Earning An Honest Living

[Yaryman]

LoU-

 

All that aside, Orman is full of shit for one simple reason. If the buyer puts up 10% of the purchase price, and the property declines in value 10%, the buyer is wiped out. Period. And they may never get that back. By the time the property declines 20%, the buyer is financially ruined. 

 

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While I'm sure Ms Orman is full of shit, her little example is correct based on her absolute faith in the fact housing prices will never fall.

 

How could housing prices fall?

They never have before!

How could they fall after 5 years of way above average price increases?

How could they fall when every large spike in oil prices has lead to a recession?

[K Wave Rider]

One more flag...

 

Housing Affordability Down to 3rd quater 1989 levels

 

"The housing market has become so stretched that the affordability ratio for first-time buyers, the folks who drive the incremental demand in the real estate sector, has deteriorated to levels last seen in the third quarter of 1989,"

[beardrech]

Another sign of the times

My wife cme home with a Pizza today==Idont usually eat carbohydrates but thought i'd take a little taste--She opens the box and I looked at it asking -How much--Ordinarily fourteen dollars but with my coupon only thirteen dollars--

 

It had all grandeur in size of a half-dollar upon which were mounted a dozen penny-sized pieces of pepperoni--wheres the cheese I asked--why isnt it cooked-

And then taking umbrage I looked my wife in the eye and said metaphysically:This piece of lo-grade sh*t isn't worth the paper it was printed on--

 

I sweart to you it tasted as if it had been ripped out of a magazine and inserted in a box

 

beardrech First it begins with the pizza and the nest thing you know they surround your home with barbed wire

 

Joking aside anybody buying this crap a second time ought to have his crystalized balls handed to him--Im seriously thinking of divorcing my wife on account of animal cruelty

[K Wave Rider]

Bill Maher sounds like a Stoolie..

[K Wave Rider]

One more flag...

 

Housing Affordability Down to 3rd quater 1989 levels

 

"The housing market has become so stretched that the affordability ratio for first-time buyers, the folks who drive the incremental demand in the real estate sector, has deteriorated to levels last seen in the third quarter of 1989,"

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Just to give some of you who may possibly not be up to speed on your history, a peek at what things looked like in the 3rd qtr of 1989, on August 26th...

 

Here's a sample of the big banks..BAC..things were sailing along smoothly with trend followers calling turn traders a bunch of fools to be shorting bank stocks, when they were in such an obvious up trend..

[K Wave Rider]

And here's BAC a littlle over a year later...That breach of the July low on the Bank Index today may very well have been the first big crack in the dam holding back the derivative flood...

[cwd]

Not quite a buy signal yet according to the MACD, but it is quite possible that the selling could be nearing an end. Without a decent push under 1555, the NDX has held up relatively well compared to the INDU and SPX. The uptrending channel is still intact and could very well target 1700 on the next upswing. I'm back in cash as of the close and will wait to see what happens after Labor Day. If the NDX holds the channel, then most likely it's going back up IMO...?

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Unlike the SPX or Dow, the NDX is looking mightly orderly on this decline. Looks like it's alternating months since April---one month up, one month down.

 

In looking at the biggest-weighted components, many of them could pop 10% without the big picture changing or hitting significant resistance. Top 10 weightings (41% of index): MSFT, INTC, CSCO, DELL, QCOM, ORCL, AMAT, LLTC, AMGN, MXIM. With most of the market concern seemingly centered around rate-sensitive financial stocks (GM, GE, homebubblers, banks, etc), perhaps money will flow into the NDX.

 

An early Sept rally off a late Aug low would hardly be unusual for the NDX. In fact, since 1992 when the data began, the NDX has had early Sept rallies 11 out of 13 years. The only exceptions were 2000 when the NDX made a high at the end of August and fell through the end of the year; and in 2001 when the NDX was falling into the end of August and kept falling through the terror attacks of 9/11.

