September 26, 2007

HousingPANIC Stupid Question of the Day


Did you change your investment strategy after Bernanke panicked, destroyed the dollar, and cut rates 1/2 point?

(Hint... you still have time. And I sure did, that minute to be exact...)


"The world economy 'is probably at its scariest point since the Depression' as fallout from the US subprime mortgage crisis crimps access to credit, said Ethan Penner, a pioneer of the $600 billion commercial mortgage-backed securities market in the early 1990s. 'We're probably at the closest point to a big meltdown, a depression-type meltdown than we have been in our lives,' said Penner ... now a principal at real estate fund management firm Lubert-Adler Partners LP

50 comments:

Owner Earnings said...

"People can (will) be irrational longer then you can be solvent"

That quote came to mind last Tuesday.

Stephen said...

I am a youngster; my only investment to speak of is a piddling amount sitting in a Roth.

I liquidated my stocks in July and sat on the cash. After the rate cut, I moved it all into GLD. I'm trying to protect what I have, so I actually have something of value when the market finally crashes and creates a buying opportunity.

If my plan ends up being a failure, I haven't lost too much. I just feel sorry for you people who have worked hard for years to acquire what they have, and now it is all at risk.

F**k the Fed.

Anonymous said...

I have been investing in s&p500 index funds for 20 years. I have close to $2M all from putting in 10-15% of my salary every month.

I'm not about to listen to some blogging morons and change the strategy that has made me a mllionaire.

area 51 said...

NO,
because everyone except for tinfoil hatters and Amateur Investors here knew the rate cut was a foregone conclusion.
All my moves were done already. Just enjoying the gains now.

And this is a very funny quote from that article:

"The Fed threw the yield curve for a loop. Three-month T-bill rates sank 23 basis points last week to 3.76%. Two-year US government yields were unchanged at 4.04%."

HAHAHAHA
The curve was "thrown for a loop", as in IT'S NOT INVERTED ANYMORE!

Head for the bomb shelter!

JLA said...

The morning of the rate cuts, I put $10550 into a small "hedge"portfolio:

$2500 GLD
$2500 EEM
$5000 MERKX
$550 GXC

It's only a portion of my overall portfolio, but I wanted to be certain my exposure to the dollar was at least somewhat hedged. The China ETF is a small speculative play.

I also considered two Pimco funds (PFUAX & PPUAX, bond fundes for developing and developed markets, respectively), but decided the minimum $5K in each basket was too much. I wanted to put some of the money into gold as well.

PMCP was another consideration, but required a minimum $10K. I may still do that when a CD matures, but we'll see.

amigauser said...

I bought large multinational stocks

McDonald's
Microsoft
News International
Boeing
Walmart

all these companies have sales all over the planet so changes in exchange rates should balance out
A possible risky buy, is Countrywide Financial, since the Fed has shown that it will bail out its friends on Wall St.

You might want to go short on the European exporters, since the Euro strength must eventually cause them serious damage, I think Airbus must be in danger of making huge looses

No doubt suckers will be buying gold, but I guess they will learn that gold is just a relic with no practical use.

Anonymous said...

CDs, foreign currencies, and foreign stocks for me. I had a busy afternoon after the announcement.

I know I should have acted sooner but I really didn't believe that they would risk breaking the all-time dollar low...

Anonymous said...

Stephen said...

I am a youngster; my only investment to speak of is a piddling amount sitting in a Roth.

I liquidated my stocks in July and sat on the cash. After the rate cut, I moved it all into GLD. I'm trying to protect what I have, so I actually have something of value when the market finally crashes and creates a buying opportunity.

If my plan ends up being a failure, I haven't lost too much. I just feel sorry for you people who have worked hard for years to acquire what they have, and now it is all at risk.

F**k the Fed.

September 26, 2007 8:35 PM<<<<

excellent, now tell some of these guys around here , who are slow on the uptake , what is about to happen to them....

and please if at all possible, change that gold into physicals, and you will sleep even better than you do now......i do not even trust a vault somewhere telling me they have my stuff.....i want it within reach of myself, so that i can reach out and touch it when i want to and i control it and no one can take it from me or tell me what to do with it.....the ultimate control of one's wealth, the way it was always intended for a human being.....

area 51 said...

