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#46 DrStool

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Posted 20 October 2009 - 09:59 PM

Your Fed report is the key to everything.


Doc, I have a question. Do you think it's a right time to buy a house, assuming I'll be able to press a seller to 10%+ discount?

I'm afraid to miss the current 30Y rate


There are many variables to consider. First the rent versus buy calculation for properties of similar utility. Second is the trend in your area. Has it stopped going down? If not, then the answer is automatically- keep renting.

When considering housing costs, be sure to consider all the maintenance expense, and obviously insurance and taxes. What's the trend rate of taxes? Older houses, and poorly built newer ones can cost a fortune in maintenance and repairs.

Then you have to consider the opportunity cost of capital. What can you do with the 50-100k you would be putting down. Can you borrow the entire purchase price?

Also, how long do you intend to stay put has to be considered. Will the house need a new roof during that time? If you sell, will you sell it yourself, or pay someone 6% to do what you could easily do yourself?

All that kind of stuff. But # 1 and #2 are the rent/buy calcs, and market conditions. Never, never buy into a down market. Wait until at least a year after the market has stopped declining.

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#47 DrStool

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Posted 20 October 2009 - 10:04 PM

Yes, my call is premature. My opinion that this one will not be the worst is based only on one single argument - somehow we avoided the bank run by the population.

Imagine if 50 million of people are heading to the bank and ask to get the deposit in cash. We've being very, very close to that last year. Probably the sheeples are too stupid, and that saved us. I had nothing in the bank back then


You're too early on that one too. There's already a run on the money market funds under way. The media is under a fatwah not to report it.

Generally, it's way, way too early to conclude that there won't be a run on the banks, and the biggie-- a run on the US Treasury. Now won't that be something.

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#48 Rationalize

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Posted 20 October 2009 - 10:05 PM

Tabby cat has this backwards.

"one type of CDO let Wall Street issue mortgage-backed bonds that were backed not by actual monthly mortgage payments made by real human beings, but by the wild promises of other irresponsible lenders. They even called the thing a synthetic CDO — a derivative contract filled with derivative contracts — and nobody laughed. "

They were borrowers, not lenders.

The synthetic CDOs were hedge hog shorts, effectively on the same side as ho-moaners.

Hedge hogs short at par, and buying back into the CDO decline.

Like a walk away, without the messy house bit.

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#49 ChicagoBear

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Posted 20 October 2009 - 10:09 PM

I love this guy

http://www.marketwat...able-2009-10-20



Sums it up nicely. We should thank God we were alive to enjoy the pinnacle.

Butt, who is really prepared for what is coming? :ninja:
If we don't change our direction, we're likely to end up where we are headed.
It wasn't raining when Noah built the Ark.
"and the vicious cycle will feed on itself in an orgy of cannibalistic self destruction until even the skeletal remains of the system are ground into powder." - Doc, 3/2/09

#50 roxy

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Posted 20 October 2009 - 10:11 PM

I think the capitalism can be fixed with one simple shot. Just Reinstate Glass-Siegel

#51 roxy

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Posted 20 October 2009 - 10:16 PM

You're too early on that one too. There's already a run on the money market funds under way. The media is under a fatwah not to report it.

Generally, it's way, way too early to conclude that there won't be a run on the banks, and the biggie-- a run on the US Treasury. Now won't that be something.


I'm very puzzled why the run on money markets is not resulting into anything bad yet. The Ted spread is very low. The commercial paper market is calm. It doesn't look like a panic - just moving money directly to the treasuries.

For example, my 401k plan offers 4 or 5 options to invest 100% in treasuries. Gives all choices of maturities and competing funds. And it gives me 2 money markets.

So I can run from 2 money markets into 5 treasury markets :-)

#52 Ags Nightmare

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Posted 20 October 2009 - 10:17 PM

He said $300 explicitly???? At $300 it will be in the top-5 world biggest co. An iPod maker.