 

Here are the early Sept NDX rallies since 1992:

 

1992--- 13% b/w 8/25-9/15

1993--- 7.5% b/w 8/26-9/29

1994---4% b/w 9/1-9/17

1995---12% b/w 8/29-9/12

1996---16% b/w 9/1-9/26

1997---7% b/w 8/28-9/24

1998---26% b/w 9/1-9/28

1999---9.5% b/w 8/31-9/20

2002---11% b/w 9/3-9/11

2003---10% b/w 8/26-9/21

2004---6.5% b/w 8/30-9/21

 

Note how these rallies started like clockwork either the last few days of Aug or the first few days of Sept. It should also be noted that these early Sept rallies foretold little about how the NDX would perform through year end. Some years it kept on rising. Some years it made a lower low after the Sept rally.

 

Based upon the late Aug/early Sept low, the NDX:

 

1992---made higher low in early Oct, rose through year end

1993---made higher low in Nov, rose through year end

1994---made lower low in early Oct, chopped through year end

1995---made lower low in early Oct, chopped through year end

1996---kept rising through year end with no correction

1997---crashed in mid-Oct, chopped through year end

1998---crashed in early Oct, rose strongly through year end

1999---made slightly lower low in mid-Oct, rose strongly through year end

2002---made lower low in Oct, rose through year end

2003---made higher low in late Sept, rose through year end

2004---made higher low in late Sept, rose through year end

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It looks like higher lows and higher highs

[K Wave Rider]

And here's the daily and monthly pic of my personal favorite today...that ARMs only, poster child for mortgage excess, The Kalifornia Rocket, GDW...

 

Only one slight problem, momo disappearing fast..

 

That monthly chart literally makes me drool everytime I have looked at it for the last few months..

[FranciscoTheMan]

Lending market is going full blast right now, lenders are desperate to book loans.

 

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I'm currently reading the book" The Smartest Guys in the Room" - The Enron story. In their early days the emphasis was all on closing deals. The deal makers received large "monetary incentives" to close deals. It did not matter if the deals actually made the company money - it was of course assumed that they would. One of the reasons that Enron went south was their problems with the contracts losing the company large sums of money.... I wonder if this might happen again... with the desperation to close loans?

 

Bung

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This is also the story of sovereign debt jumbo loans to Latin America in the early 1980s.

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Is this documented in the book, or is that the other side of the story? Got Link?

[FranciscoTheMan]

The latest from Northern Trust

 

WARNING...Scary Pictures!

 

That first chart is prolly one of the more scary charts I have ever seen..Chart 12 is a close 2nd..

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Considering that the numerator is much less elastic than the denominator, Chart 3 suggests a parabolic blow-off in the future. As Sly Stone sang, "We are on the verge of getting in on."

[FranciscoTheMan]

Beardrech , have you dined on a steak tartare of fox meat and cuckoo eggs? You are in top form.

 

Francisco, , have you dined on dodos, you are the same as ever.

[FranciscoTheMan]

The vignette that Mark describes is characteristic of the final, desperate stage of the end of a mania. 

 

Lenders are so desperate they are pushing credit card offers to terrorists: Habbas opened the letter, and the salutation read "Dear Palestinian Bomber."

[Jimbo]

YOU JUST HAVE TO LOVE THE GUY

 

Housing Bubble's Not a Huge Story

 

By James Cramer

 

About this article:

The risk/reward ratio of real estate and stocks changed dramatically in the Enron/WorldCom era. You can lose it all in a stock; you can't lose it all in housing (unless you're overextended). Despite business media's making this housing boom seem as reckless as the 2001 markets, the horror-story ratio is different.

 

Ahhh Creeemer

 

You nailed it again

 

In reverse as always

 

Creemers like that character in the Diary of a Stock Operator - the life of jessie livermore - you always do the oposite of what he recommends

[fxfox]

in yesterdays IDS i posted a chart of German Midcaps (MDAX) which shows a potential crash setup and if not a crash setup than a setup which favours quite a good downmove, here is a chart of

 

German Smallcaps (SDAX)

 

at least a test of the uptrendline seems like almost 100% certain

 

SDAX daily

 

Chart ?ffnen

[TURK]

Hoofgrind,

I noticed how silver has been getting thrashed for several days.

It looks like dumping without concern for the silver market. Have you heard something in particular about a fund liquidation?

Thanks,

TURK

 

 

Here's a stupid physical silver question.  If regulators were forced to sell a large physical silver hoard from a certain capital constrained CT hedge fund in forced liquidation, how much physical silver in OZ's could the market digest at the market?  Could an indiscriminate seller force the market down 2% a day?

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