July 26, 2007

FLASH: Special thread to talk about the wicked stock market selloff underway

I hope some of you had some shorts and puts against REIC stocks during this meltdown. They're selling off now even faster that I imagined possible. And pretty much everything else today as the debt markets collapse.

This is a special thread to talk about the collapse in builder, lender and REIC stocks especially, and anything connected to housing, mortgages and debt. Also use this thread to discuss how to best prepare, even at this late date, for the economic collapse at hand.

(Yes, I'm still short IMB, FED, HD and GM at time of writing, after having covered WCI, CFC and HOV at amazing profits, will be looking for more opportunities today)

141 comments:

keith said...

x
x

x
x

Homebuilder Profits Go From Bad to Worse

The slaughterhouse that has been the U.S. housing market for the past few months got bloodier on Thursday as several industry leaders reported worse results, July home sales fell more than expected and stocks throughout the sector hit multiyear lows.

The grim tidings about the industry dragged down both the housing and construction sectors, as well as the broader stock market.

"Overall, the market for new homes stinks ... liquidity is getting sucked out of the system," said Alex Vallecillo, senior portfolio analyst with Allegiant Asset Management, which has $30 billion in total assets under management. "Mortgages are going to be tougher to come by, more expensive. The buyers are basically drying up."

http://www.cnbc.com/id/19973692

borkafatty said...

I predict a 300+ sell off today...we are almost there as i type

Anonymous said...

Is there a safe asset class in which to park 401K money? I'm in energy and foreign stocks and those have done well over the past two years, but now its time to take my ball and go home. Where can I park my money?

Mark in San Diego said...

Yes, we are watching the meltdown in real time today - understand curbs are in at NYSE. . .I am mostly in cash, muni bonds and some utilities, etc. . .cash (even the USD) seems to be doing ok today - as someone put it, "when the dollar goes up on a day like today, you KNOW the line for the Exit is long!"

keith said...

WCI down over 20% today - no bids for them. Funny, just days ago rumors and reports of them being bought for $22 a share. Today? This condo builder is at $9

FirstFed down another 10% today - this negative-am ponzi scheme stock's earnings were Enron in quality

IndyMac down another 3.5% today, their earnings at the end of the month should be fascinating - will they come clean (like CFC) or will they keep up the lies and spin?

Everything I track is plummeting today, so fast it's tough to take out new puts

I'm gonna sit tight

Anonymous said...

http://tinyurl.com/2rv9o9


WASHINGTON (MarketWatch) - Sales of new homes declined 6.6% in June to a seasonally adjusted annual rate of 834,000, the Commerce Department estimated Thursday. Sales are now down 22.3% compared with June 2006. The sales pace in June was the lowest since March's 830,000, which was the lowest since 1999. Economists were expecting sales to fall to an 890,000 annualized pace in June. Sales dropped in three of four regions. Sales in the West fell 22.5% to the lowest level in 12 years. Inventories of unsold homes were unchanged at 537,000. The median sales price was $237,900, down 2.2% compared with June 2006.

ALAN DEE said...

READ MY BLOG: http://anonymousappraiser.blogspot.com/

I've been talking about this for the past few weeks, ITS TEN TIMES WORSE THAN PEOPLE THINK IT IS RIGHT NOW. I've seen homes dropping over 10K-20K per month.

borkafatty said...

Hey mark the USD is down 32 as we speak:

http://www.dollarcollapse.com/

Anonymous said...

New Home Sales Down Substantially

Sales of New Homes Plunge by the Largest Amount in 5 Months, Commerce Department Reports


WASHINGTON (AP) -- Sales of new homes fell in June by the largest amount in five months as the housing industry continued to struggle with its worst downturn in 16 years. The median home price also fell.

http://biz.yahoo.com/ap/070726/economy.html?.v=23

Anonymous said...

The proud owner of PUTs in CFC, LEND and IMB.

Also own SRS, and ETF that bets against real estate.

:-)

keith said...

Remember, stocks are not housing prices, as we've seen with housing prices tanking while stock prices went up (all in US$ terms)

That said, some stocks tanked directly because housing tanked (builders, lenders, etc)

Now, most stocks are tanking because of the collapse of the debt bubble - set off by housing / cdo collapse and finished off by the boots and chrysler collapse

Will stocks go up or down from here? I have no idea.

Will home prices go down from here? Yes, and farther than you ever thought possible.

David in JAX said...

I'm not short any company (don't have the balls), but I am positioned such that I am up today and through this week.

What I really want to know is what happened to Dogcrap Green? He was talking about how the HB stocks were at a low point about nine months ago and how would rally this summer (now). I remember him saying that TOL at $35 / share was a bargain. Where is he now?

FlyingMonkeyWarrior said...

STAY IN ENERGY, YOU AIN'T SEEN NOTHIN YET. Next Bubble according to ITULIP.COM is the Energy Sector.

Bloomburg Story

$100 Oil Price May Be Months Away, Say CIBC, Goldman

http://tinyurl.com/yt8ehy

Anonymous said...

BUT IPHONES ARE SELLING!!!

SUZANNE!!!!!!!

greedy said...

The Fed and other central banks are trying to defend the USD and hit gold over the head. The dollar index has been flirting with 80 all week and even dipped its toe below 80 a couple of times.

It's sh_t or get off the pot time for the USD and the markets, and it looks like Bernanke is willing to pull out all the stops. watch the central banks and PPT swing into action - the DOW will close up on Friday.

cobra2411 said...

Anon 7/26 5:00

SLV - Silver ETF
GLD - Gold ETF
FXE - Euro ETF

Also
SDS - UltraShort S&P500
DXD - UltraShort Dow
QID - UltraShort QQQQ

I'm waiting till the close on the sorts. If we close under 1490 on the S&P I'm loading up on SDS.

I have some GLD and SLV and FXE, but I'm waiting to add more. There may be a sell off to raise money for things like Margin Calls... But ultamatly I think they've got a huge upside. In fact I think precious metals are the next bubble...

FXE is a bet that the euro is going to do better then the dollar. I've got it as a hedge against the dollar taking a crap...

borkafatty said...

