August 28, 2007

HousingPANIC Thought of the Day

Isn't it kinda funny that the same people who didn't see the NASDAQ bubble (rode it up, rode it down) are the same people who didn't see the Housing Bubble (rode it up, rode it down)?


List dot-com and dot-condo similarities here...

33 comments:

Doktaire said...

http://tinyurl.com/2yh38f

LOL, and this is for July before the mortgage meltdown really hit the headlines!

And, Case-Shiller Home price index, steepest drop in 20 years!

http://tinyurl.com/yqx8hq

Makes that "Real Estate only goes up", "This is not a bubble, bubbles burst" BS sound a bit stupid now really. And we have only just started, things are going to get a lot worse. To all sellers, lower your home price to at least 2005 values, NOW. You will only end up losing even more if you don't.

the two are about the same said...

In the dot.com crash, I lost my cash. In the great housing rob, I lost my job. So now I'm looking for something else to do, while realizing that bush-regime republicans are full of doo.

PANIC in Detroit!

(Although the Detroit Tigers stomped the NY Yankess last night 16-0! It was the largeted spanking of the NY Yankess in their franchise HISTORY, passing a romp from the Chicago White Sox 15-0 game in 1907). NY Mayor Rudy Guliani was at the game in Detroit trying to gather voters for his presidential bid. Bwaaaaa!!! Sorry Rudy, Detroit'ers love NY, but not 9/11 republiscam liars like you. 16-0. Now beat it)

shocked said...

The ones who start the ponzi scheme always see it. The amazing thing is this time all the big players were fooled too. The ibanks, banks, lenders, investors, flippers, realtors and regular joe's all denied it was a bubble and some still deny it now. Others think the market will come roaring back next spring, as if the credit problems are of no consequence.

Anonymous said...

Keith, I beg to differ in regards to your paranthetical clarification of the quote (rode it up, rode it down). Many ofthe people who road it down got in at the peak!! They did not ride it up!! They saw it go up and dove in without analysis realizing it was peaking (admittedly its sometimes difficult to detect the peak until after the fall just like its difficult to find botom until a substantial sustainable uptick occurs.).

So I would focus only on the GFs who got consumed by it regardless of their point of entry into the last bubble as well as this bubble.

Keep up the good work, love your site.

Anonymous said...

I disagree. I, for one, am a person who lost an enormous amount of money during the dot com crash due to being naive and greedy. I did not make the same mistake twice when it came to housing. I saw this coming years ago - well before I discovered Housing Panic.com. I sold all of the homes I owned in bubble markets back in 2000, 2002, and 2006. I made money on each of them. The only home I own now is in a non-bubble area, and I have $200,000 equity in it. I could sell it for far less than it would cost to build it discounting any value for the land or land improvements, and still come out ahead.

When I tried warning a relative not to buy in Las Vegas in December 2005, it was because of the bad experience I had in 2000-2001 during the NASDAQ crash. I told him this will end the same, it's just a different asset class. He didn't listen, unfortunately.

Anonymous said...

Ironically, I have seen exactly that first hand.

I work at a company that had a front row seat for the dot com bubble. Although we survived, our stock price eventually took a 90% haircut in value. I knew individuals that held their stock options the entire time, not exercising any of them and taking no profit on the way up and on the way down. To the point where they lost their profit potential.

Now those same people are all home-owners. Some are sitting on equity but refuse to cash out. Many refied multiple times and are now in negative equity. Yet the denial of the situation reminds me exactly of what I saw in the dot com days. Its quite amazing actually.

gwk said...

How was Prague and this is it you are now vindicated welcome to the Jungle

Anonymous said...

And the pink slips are flying. I hope those employees don't carry any mortgages, car leases, or credit card debt. Like I said before, NOBODY has job security these days. Wait for the layoffs of credit card companies and auto industry to hit the market.


"(ATLANTA (AP) Earthlink to cut 900 jobs, or half of its workforce.
The company will close offices in Orlando, Fla., Knoxville, Tenn., Harrisburg, Penn. and San Francisco. Earthlink also said it will "substantially reduce its presence" in Atlanta and Pasadena, Calif."

Anonymous said...

Hey PPT, time to print some money because the Dow is down 150 points today. Bernanke, don't forget to make Maria "Lend Me Your Corporate Jet" Bartoramo cheer like a girly sheeple at the market close.

Anonymous said...

I fondly remember the folks I worked with in tech back in 98-01 who directed their 401k heavily in company stock (remember that great company WCOM?) or these geniuses purchased tech shares on margin.

