and THEY STILL CANNOT VALUE IT PROPERLY. (Hate to use caps, but if this doesnt freak people out, then I dont know what will...) Friends on wall street are glad they are able to kill this quarter once and for all so they can focus on profits again. But even they admit they freaked out and are not sure all of the bad news has come out because the true cost vs. current basis has a spread so out of whack they dont know which a$$ the dirt is flying out from next...

6. Did anyone see the MasterCard earnings report? This all but confirms credit has ever so quickly shifted the risk from home eq lines that were used as ATMs over to plastic credit.... the problem? for the consumer, higher interest rates/higher pymts and lower net worth. (IMHO, Mastercard will realistically be a strong short when a lot of the dust settles)

7. Default rate at Alt-A levels are increasing... see #1.

In summary- the economic reality of Americans is that they cannot afford all of the above in one full swoop... Lower $, higher oil, reduced home equity/net worth, higher payments... the economy reminds me of a table with a broken leg being held by books...

but who am I? currently investing in gold, silver and bulk shipping companies and recently have reentered the oil/gas arena. So far, so good. good luck to the rest of you.
Items 1,2,3,6, and 7 seem to all point in the direction of international real estate investing. I think it was one of your earlier posts where you said you might start a thread on this topic. Seems to me that it addresses this in two ways, gets real estate investors out of a bad and possilby declining market, and investing overseas is a play to short the US$.
 
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randallg99

randallg99

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I think it was one of your earlier posts where you said you might start a thread on this topic. Seems to me that it addresses this in two ways, gets real estate investors out of a bad and possilby declining market, and investing overseas is a play to short the US$.

I mentioned about buying real estate in Panama where I am part of an existing project consisting of a marina and several hundred homes/townhomes and am currently doing DD for another project.

There are many pros of developing in Panama vs. any other Latin American country.... but the main focus of the question correctly identifies that foreign real estate ownership in a growing economy represents a strong hedge against declining dollar values.

What I think most of the population misunderstands is that the deflated currency is actually not a "temporary setback" like the Nasdaq bubble, but a generation long period... Any planning for investments has to account for the deflated dollar for short and long term.

The reality is that the USD will take much longer to recover its value than it took for the dollar to lose its value.

If there is enough interest, I will highlight why I chose foreign real estate investment in Panama versus about 12 other countries I visited.
 

andviv

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What I think most of the population misunderstands is that the deflated currency is actually not a "temporary setback" like the Nasdaq bubble, but a generation long period... Any planning for investments has to account for the deflated dollar for short and long term.
Interesting opinion. But it is only your opinion. I am not saying you are right or wrong, I just want to mention it explicitly, this is your opinion and not a fact. I've seen many other opinions that disagree with you on this, but in the end they are just that, opinions, not facts.

About the interest rate drop, it may be time to refi for many, given that is not expected to be more cuts anytime soon.

About the german cars.... I just went browsing to the three top auto lease trader websites and found that the number of people 'selling' their leases for luxury cars has increased... or so it seemed. But this is not a fact, I have not seen the real numbers, that is just my feeling compared to when I visited the same websites last year. Seems you can get a lease on a luxury car for free these days.... people are dumping their toys.

About oil... I do remember when many had the opinion that it will get to $100 and I did think they were crazy, extremely pessimistic. Go figure.
 
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OP
randallg99

randallg99

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Aug 9, 2007
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Interesting opinion. But it is only your opinion. I am not saying you are right or wrong, I just want to mention it explicitly, this is your opinion and not a fact. I've seen many other opinions that disagree with you on this, but in the end they are just that, opinions, not facts.

About the interest rate drop, it may be time to refi for many, given that is not expected to be more cuts anytime soon.

About the german cars.... I just went browsing to the three top auto lease trader websites and found that the number of people 'selling' their leases for luxury cars has increased... or so it seemed. But this is not a fact, I have not seen the real numbers, that is just my feeling compared to when I visited the same websites last year. Seems you can get a lease on a luxury car for free these days.... people are dumping their toys.

About oil... I do remember when many had the opinion that it will get to $100 and I did think they were crazy, extremely pessimistic. Go figure.
1. you are right that it's only our opinions expressed... one day we are all correct. Hell, a broken clock is even right twice a day. More importantly, my opinions are based upon convictions which help me with my investments and while my opinion is just that, it is however gathered based upon many facts.

2. the rate drop makes another wonderful opportunity for a refi. But so have the previous several years... ever since 2002 interest rates have been historically low, even when commercial loans were in the 8's in 02 and 03 presented incredible opportunities for those who have lived knowing nothing other than double digit rates...

3. I don't know what people are doing as far as selling leases or buying cars and like you I don't have any real numbers. What I do know however is that while foreign products have escalated in price to a certain degree, the BMW's have jumped dramatically. I do know that our 2 year old X5 is worth significantly more than what I expected it to be worth today when I first bought it as a result of the current new car values. This is based purely upon my own personal observation and while I am no expert, I can say this will impact their American sales as people find it more diffuclt to afford them with a lower dollar.... In my area, we see beemer dealers giving away the 1st two monthly payments which exemplifies my point

the main part of the equation is that foreign COGs are exponentially outpacing american wages strictly due to diminishing value of us$

4. a couple of years back when pipelines were temporarily the target of suicide bombers, I called the $100/bbl. I acted upon my convictions and made a lot of money from Canadian Royalty trusts and other companies involved in NG and Oil... it's not really a matter of being pessemistic, but rather viewing the macro scale of events and being able to digest the direction of its momentum. I will admit I never would have believed it was going to happen as fast as it did...

my current conviction: Gold will be the next bull... it will be fast and furious.
 

Yankees338

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I mentioned about buying real estate in Panama where I am part of an existing project consisting of a marina and several hundred homes/townhomes and am currently doing DD for another project.

There are many pros of developing in Panama vs. any other Latin American country.... but the main focus of the question correctly identifies that foreign real estate ownership in a growing economy represents a strong hedge against declining dollar values.

What I think most of the population misunderstands is that the deflated currency is actually not a "temporary setback" like the Nasdaq bubble, but a generation long period... Any planning for investments has to account for the deflated dollar for short and long term.

The reality is that the USD will take much longer to recover its value than it took for the dollar to lose its value.

If there is enough interest, I will highlight why I chose foreign real estate investment in Panama versus about 12 other countries I visited.
I don't really have any opinions on the whole national economic crisis, but I would be interested in hearing about your decision to invest in Panama as opposed to the other Latin American countries.

Hopefully I can gain more information and knowledge about everything else so that I can form an opinion, but for now, it's all just learning.
 

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