Hey Keith I think this Quote from Bloomberg sums it up quite nicely

``The `sky is the limit' investment approach is coming to an end,'' said Philip Gisdakis, a credit analyst at UniCredit SpA. ``When the LBO and M&A machinery run out of steam, it might be also bad news for stock markets.''

But everything is going to be alright, please everyone clam down, clam down!!! dammit!!!
(said in my best panic voice)

Tom said...

It's sh_t or get off the pot time for the USD and the markets, and it looks like Bernanke is willing to pull out all the stops. watch the central banks and PPT swing into action - the DOW will close up on Friday.

Bernake knows that housing is now a lost cause. He can try to continue propping up the economy by ensuring that the spigot is still wide open and dollars keep flowing from the reserve. But he damn well knows that he needs to start raising interest rates before he completely devalues our currency. Not sure where the endgame breaking point is, but it will likely start to occur when interest begins to wane in treasuries at low yields. He'll need to start increasing the interest rate on treasuries to attract buyers. So in the end, it will be two stakes through the heart of housing.

But he is stuck. Its the lesser of two evils now. Sacrifice certain areas of overinflated housing or sacrifice the entire US economy. Even for a government employee, that's a no brainer.

Can anyone care to guess what will happen to all those California ARM and I/O mortgage holders that see their rates reset from 4% "teasers" to around 8%? That basically doubles your payment. (And more if you are an I/O and the priciple payments start coming)

Ouch!

Anonymous said...

Folks, if you want to buy shorts on the indicies, buy SKF & SDS & DOG. SKF shorts the financials at double the rate and has sprung from $71 to $85 since the debt financing problem went public. SDS shorts the S&P 500 at double the move, and has risen from $49 to $54+ the past few days. DOG shorts the DOW on a 1:1 basis. So several ways to make dough besides puts.

For some REAL entertainment, flip on CNBC International tonight to see how Asia trades overnight and Europe tomorrow morning.

RJ said...

Won't the Chinese help by buying up Ginnie Mae MBS? Especially since our Secretary of HUD asked so nicely.
Don't count on it.
From Asia Times Online
http://tinyurl.com/3xeol8

Yi Xianrong, a senior economist and finance professor with the Chinese Academy of Social Sciences, a central government think-tank, attributed the previous surge of mortgage-backed securities bought by Chinese companies to inexperience in conducting risk assessments and their miscalculation of the US property market.

"After seeing how the property prices in China kept soaring, these Chinese companies never thought of the US property market as having problems and they bought a lot of mortgage-backed securities, particularly in the past two years," Yi told Asia Times Online. "Apart from underestimating the level of risk, the better returns offered by MBS over US Treasury bonds also made the Chinese investors unable to judge the high risk of the US mortgage market....

Economist Shi Weigan echoed Yi's comments. "With a possible burst in the housing bubble in the US, it's not the right choice for Beijing to spend foreign-exchange reserve funds on the US mortgage-backed securities," Shi said.

(A possible burst?)

If the Chinese won't help stop the bleeding there's always another shot of FED prescribed morphine to keep the dying patient comfortable for a while.

Anonymous said...

Wow just tried to short IndyMac and got the "There are no shares available to short at this time."

Anonymous said...

Where is the DOPE troll today???

Bwaha ha ha ha

Poor thing, he's probably drinking kool-aid with Mozillo and Bob Toll.

Anonymous said...

Just got back from the bank. The CD rates were unacceptable, and the @sshole tried to sell me some "investment" product! I pointed at the TV with bloomberg on it and said I don't think I want to participate in that.
I plan to actually join the stock market ponzi scheme when Dow gets to 10750 or S&P 1275.
I will enjoy watching in the meantime.

Anonymous said...

Retirement money is in international and energy sector mutual funds.

stock portfolio has moved into a lot of short positions. I shorted Yahoo like crazy a couple weeks ago and that stock is now on a death spiral. Shorted CFC as well. Nice.......

That new BMW is looking more like a reality by years end and I'll be looking to buy a home in a year or two when Seattle market takes a dump after thousands of new condos flood the market

losers said...

apple is up $8!
amzn is also doing okay.
nothing to see here folks.
cant wait to watch 'on the money' on cnbc tonight. they didnt even mention countrywide the other day. lets see how much they leave out tonight.

Anonymous said...

When you mention puts anywhere on this blog, Keith, there is always someone mocking you or your moves. Don't see any today. I wonder why.

Snow -

Anonymous said...

Hey, Cramer's Stop Trading should be fun today...

Then he gets a whole hour later on to press his machine gun & shotgun buttons.

Anonymous said...

Very odd mixed feelings today.

Stocks are tanking because corruption in the REIC (in the form of sub-prime slime repackaged as faux AAA bonds by the magic of wall street) has finally cycled through the greater economy and is no longer "contained" (or should I say that investors have awakened to the fact that is not contained). So now the trolls & realtwhores have no leg to stand on and we are finally going to get our day of satisfaction.

But at what cost? Personally we are going to all suffer financially in any stock & bond investments that we have no matter how you've spread the risk. Having puts/shorts on REIC stocks is nice, but inthe long run will it be enough to offset the massive losses we will have suffer once all this plays itself out?

We are entering interesting times not seen since WWII and all the severe economic troubles that occured in the late 1800's & early 1900's before we established all the safeguards that have stabilized the economy. Safeguards which have either become corrupt themselves or which will be insufficient to weather the storm that has been brewing as which is starting to be unleashed today.

Good luck!!

Anonymous said...

Beazer Homes down another 11% today, 70% from the high

Spin that trolls

honica jewinski said...

I agree with FMW, energy is a safe bet. The dollar will go down, energy will go up. I would hold these as long as possible, make sure you have plenty of guns and ammo, and make sure you don't live around a lot of third-world savages, and sell off when you feel civil unrest is near.

borkafatty said...

This just in:

NEW YORK (Reuters) - Wells Fargo & Co. (WFC.N: Quote, Profile , Research), the second-largest U.S. mortgage lender, said on Thursday it will close its nonprime wholesale lending business, which processes and funds loans for third-party brokers, citing turmoil in the market for riskier home loans.