“Psst, hey Bro. Forget all that boring Mid-Caps, Large Caps, P/E, Index Funds crap. Dump it all into Cisco and DotCom whatever.”

We all know what happened there.

Fast-forward to 02-Current and these are the same b*tth0les who bought into the RE Scam.

"I'm gonna double HELOC the living $hit out of my house and buy a new beamer...hey everybody! I just bought a condo with nothing down and stated BS income, look at me!!! Ooops....Oh NO!! not again!!!"

The years and the scheme may change, but the idiocy remains constant at ye old water cooler.

Mark in San Diego said...

Just today a woman I got an email from ask me why I wasn't buying in this "buyers market?". . .she also rode the tech bubble down to the bottom. . .now she has real estate in Sacramento, etc. . .she doesn't read the paper much, or aparently internet news. . .she (like others) have no idea what is going on in the financial world - when I talk about "credit crunch" and "interbank lending" you would think I was talking Esperanto to these people. . .today's Financial Times has an item about Credit Card default growing . . .the next shoe to drop. . .this thing IS getting nasty.

Anonymous said...

The sellers in the dot.com and dot.condo were both selling the same thing: nothing. just speculation on a piece of paper.

fooman said...

In my opinion, one of the biggest similarities is rampant fraud. Kindleberger points to fraud as a major hallmark of any bubble in Mainias, Panics, and Crashes

Dot Com: You had media pundits with a vested interest in a security pumping the heck out of it so they could profit.

Dot Condo: Mortgage and appraisal fraud up the ying-yang.

Bubbles have a way of bringing out out the scumbags.

Anonymous said...

They are both but a reflection of a bankrupt financial and monetary system.
The bankrupt system created both crisis and not the other way around.
There is no housing crisis, what there is is the collapse of the August 15, 1971 floating exchange rate system. That's what youre realy seeing in this housing crisis.

The US government must act to put the Fed Reserve system through an orderly bankruptcy reorganization.

Josh said...

Greed showed up and reason went out the door.

Anonymous said...

DOW down 280 again...

Gosh, I thought we were in a bull market and everything was rosey.

Well at least I got Apocalypto to watch tonight!

Anonymous said...

*









kinda funny?



Hilarious!



Priceless!

Anonymous said...

I love this blog, but I disagree. I made some big mistakes during the dotcom bubble, but learned from it. Again, I love this blog very much, but your statement is smug and anecdotal, rather than measurable.

Bystander said...

David Lereah, principal pump monkey for the RE bubble, wrote a book on how to get wealthy on information technology stocks that was released in June, 2000. This masterpiece of bad timing was called The Rules for Growing Rich : Making Money in the New Information Economy. Check it out on Amazon; available for as little as $0.24 per copy.

http://www.amazon.com/Rules-Growing-Rich-Information-Economy/dp/0812930568/ref=pd_bbs_sr_3/102-0480633-3692960?ie=UTF8&s=books&qid=1188342240&sr=1-3

Anonymous said...

We're talking major greed! Greed is what drives all asset bubbles.

Anonymous said...

Here is the problem.

You can get out of the stock market at any moment by posting a few trades on E-trade, cut your losses and move on.


I realize there is a housing bubble popping and it will only get worse but no one will buy my house because there are 10 others for sale on the same street.

long story short, even if you realize it and want to sell to rent, you can't because its too late.

Atleast I have a 30 year fixed mortgage so I will be fine, I feel real bad for the people who are adjusting soon and have no hope of selling because they are underwater already.

Shakster said...

Simple,because they are US Citizen Subjects of Washington DC,and owned,educated,and employed by the US(Yes I mean all US Citizens),they are fully conditioned to follow the pied pipers of Mass Media,politicians,and each other.Some learned from the Dot Bomb,but most never even heard about it.
The warnings were in Vain where the General Mass public was concerned,but very valuable to critical thinkers,or actual Men ,and Women.

Anonymous said...

There is a sucker born every minute and a smart guy born every hour to take care of the other 59. WC Fields I think. I really believe that Boomers who grew up in prosperous times are eternal optimists, and as such are easy to sucker into any feel good ponzi scheme. The previous generation took a dim eye at Wall Street Casino and believed in not having debt. Boomers believe in Wall Street Casino hook, line, and sinker. They have also turned real estate into a bubble boom, now a bust.

mrmx said...

The amazing thing is this time all the big players were fooled too.

when a dealer becomes a user, he becomes addicted too. it's not that they didn't know, IMO, but that they thought they could pull out at just the right time and avoid the consequences.

John S said...