Yep...he had the $ 300 price tag or target pinned on the giant cardboard Apple he was wearing. It was covering up his old $ 264 dollar price tag.
"I went out and bought an Apple Computer; it had a worm in it"....."When I was born, I was so ugly that the doctor slapped my mother"....'I played hide and seek; they wouldn't even look for me.'- Rodney Dangerfield

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#53 TenaciousG

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Posted 20 October 2009 - 10:21 PM

Interesting and scary thought. As more people lose what they have, they will feel they have nothing to lose. Listen to the caller.

Will economic inequality lead to terrorism
Cynically optimistic

#54 phatbubble

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Posted 20 October 2009 - 10:23 PM

You're too early on that one too. There's already a run on the money market funds under way. The media is under a fatwah not to report it.

Generally, it's way, way too early to conclude that there won't be a run on the banks, and the biggie-- a run on the US Treasury. Now won't that be something.

Doc, am looking at the MM chart in the Fed report (p. 67 from 18 Oct 09).

Looks like since March, Retail MM is down ~20% and Institutional down ~10%. Retail looks like a steady slope, Institutional seems to be accelerating a bit.

Is the whole story, or is it worse? TIA
Quod Severis Metes

Your life is the sum of a remainder of an unbalanced equation inherent to the programming of the Matrix. You are the eventuality of an internal anomaly, which despite my sincerest efforts, I have been unable to eliminate from what is otherwise a harmony of mathematical precision. While it remains a burden assiduously avoided, it is not unexpected, and thus not beyond a measure of control. Which has led you, inexorably, here.
You haven't answered my question.
Quite right. Interesting. That was quicker than the others.

#55 roxy

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Posted 20 October 2009 - 10:23 PM

Yep...he had the $ 300 price tag or target pinned on the giant cardboard Apple he was wearing. It was covering up his old $ 264 dollar price tag.


Right now the market cap of the biggest multinational co is implying the investors bet on the destruction of the dollar.

What's interesting, the bet on the dollar collapse is extremely crowded and is not hedged. It is simply impossible to establish a comparable hedge.

I wonder is those investors are tracking M2

#56 Charmin

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Posted 20 October 2009 - 10:29 PM

Something worse than a 50 bar bounce for Toyota inside the Nikkei might lead to the bottom if the stochastic passes through... the twilight zone.

http://www.StockShar..._1256092066.png
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#57 Charmin

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Posted 20 October 2009 - 10:33 PM

Throw in Honda for the Nikkei and some divergence and your could have yourself a full blown price correction to add a little spice.
http://www.StockShar..._1256092272.png
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#58 phatbubble

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Posted 20 October 2009 - 10:37 PM

Yep...he had the $ 300 price tag or target pinned on the giant cardboard Apple he was wearing. It was covering up his old $ 264 dollar price tag.

I heard he had apples all over the studio and was eating them too.

He's running out of dimwit gags.

One day sometime in the future he'll come blubbering and whimpering on air half naked and smeared with his own feces. It'll be the buy signal of the decade.
Quod Severis Metes

Your life is the sum of a remainder of an unbalanced equation inherent to the programming of the Matrix. You are the eventuality of an internal anomaly, which despite my sincerest efforts, I have been unable to eliminate from what is otherwise a harmony of mathematical precision. While it remains a burden assiduously avoided, it is not unexpected, and thus not beyond a measure of control. Which has led you, inexorably, here.
You haven't answered my question.
Quite right. Interesting. That was quicker than the others.

#59 vitrofan

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Posted 20 October 2009 - 10:41 PM

Off topic.....I guess, sorta.......

Oct 25th/26th seems to be 'it' in the wackosphere....

Haven't seen this much chatter from diverse quarters about a date since Y2K.....speculations about a banking system lockup, dollar demise, Iran bombing, 8+ earthquake, all sortsa whatnot....

Where's that damned blue pill


Well, I did my bit today and bought a little more peace-of-mind with a couple of March 700 S&P puts... Doc's Fed Report definitely put me in a catastrophic frame of mind...
It's later than you think...

#60 roxy

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Posted 20 October 2009 - 10:49 PM

Throw in Honda for the Nikkei and some divergence and your could have yourself a full blown price correction to add a little spice.
http://www.StockShar..._1256092272.png


Well, this chart is a clear 5 wave impulse from the bottom. After correction it can move higher





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