The company will shut operations in Baton Rouge, Louisiana, resulting in a loss of 170 jobs, and in Des Moines, Iowa, where it will seek other positions for 67 affected workers. Wells Fargo's home mortgage unit is based in Des Moines, while the parent is based in San Francisco.

Anonymous said...

Anyone remember when Cramer had Mozilo on from Countrywide and they circle jerked?

CEO Interview: Angelo Mozilo, Countrywide Financial (CFC)

When Cramer asked why CFC stopped giving out "bad loans" at a time everyone was doing it, Angelo Mozilo said he was talking about problems with loan quality and margins at New Century and Ameriquest a year ago. The companies had a bad business model, Mozilo continued, stating there will be consequences for minority and first-time prospective homeowners because of disappearing liquidity, and this trend will impact the housing market. However, he added the subprime mess has cleared the field of many of CFC's competitors, and the company will be in a dominant position at the end of this painful subprime ride. Cramer commented its time to pick up survivors like CFC ahead of a Fed rate cut in May. Cramer aimed to reassure viewers about Muzilo's stock-selling; "He's an older fellow... It's time for him to do a little insider selling... and I would start doing some outsider buying!"

http://seekingalpha.com/article/30460

gt said...

even with the market down so much this week, it only erases gains from the past 3 weeks...
i've never understood that, when analysts say 'the market is cleansing itself out' after it sheds 1%...you mean the market has needed to erase the gains from the past 3 days for the past couple months?

Anonymous said...

Yeah, where is that Dogturd Green guy at? I too remember him touting TOL in the 30's. OUCH!!!!!!

LOL!!!!!!!

Anonymous said...

Information on trading curbs

http://en.wikipedia.org/wiki/Trading_curb

Information on FDIC insurance

http://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation

Anonymous said...

This downturn will be 10% but the bounce will be sudden

Anonymous said...

I bet homeowners wished they could hit the SELL button as easy as stock owners could today

Anonymous said...

SElling into the close?

Anonymous said...

Wow almost 40 comments so far and not a single TROLL!! Hmm!!

honica jewinski said...

Hmmm, I wonder what a 13,500 dow looks like in 2002 dollars?

Mark in San Diego said...

Flash! Dateline San Diego - Americans are massing at the border trying to escape the collapsing US Dollar to the strong Mexican economy - "the Peso is king" said one hapless American. . ."I am going to Tijuana to work at a carwash. . .my job at the escrow company was eliminated." Yes, who would have thought - Mexico with oil, agriculture, drug cartells and thousands of low-wage factories would end up the winner in the NAFTA deal?

Anonymous said...

HELP THERE ARE NO BUYERS! where have all the greater fools gone?

vegas crash watcher said...

Buy PSQ to short NASDAQ.

Beginning of the great deflation? I hope so. I want Hillary or Obama to inherit a double debacle: a lost war and a ruined economy. The welfare state is toast.

gordon gekko said...

We'll fall 500 - 1000 points today and tomorrow. Then Black Monday approaches

Anonymous said...

WEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Anonymous said...

JUST CROSSED 400 ON THE DOW!!

Anonymous said...

400 points down and falling and still two hours left in the trading day.........can you say blood bath? i knew you could...

it will be funny to watch my little bald headed jewish buddy from philli today on his little chearleading show on cnbc, you know, our little buddy, jim cramer........yeh today he will be very subdued and look like a putz.......which he is anyway...

Anonymous said...

Remember, stocks only go up. There's no better time to buy stocks than now. And you have so many choices of stocks now! And you'll also have pride of stock ownership. Most stocks today come with granite anchors...er, "countertops." Buy now or be priced out forever...

benevolentstranger.blogspot.com said...

Pump and Dump Scheme?? Artificial Trends anyone?

Angelo R Mozilo - Declared Holdings
Relationship - Chairman & Chief Executive Officer
Company - Countrywide Financial
Reported Shares / Value Roster
Currently holding 1.38M as of: 07/25/2007
Purchased $ 0 as of: 07/25/2007 $ 41.45M sold

This trend is getting uglier by the minute...look at what our buddy Mr. Countrywide Home Loans Chairman is doing to his stock in a pathetic attempt to fool the average investor that the outlook is actually good and that the company shares are moving in good volumes!!!!!!!!!!!



Angelo R Mozilo - Transactions Date / Shares / Symbol
07/25/2007 / 46,000 / CFC Open Market Sale DUMP
07/25/2007 / 13,420 / CFC Exercise of Stock Options PUMP
07/25/2007 / 32,580 / CFC Exercise of Stock Options PUMP

07/23/2007 / 70,000 / CFC Open Market Sale DUMP
07/23/2007 / 70,000 / CFC Exercise of Stock Options PUMP

07/20/2007 / 70,000 / CFC Open Market Sale DUMP
07/20/2007 / 70,000 / CFC Exercise of Stock Options PUMP

07/18/2007 / 46,000 / CFC Open Market Sale DUMP
07/18/2007 / 46,000 / CFC Exercise of Stock Options PUMP

07/16/2007 / 70,000 / CFC Open Market Sale DUMP
07/16/2007 / 70,000 / CFC Exercise of Stock Options PUMP


07/13/2007 / 70,000 / CFC Open Market Sale DUMP
07/13/2007 / 70,000 / CFC Exercise of Stock Options PUMP

07/12/2007 / 46,000 / CFC Open Market Sale DUMP
07/12/2007 / 46,000 / CFC Exercise of Stock Options PUMP

shtove said...

A money centre bank in the US stuck with $92 billion bridging loans - could it be true?
http://tinyurl.com/2cqoc6
Bang go the pig-men bonuses!

Anonymous said...

Wall Street Plunges on Concerns About Credit Quality, Energy Prices, Taking Dow Down 400


NEW YORK (AP) -- Wall Street suffered its second-biggest plunge of the year Thursday, leading global markets lower as investors fled stocks amid increasing uneasiness about the mortgage and corporate lending markets. The Dow Jones industrials briefly fell more than 400 points, while Treasury yields plunged as investors moved money into bonds.

http://biz.yahoo.com/ap/070726/wall_street.html?.v=56

Anonymous said...