I worked at one of the highest flying Dot Coms. Their IPO was up 2700% the first year. My stock options were worth $440,000 on paper, but eventually went deep under water. Fortunately there was never a dime of my money involved and I did pocket about $75,000 from the few options that vested before the bubble burst.

(Some of my co-workers ended up unemployed as I did but also lost thousands the employee stock option purchase plan.)

I never fell for the current housing bubble. I had watched house prices drop 45-50% in the early 90s. Bought my house in early 2003, 20% down, 30 year fixed at a Greenspan rate. I plan to sit out the housing crash here.

Bystander said...

I have heard, but cannot prove, that a lot of guys who raised venture capital for tech startups in the 90s switched to raising money to build Miami condos high rises.

Anonymous said...

I find the housing bubble similar to the dot com bubble.

I was younger during the dot com bubble, I was just out of HS, and landed a job with a tech company.

Here is my story on how I lost 20k or did I?


I lost 20k (yea I know not a lot, but it is when you are 18-19) in the dot com bubble, but at the same time I really didn't lose it.

I had options that my company gave me as an incentive to buy into the employee stock purchase plan, so I bought a small amount up. It grew in value to around 20k.

There was rumors spreading about the company possibly going under or being bought out, so I decided that I will wait one more day and I will sell at the first ring of the bell the next morning. Big mistake on my part, I over slept, and during the 1 hour of over sleep it was announce the company went BK. My stock went from a value of 20k to a value of $11.

I was pissed, I started complaining that I just lost 20k and blah blah blah to one of my coworkers. He looked at me and said.

"How much have you actually put in the account?"

I replied "$1,000"

which he replied
"Well then you only lost $1000 now didn't you?"




I look at what happened to me as similar to all the people the are facing losing their homes, or the people who are complaining about the decline in equity value.

For me,
Until something is sold, the only value that is posses is what you have put into it.

Anonymous said...

While the Republican Congress did not offer a taxpayer bailout for Wall Street after the dotcom ponzi scheme, the Democrat Congress is trying to push through a taxpayer bailout for the housing ponzi scheme bust.

DAGG said...

"David Lereah, principal pump monkey for the RE bubble, wrote a book on how to get wealthy on information technology stocks that was released in June, 2000. This masterpiece of bad timing was called The Rules for Growing Rich : Making Money in the New Information Economy. Check it out on Amazon; available for as little as $0.24 per copy. "

that is just too funny. so this guy wrote two book at the peak of both bubble, what a freaking idiot!!

keith said...

The unforgivingness of forgetfulness

New York Times

Wdid so many home buyers in the US ignore recent lessons and start viewing real estate as such a certain and profitable bet?

Understaniding how subprime mortgages led to the current market meltdown is a bit like figuring out a card trick. Lenders and financial wizards took the joker — the risk that certain borrowers might default — and hid it in the deck. They shuffled all those risky subprime mortgages into bigger investment pools, then cut the deck twice, fanned the cards and presto, it disappeared. Magic.

But then borrowers were shown the sleight of hand. Of course, the joker was always there, and the risks were real. Now people are defaulting on loans, and investors are spooked, prompting the Federal Reserve to act by cutting the rate it charges banks on loans, which buoyed the stock market.

http://www.indianexpress.com/story/211322.html

sam said...

"that is just too funny. so this guy wrote two book at the peak of both bubble, what a freaking idiot!!"

Actually the idiots are the people who bought them. DL was banking 7 figures selling his snakeoil to the masses.

Similarity between the two- charlatans got rich in spite of being fantastically wrong.

Happy Homedebtor said...

John S said...

I worked at one of the highest flying Dot Coms. Their IPO was up 2700% the first year. My stock options were worth $440,000 on paper, but eventually went deep under water. Fortunately there was never a dime of my money involved and I did pocket about $75,000 from the few options that vested before the bubble burst.

(Some of my co-workers ended up unemployed as I did but also lost thousands the employee stock option purchase plan.)

I never fell for the current housing bubble. I had watched house prices drop 45-50% in the early 90s. Bought my house in early 2003, 20% down, 30 year fixed at a Greenspan rate. I plan to sit out the housing crash here.

August 29, 2007 1:56 AM
----------------------------
Man I love the amount of BS people spout. Without adjusting for inflation, 10-25% is the biggest hit any market has taken prior to the current in-progress. (I think Detroit is pushing 20% so far and counting...but have you been there in the last 4 years? It looks like a bomb hit it) So, 1. You've proven to be a liar. 2. The rest of your statement is invalid by association.

Anonymous said...

Not BS. Here in Sacramento, CA I already see some houses marked down 40-45% from the purchase price, thats a heavy loss for the current owner. And this when the bubble burst are just getting started!