MARK TO MARKET

MARK TO MARKET

MARK TO MARKET

MARK TO MARKET

MARK TO MARKET

MARK TO MARKET

MARK TO MARKET

borkafatty said...

Anyone else have a hard on?

I do I friggin love it...the more housing tanks the better I feel, as a matter of fact i am going to light a cigar and make a nice stiff drink in celebration of it all.

Why the celebration you ask?

Cause we have all be had and I want the builders as well as the lenders to fall on their F@CKING faces, belly up, hands down.

This system of Ronald Regan Economics is finally coming to roost..the sooner the better, this country needs a shutdown and a reboot...oh the sport of it all.

Mtbaker said...

my 6% CD's are doing just fine! Whats all the fuss about?

Trevor Cordes said...

I still have puts from July 2005 on BZH, DHI, RYL, CTX, HOV. Insane profits.

BZH down another 12% today. In just 9 trading days, BZH has gone from 24 to 15: down 37% in less than 2 weeks. My puts are screaming!

My sell finger is getting itchy. You put-buyers, want to work out when a good exit point will be? These stocks are all insanely oversold. A bounce should be coming and it might be strong.

That said, look at ^HGX housing index: last 2 days it has fallen below the 5-year neckline of 195 and is just below its July 2006 lows. Look at that chart folks, a perfect H&S with the huge-volume breakout critical point happening RIGHT NOW. If this neck doesn't hold, the housing stocks will be straight down another 25% or more. If the neck holds (decent bounce in next few days and a few closes above the 195) then a big bounce rally could occur -- good time to cover (before it goes up more than 5%). Wait until a fib retracement and then buy more OOTM puts.

To those getting excited about Dow/S&P puts/shorts... be very very careful. The manic market has screwed me badly on that since 2006 (think Sep 06 and Mar 07). I will not short Dow until I see that this market has definitively had its back broken. Don't worry, when this market finally breaks it will be easy to make gobs of money buying 2009/2010 puts and riding back down to FMV which is Dow 7000 or so. Remember 2000-2002 anyone? Just don't get too excited... yet...

Anonymous said...

I know several people who've HELOC'ed their overpriced cr@pbox to the hilt, put the HELOC cash into a margin account and invested in the market thinking "they were smart" because of the tax efficiency of using the HELOC cash to fund the margin account. They are very thin financially otherwise, just living paycheck to pay check.

I said well, you've now got a very high % of leverage agains an overvalued asset after you HELOC'ed the house and now you've leveraged the HELOC cash in a margin account with little or no savings, if you get a margin call what are you going to do?

The response was to borrow more against the house.

I said, sounds scary to me, but what if your house goes down in value and you can't borrow more against the house.

Blank stare, like housing never goes down. Today is his day of reckoning, its the beginning of the end for dolts like this!!

Anonymous said...

Where have all the trolls gone????

Bwaha ha ha ha ha

Dopey, why have ye forsaken us?

Anonymous said...

Mozilo is going to be the Ken Lay of this housing debacle. They are going to crucify him.

Dopey the Dope King said...

I have nothing to say today, other than:

DOPES!

burn baby burn said...

I think we need to put the Trolls on the endangered species list. I am worried about them; do you think they are eating their young yet? God I love being right! You bunch of now Brooke dopes could not have happened to a nicer bunch of idiots.

Anonymous said...

I like DXD. It's a 2 for 1 on shorting the dow 30.

Good luck!

Trevor Cordes said...

Forgot to add. Look at the abysmal breadth on NYSE. 400 pts has the wow factor but .07 A/D and 19 down-to-up volume is the big story here. 19-1 D/U volume!!!! I have never seen that kind of number in 3 years. Even Feb wasn't that bad. Normally 2 or 3 to 1 (either way) is considered and great/ugly day.

Illegals Everywhere said...

Wow almost 40 comments so far and not a single TROLL!! Hmm!!

Too Funny! These market bulls will go the way of the housing bulls.

Like I said a couple of days back! They will have to choose food over their I.N. Connection.

Thus we won't hear from them anymore..

Trevor Cordes said...

Oh, and watch the yen... watch the yen. 122 a few days ago. 118.7 now. USD index only holding up because of CA$ thrashing (oil/gold). When oil/gold resume uptrend, CA$ will cause US$ index to tank below 80. If that happens, get scared, get very scared.

Anonymous said...

I LOVE THE SMELL OF NAPALM IN THE AFTERNOON!!!!!

HPDevotee said...

Was short the cash to short INDYMAC earlier this summer.

It's awful to not be able to profit from you're own savvy.

Oh well, I've been telling my colleagues to get their 401K's into cash for months.

I like the feeling of being right, I just wish I could spend it.

Anonymous said...

all this happened in feb...markets down 4% then within a month they were up 10%

I'm not getting too excited just yet

Anonymous said...

Moody's downgrades all ratings on Home Depot

By Katherine Hunt
Last Update: 2:21 PM ET Jul 26, 2007


SAN FRANCISCO (MarketWatch) -- Moody's Investors Service on Thursday downgraded all ratings on Atlanta-based home improvement retailer Home Depot Inc. (HD : Home Depot, Inc
News , chart , profile , more
Last: 37.00-1.05-2.75%

2:47pm 07/26/2007

Delayed quote dataAdd to portfolio
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Sponsored by:
HD37.00, -1.05, -2.8%) and left all ratings on review for further possible downgrade. The senior unsecured rating was downgraded to Baa1 from Aa3, and the short-term rating was downgraded to Prime-2 from Prime-1, the agency said. The downgrades were due to the significant increase in leverage that will occur following completion of Home Depot's $22.5 billion share buyback, the loss of about $1 billion in earnings before interest, taxes, depreciation and amortization following the sale of Home Depot Supply without any corresponding debt repayment, and the company's stated intention to manage to a 2.5 times debt/EBITDA ratio going forward, Moody's said. The continuing review action reflects the lack of visibility with regard to the funding of the initial phase of the share buyback, a tender offer that will require about $11 billion to settle on Aug. 23, and the potential negative impact on liquidity of some of the possible payment scenarios, the agency said.

Anonymous said...

Dopey the Dope King said...
I have nothing to say today, other than:

DOPES!

July 26, 2007 6:54 PM
-----------
Um why does that make a difference as compared to any other day then??!!

Anonymous said...

The Worst Is Yet to Come
By Rich Greifner July 26, 2007
11
Recommendations
Remember the subprime meltdown last winter? Low-credit borrowers defaulted on their home loan payments in increasing numbers when their adjustable-rate mortgage interest rates reset. Shares of major subprime lenders like Countrywide Financial (NYSE: CFC) plummeted, while the most egregious offenders filed for bankruptcy.

Investors were pretty panicked -- for about a week. The market fell 5%, but quickly rebounded. Within a month, those losses were erased, and the major indexes were setting all-time highs by summer.

You call that a meltdown?
The market's resurgence was impressive, but let's not pat ourselves on the back just yet. The subprime episode wasn't a meltdown, a crisis, or a disaster. It was a warning, and we failed to heed it. The real meltdown is coming ... and its name is Alt-A.

No one knows for sure when the Alt-A implosion will happen, or how much damage it will ultimately cause. But the experts do agree on one thing: The Alt-A fallout will make the subprime situation seem like a minor chimney fire.

I have a few suggestions on how you can protect your portfolio, but first, let's get to know the enemy.

Pants on fire
If you aren't familiar with Alt-A mortgages, perhaps you know them by another name: These products also go by the charming moniker "Liar Loans," because many Alt-A borrowers overstate their income and/or assets and provide little or no documentation to secure their mortgages. Historically, lenders reserved Alt-A mortgages for borrowers with blemished but not irreparable credit. Accordingly, these loans carry an interest rate somewhere between prime and subprime.

However, in recent years, the Alt-A segment has evolved. Now it reflects the type of mortgage product rather than the credit quality of the borrower. Mortgage lenders have devised ever more risky "exotic" mortgage products, most of which fall under the Alt-A label. Interest-only loans were a particularly devious innovation. Worse still are "negative amortization" loans, where the monthly mortgage payment is based on a below-market interest rate for an initial period (think of a minimum payment on a credit card).

These exotic mortgage products aren't dangerous in and of themselves. The problem occurs when a borrower uses these products' lower initial monthly payments to qualify for a home that he or she otherwise could not afford. According to a recent Credit Suisse report, surging home prices and record-low interest rates over the past five years tempted many borrowers: In 2001, interest-only and negative amortization loans comprised 1% of total mortgage purchase originations. By 2005, that figure was 29%.
http://www.fool.com/investing/dividends-income/2007/07/26/the-worst-is-yet-to-come.aspx

Shakster said...

Crash ,and Burn.Still looking forward to the 3000pt hair cut.
BTW-Met 2 more would be homebuyers that give the blogs credit for saving their financial lives.HP was mentioned first,and they love the off the wall Atmosphere.
Congrats Kieth-This HP thing is a success for sure.

Anonymous said...

BEARX

Anonymous said...

**** CHINESE FIRE DRILL!!! ****

Bush administration pushing out top 4 economics people to CNBC tomorrow morning for roundtable interview.

borkafatty said...

A must read into this hole CDO MESS! and shocking who is running it!

http://www.minyanville.com/articles/JPM-BSC-S%26P-CFC-CDO-subprime-AXP/
index/a/13446

Anonymous said...

borkafatty:

this country needs a shutdown and a reboot...

That's a good one....as an IT guy, I appreciate that wit.

Anonymous said...

10 year down to 4.75%...wasn't it just a month ago when you were having multiple orgasms that it hit 5.25%? Remember the predictions made of 6% by end of July? How's all that working out for you? Come on, admit you were wrong.

I am 85% in CDs and rent, so save the comments about being an FB please. If tomorrow is another down day I'm buying in and riding up the next mini bubble.

Anonymous said...

Watch the rally tomorrow folks, it will be amazing and inexplicable. Shorts are going to get slaughtered in this Fed/PPT engineered whipsaw. Once again the HP bubblesitters will have their heads handed to them.

When are you guys going to figure it out? The system is not a free market, it's rigged from top to bottom and you in-duh-vidual investors are just pawns and comic relief to the people who call the shots.

Anonymous said...

borkafatty and all other socialist scum must be gassed

Anonymous said...

Wall Street's "fear" meter hits 13-month high
Thu Jul 26, 2007 12:57PM EDT

Market News
Janus net jumps 57 pct, beats expectations
Comcast net up, but shares down on subscriber loss
Oil drops as U.S. stock market fall clips rally
More Business & Investing News... Featured Broker sponsored link
Power. Price. Service. No Compromises.NEW YORK (Reuters) - Wall Street's main gauge for measuring investor anxiety shot to its highest in more than 13 months on Thursday as global equity markets swooned on concerns about deepening problems in global credit markets.

The Chicago Board Options Exchange's volatility index, or VIX (.VIX: Quote, Profile, Research), surged 21 percent to 21.95, its highest since June 13, 2006.

The rise in the index indicates investors are willing to pay higher premiums for protective put options on the Standard & Poor's 500 index (.SPX: Quote, Profile, Research). The S&P was down 2.4 percent.

Anonymous said...

anon July 26, 2007 7:49 PM

Don't move, we are coming for ya!

Anonymous said...

Watch Asia!

Anonymous said...

Today is why many people on this board don't belong in the stock market....whish is fine. Some of you get so "satisfied" when there is a pull-back and then point to the fact that their money is in cash...Well I'm happy for you, but if you want to make money in the market you'll have to tolerate days like today.

A well diversified portfolio of Index ETF's (my preference) in Domestic, Foreign, bonds, & natural resources makes me sleep well at night....That & 2 years of living expenses in an ING account.

Day to Day fluctuations...What true "investor" really cares. Talk to me in 8 years...

The other guy said...

Good CNN article

Stocks Continue To Fall In Near-Panic Mood

Here's the link:
http://money.cnn.com/data/markets/dow/

I like the term panic!

Anonymous said...

160 point Rally to finish the day.

the other guy said...

"We're seeing panic in the market today - you can almost cut the level of fear with a knife," said Al Goldman, chief market strategist at AG Edwards.

Anonymous said...

s&p500 is up 1.2% since 3:00pm...wow that sell off lasted a whole 6 hours!!

Anonymous said...

Credit for stock buy backs is the reason the stock market has been skyrocketing. Easy credit is gone! Stock market will continue declining as credit continues to tighten.

Credit worries send Dow into a dive
By Walter Hamilton, Times Staff Writer
1:05 PM PDT, July 26, 2007


NEW YORK -- Fear that housing market woes could dent consumer spending and inflict broad damage on the U.S. economy pushed U.S. stocks down sharply today.

The Dow Jones industrial average closed down more than 300 points, recovering from an intraday decline of nearly 450.

The sell-off was fed by rising nervousness among investors that a sudden tightening of credit in some areas of the bond market could jeopardize the private equity buyouts that have helped fuel the stock market's rise this year.

Investors were shaken by the news that the private equity firm planning to buy Chrysler Group had to postpone a $12-billion bond sale amid evaporating buying demand.

"The market is just very, very nervous," said John Bollinger, head of Bollinger Capital Management. "Just a few days ago we were tying to break into new high territory and people just weren't comfortable with that."

Preliminary calcuations showed that the Dow closed down 311.50 points, or 2.3%, to 13473.57. The Standard & Poor's 500 stock index was off 35.42 points, or 2.3%, to 1482.67.

There were several new signs today of weakness in housing.

The Commerce Department reported that sales of new homes plummeted 6.6% last month, while orders for durable goods slid 0.5%.

In a new report, Moody's Economy.com predicted that the housing market would remain weak well into next year and would "have a substantial impact on the broader economy," said Mark Zandi, its chief economist. But strength in the employment market should help the U.S. avert a recession, he said.

Three home-building companies reported poor earnings results. D.R. Horton fell 80 cents to $16.88 after reporting a sharp quarterly loss.

Phil Roth, a technical market analyst at New York brokerage house Miller Tabak & Co. in New York, said the market had turned suddenly weak. He expects stocks to rally early next week in response to the deep sell-off today. But selling pressure should linger at least into the fall, he said.

"We should be thinking in terms of rallies to sell rather than rallies to buy," Roth said.

walter.hamilton@latimes.com

Anonymous said...

Making money in SRS has been like shooting fish in a barrel. But I would not go into SDS (double short S&P 500) at this time, when a much better option is available.

That is TWM, which is double-short Russell 2000. Look:

TTM P/E of S&P is about 16.
TTM P/E of Russell 2000 is about 40.

Large-caps have more international exposure, better opportunity to profit from falling dollar, and less exposure to credit risk. Small-caps are going to get slaughtered, especially those with high leverage, while large-caps may do fine.

Also, I don't buy into the idea that the PPT can rig the U.S. market, at least not while Europe's stock market is tanking. Investors can make rational choices between U.S. and European quality stocks, and if the gap gets too wide (due to PPT) then they will certainly choose Europe.

Or, please tell, does Europe have a PPT, too???

Anonymous said...

"Well I'm happy for you, but if you want to make money in the market you'll have to tolerate days like today."

I made a lot of money in the market, TODAY.

Anonymous said...

trolls? Dopes? Where you guys at???

Anonymous said...

>>>What I really want to know is what happened to Dogcrap Green?<<<

he rolled snake eyes....he's out of here......

Anonymous said...

on maria's closing bell show on cnbc, some talking head was talking about $750 trillion in credit derivatives.........my.....

that is a tidy number isn't it?

keith said...

Remember, this thread was about REIC stocks that continue to freefall - lenders and builders

So much news this week out of this sector, so much blood in the streets

Stocks may go up, stocks may go down, but with housing crashing at historic levels, lenders and builders will have trouble staying afloat

I can't wait for IndyMac earnings. Will they choose honesty, or will they choose jail time?

Enron and WorldCom came to that bridge in the road. We all know how that turned out

Anyone short IndyMac?

Anonymous said...

Don't worry everybody.

Tomorrow I predict the Dow will be up at least 100.

Because THEY can't let the market fall two days in a row or else the SHTF.

Viva the PPT!

Jymkata

It's getting really hard to stop all these pots from boiling over!

Anonymous said...

Market 1% since 02:50EDT.

DOPES

Anonymous said...

Market tanks and Troll celebrates only closing down 300 points

Dolt

Anonymous said...

If the market is up on Friday on light volume, look out on Monday. Seen that act before.

stock ho said...

is anyone else watching maria on cnbc. Shes frothing at the mouth loosing her mind!!!! I can't stop laughing. Thought she would get in a fist fight with ron insana if he werent on a remote. GOTTSA LOVES IT!!!!!!!!!!!!!!!!!!!!!

CAN YOU DAY MELT DOWN..GLOBAL MELTDOWN OF ALL FINANCIAL ASSETS???


I can

Anonymous said...

gordon gecko.......greed is good...

damn look at that phone.........can't believe people used to carry those big things around....geez.....

Anonymous said...

Anyone short IndyMac?

not yet. Iooking at puts for tomorrow.

Anonymous said...

Even with a 2% up day today, I still like the yen as a conservative short-term investment.

It's at about 118 and I see a short-squeeze in the making, with traders hammering it down to squeeze out the leveraged carry traders. I'm looking for a dive to about 108 over the next month or two, which would be about a 9% profit.

Direct yen play = FXY.

Agent #777 said...

One Hundred and MURST!!

How did so many comments get posted before I even saw this thread? I must be slacking!

Anonymous said...

well if they see red tonight in the japanese markets......then i think tomorrow will be black friday redux......history repeats itself.

the the sheep get sheared.......

did someone say something about physical gold and silver?....

Anonymous said...

mental midgets all over the place....dow up 26% since this time last year....today down 2%.Yeah a real crash indeed.

Anonymous said...

i think soon, there will be a lot more former stock market types, and real estate types and legal types who will be riding around in junky old trucks, asking people if they need any yard work....move over wet backs.....some highly intelligent, highly qualified hundred dollar, yard men are going to be competing with you very soon....

Anonymous said...

hey stock brokers...and real estate brokers.........shine my shoes boys.....

Anonymous said...

rates reset from 4% "teasers" to around 8%? That basically doubles your payment

=========================

I love how financially illiterate people give financial advice. Spanky, do yourself a favor get a clue, then come back and pontificate.

$250K @4% = $1193
$250K @8% = $1894

Interest rate would have to go to 11% for the payment to double.

Anonymous said...

>>>>mental midgets all over the place<<<

what a mean thing to say....

WAWAWA said...

SUZAN can come and suck on my long list of HB shorts !

My next LEXUS is going to be free :) I am drinking a cold beer for that.

And congradulations to those people who saw this comming last year and toke advantage of it.

borkafatty said...

borkafatty and all other socialist scum must be gassed:

--------

socialist huh its called reality Neoscum!!!

borkafatty said...

mental midgets all over the place....dow up 26% since this time last year....today down 2%.Yeah a real crash indeed.

---------------

HAHAHAH! You just proved our point stupid Americans....hahah go away. I am sure in fantasy land the clouds are cotton candy and the rain is a fine wine.

So 26% and your real dollar profit is what may I ask?

Anonymous said...

nasdaq up after hours. some crash

honica jewinski said...

Anon 9:43.... Yeah, but what was the dollar index this time last year?


From Ed Steele @ conspiracy penpal........

........aaiiieeeee!!! The Central Banks are selling paper gold and silver like there is no tomorrow (perhaps there isn't, after all), with both down substantially at this moment (11 am, July 26). See chart below. Bbbbbut........ the dollar isn't responding. The dollar dipped under 80.0 for most of yesterday, but end-of-day bailing got it back to exactly 80.0, then up overnight. Now it's headed south again. And the market is down big, too. What will they do?

This is the new financial paradigm, where gold and silver, which traditionally (and logically) react inversely to dollar and stock movements, move in lockstep with them. There is only one explanation possible, of course, just in case there is anybody out there who still believes otherwise: massive manipulation by government (including private central banks, but I repeat myself).

Metal deliveries are stretching out already. Soon, somebody will be forced to take dollar bills instead of gold or silver when their contract comes due and the whole house of cards will fall at once. (Can you say WWIII, boys and girls? How about Depression II? Okay, then, how about the complete freekin' end of civilization as we know it?).

Truly, these are interesting times....

-ed

Anonymous said...

>>>>>Thursday, 26 July a.d. 2007
The debacle in today's stock market was so terrible
that the Nice Government Men trotted out Treasury
Secretary Paulson to fire their main weapon, the
Blarney Cannon. He solmenly intoned that
sub prime issues "would be largely contained."
Yes, O, Yes. Right. Ha. Ha. HAHAHAHAHAHA!
Nobody said how bad this drop was. At the low the
Dow was down 449 points (3.3%), & the S&P 500
dropped waaaay under 1,500 to close at 1,486. I can't
remember exactly, but this is one of the worst single
day drops since the 1998 LTCM crisis. Something
very bad is happening behind the curtains, subprime
mortgage securities-wise. <<<



from Franklin Sanders, The Moneychanger.......

http://tinyurl.com/248z8u


couldn't have said it better myself...

Anonymous said...

I actually owned a phone like that. Charges were something like $1 a minute and keep in mind $1 was still worth something in the late 80s. Good times.

RE Investor said...

This selloff is temporary for one reason - Fundamentals. I also like the fact that the credit market is tightening. It makes everything healthier in the long run. The Chrysler Cerberus deal was a major contributor. I would not touch Chrysler if I was a bond investor either. Chrysler is crap! Diamler lost TONS of money on that garbage company. It is still a garbage company, but now Cerberus wanted the bond investors to lose instead of Daimler. So far the credit is drying up for crap, but for profitable companies it will be just fine. Most of the time the market over reacts in both directions, and this is a case of "Oh! they won't finance crap anymore". Once people realize that the main companies of the DOW and NASDAQ are making good profits, things will smooth out and the bulls will continue. If profits were bad, and global economies were bad, then it would make more sense. Housing - Dead for a while. If you bought a house in 2003 with a low long fixed mortgage - and are renting it out now, you should do well - not on appreciation but on revenue from rent. The tightening of the lending market and dry up of sub prime is really good for landlords. These folks have to live somewhere, and landlords have been dealing with low rents, while the people that should not have bought were buying. Now it is the opposite....

Enjoy the ride!!!

Anonymous said...

Not a troll- it'll go up and down a few more times before the main event.

KaliExPat said...

The Nikkei has dropped like a lead balloon 2 days straight and is down 157 as I type!

http://images.bloomberg.com/r06/homepage/HP_NKY.png

This is gonna get VERY ugly, too big for the PPT to bail-out without showing their hand (even with all the bull$hit artificial controls since 87') ;-)

"mental midgets all over the place....dow up 26% since this time last year....today down 2%.Yeah a real crash indeed."

Gotta love cowardly anon trolls/dopes like this moron, can't wait until a few of these shysters start jumping out of windows...LOL

Anonymous said...

PPT must be printing money as we speak to bring the market into positive territory this week. Funny how this market works: on Friday the market tanks because of long term negatives, then on Monday the market shoots up like nothing really happened last Friday, like long term bad fundamentals ceased to exist over the weekend. IT'S ALL FIXED! Analysts, indexes, forecasts, beige book, inflation, unemployment rates, data. FIXED, FIXED, FIXED...! Watch how tomorrow the market will behave like all the bad fundamentals never existed, with the help of PPT.

sinis said...

Nikkei down 400+ pts at open!!! Friday may not look too good...

Anonymous said...

"HPDevotee
Was short the cash to short INDYMAC earlier this summer."

My god you're a friggen moron. I see you have no idea what the f*ck you are talking about.

Anonymous said...

Just wanted to say thanks, your blog clued me in to what options (specifically puts) are useful for. I got approved for options trading last month through my existing brokerage, and I took out puts on lenders, homebuilders, and moneycenter banks. The only think I'm down on is AMZN, but that expires in Jan 09 - so the market has plenty of time to figure out their margin is 4% and the PE is over 100. Big ups to Calculated Risk, too, I'm making the cash money off those pier loan bag holders!

burn baby burn said...

Japan Stock Index Falls 2.5 Percent



Thursday July 26, 8:40 PM EDT


TOKYO (AP) — Japan's main Nikkei stock index plunged more than 2.5 percent during early trading Friday, following an overnight fall on Wall Street.

The Nikkei 225 index lost 450.88 points, or 2.55 percent on the Tokyo Stock Exchange, to 17,251.21 points about 20 minutes after the market opened.

Could it be spreading? It will be fun to wake up tomorrow and see what happed while I slept.

Anonymous said...

I hope you morons continue to short the DOW and S&P, so when you have to cover, you drive it up even more. Thank you for funding my retirement.

DOLTS.

You're all a bunch of dopes said...

To Anonymous 7:56:

Don't waste your time trying to educate DOPES and DOLTS about why their reasoning and strategy is flawed. Aside from Keith, who shorted housing, (good move) the rest are amateurs.
Just make money off of 'em.

Anonymous said...

Anonymous said...
mental midgets all over the place....dow up 26% since this time last year....today down 2%.Yeah a real crash indeed.

July 26, 2007 9:43 PM
--------------
And during that time frame how many days did the down rocket up 300+ points?

Anonymous said...

is anyone else watching maria on cnbc. Shes frothing at the mouth loosing her mind!!!! I can't stop laughing. Thought she would get in a fist fight with ron insana if he werent on a remote. GOTTSA LOVES IT!!!!!!!!!!!!!!!!!!!!!

CAN YOU DAY MELT DOWN..GLOBAL MELTDOWN OF ALL FINANCIAL ASSETS???


I can


I watched that pig acting like they knew all along those were bad loans. Give me a break. Revisionist history at its best.

Roccman said...

Ahhhhhhh....the smell of napalm in the morning eh...??

So if I am reading these posts right...this blood bath is well over due...

One poster said ...we need a reboot...

So a question for you "front rowers"...ya think lines on graphs like oil supply and ohhhhh...human population take a dive south...a "blood bath" so to speak?

I think they do.

Yes - the smell of napalm in the morning.

JP said...

Shorts;

Be careful, could be a bear trap has been set.

Anonymous said...

AS AN IT GAL - Can't you just say reboot? Isn't that shutting down and starting up? I guess that's an IT GUY for you. Ninney!

Anonymous said...
borkafatty:

this country needs a shutdown and a reboot...

That's a good one....as an IT guy, I appreciate that wit.

Anonymous said...

tomorrow the real fun starts!

Trolls - protect yourselves with an iPhone and a pair of ruby slippers ;~)

It's all good man! Casey said so...

Anonymous said...

Ford motor major upside surprise. UAL doing great and doomers saying the sky is falling.

DOPES!

Anonymous said...

Anonymous said...

Ford motor major upside surprise. UAL doing great and doomers saying the sky is falling.

DOPES!

July 27, 2007 5:05 AM

========

I own a lot of UAL stock, and own a substantial amount of Ford bonds.
This week has been X-mas in July for me. My only regret is selling Apple too early.

All this doom and gloom talk is funny.

Anonymous said...

Friday morning, 7:52AM.

NIKKEI down 418.28.

Dow Futures down 83 as I'm typing.

Should be a turbulent Friday. Monday won't be a picnic either as everyone has plenty to think of over the weekend.

Anonymous said...

Anonymous said...

Ford motor major upside surprise. UAL doing great and doomers saying the sky is falling.

DOPES!

July 27, 2007 5:05 AM
------------
This troll just cannot be this stupid, s/he must be just trying to provoke a response for entertainment purposes. Futures for all US indices are negative/after hours trading indicates a lower opening, world markets are all down and all this troll can do is point toward two stocks/companies that have been battered and sold losers for years but which now after analysts lower the bar to define a successful turn around, barely clear this lowered analyst bar as exemplifying how all is well, oh PLEASE get real.

Anonymous said...

Why is it that anyone with a dissenting opinion is a troll? Rather think skinned posters here. If your argument is sound, defend it. No need to insult someone for disagreeing. Unless you are in high school in which case, carry on dude.

Anonymous said...

Anonymous said...
Anonymous said...

Ford motor major upside surprise. UAL doing great and doomers saying the sky is falling.

DOPES!

July 27, 2007 5:05 AM

========

I own a lot of UAL stock, and own a substantial amount of Ford bonds.
This week has been X-mas in July for me. My only regret is selling Apple too early.

All this doom and gloom talk is funny.

July 27, 2007 11:31 AM
--------------
You're obviously much better and brighter than the rest of us humble masses, to include Warren Buffett and many other bright investing minds, who would not have touched either one of these cash hemoraging mismanaged companiess, let alone both. You should also play powerball lotteries. Once finished with that I recommend that you work on world peace and hunger as you obviously walk on water and can turn it into wine. We're going to need all your wealth, advice and wisdom as UAL Stock & Ford Bonds will be the cure for the 100's of billions of bad debt that will erase the wealth and fortunes of us lesser beings once the credit bubble bust runs its course.

Oh thank you oh merciful MORON.

Anonymous said...

Is anyone else getting a message that Indymac cannot be shorted right now? I tried to sell some shares short today and got rejected by ameritrade. My other shorts over the past few weeks have been going through fine.

Anonymous said...

>>> honica jewinski said...<<<


he he he

i love that handle...

Anonymous said...

All major US stock Inices have their worst week in 5 years and are off b/t 4-5%.

So how many more days and weeks like this will it take to be back whre they were last year?

Answer: Not very many!!

Daniel said...

HPDevotee said...
Was short the cash to short INDYMAC earlier this summer.

It's awful to not be able to profit from you're own savvy.

---

I felt the same way in 2000 as the obviously bloated tech bubble popped. It took me several months to scrape together $2000 to open an E*Trade account to buy puts on all the tech turds. And because I had so little $ on hand, I actually ended up losing money shorting tech stocks in summer 2000.
I could only afford short term put options, most of which expired worthless. The good news is, there's always another form of idiocy that comes along for smart people to profit from. I'm up >$10k so far shorting the housing stocks and buying puts.