To Stephen:

ALERT ALERT ALERT!

If you are not a shill.....

Sounds like you've been listening to too many doomsayers.
Whatever the hell you do, DON'T Repeat, DO NOT get your investment advice from bloggers.

Read Books, Wall St. Journal, Marketwatch.com, Investopedia.com, Read your ass off and learn for yourself what to do with your money.

Only "advice" I'd give.....
Here is a list of a boatload of books you can start with:
http://www.bobbrinker.com/books.asp

Don't listen to the "shoe shine boy". (Bloggers)

These things are for entertainment purposes only.

I won't even begin to tell you where I think you F'd up, but you shouldn't listen anyway.

I would add one thing:
Neither you nor ANYBODY else can predict what the market will do in the future.....

That ain't opinion or advice, that's a proven fact.

Agent #777 said...

No doubt suckers will be buying gold, but I guess they will learn that gold is just a relic with no practical use.

hahaha.

Yeah, I am getting stuck with some Gold reserves when I buy that future leader in Copper, Silver and Moly mining - Novagold. That is just the way it goes, I guess.

Anonymous said...

Little bit off topic. Interesting article on the future of the housing market on seekingalpha.com.

http://tinyurl.com/37p24o

smitty said...

I reallocated my 401k to be heavier on bonds and that move increased its value over the past few months. I have SEP investments that I left in vanguard 35+ retirement funds and international funds.

I've talked to people who still believe that housing can only go up and stocks can only go up! maybe with the stock market bubble, homes will become hot at the right time next year? who knows.

Anonymous said...

Someone named "amigauser" saying gold has no practical use = HAHAHAHAHAHAHAHAHA! Your computer was dead fifteen years ago!

Appx. 20% return YOY for last five years is nothing to scoff at. (Silver has returned even more.) People are slowly realizing that no government is able to restrain itself from inflating its currency into worthlessness.

This trend will continue, and precious metals will continue to overperform, as will necessary commodities such as oil, uranium, etc.

Yoski said...

Gold is just a yellow metal with no real use. Looks nice and doesn't corrode, that's about it. At least Silver & Platinum have industrial applications. Own some of each, but don't go over board.
I put my money in stocks, basic materials, mining, (alternative)energy. Canada, Australia & Europe seem pretty safe. Stay away from the "emerging markets". See the oil ventures in Russia and Venezuela. That stuff can evaporate over night. Good farmland is another excellent investment. Food and Energy crops are not going out of style any time soon. Own some acerage in NC (I know, there's better farmland than NC).
Never short a stock (or buy on margin), you can get burned badly no matter how (un)sound the fundamentals are. The market can stay irrational a lot longer than you can stay liquid (somebody a lot smarter than me came up with that one, I think Warren Buffet).

Anonymous said...

Converted all my housing equity into CD's about 1.5 year ago and will probably leave it there until housing (non-leveraged) looks like a better bet than the CD. Unlike many expert investor trolls who, for some mysterious reason, still feel the need to spout their wisdom here, I don't fancy myself any better than an FDIC backed institution. If something goes wrong enough with the currency or economy overnight, such that I can no longer exchange the cash for a house, I'd be happy to demonstrate what I am good at while annexing my next house.

tim73 said...

"I'm not about to listen to some blogging morons and change the strategy that has made me a mllionaire."

HA HA...you idiot will lose it all. Dollar will be soon worthless piece of paper.

gekko said...

honestly (rare here i know), not really. i changed my tsp/401k to the g, i, and f funds a while back. other than that, just cash sitting in high yielding savings being wiped out

Anonymous said...

tim73 said...

"HA HA...you idiot will lose it all. Dollar will be soon worthless piece of paper."

It already is, but that's the piece of paper you need to pay property tax and buy a house in the US. Are you suggesting that housing is about to recover in dollar terms? Plenty of avenues around to scratch that itch...

Anonymous said...

"they" will screw whomever they want to whenever they want too.....

Edgar said...

I sold off controlling interest in the family firm. Maybe you've heard of it? Shnob, Shyster, and Grifter CONsolidated? Oh, I also moved my tomatoes outside, where they can get some light. ;-)

Mike said...

China, oil, mining, multinationals

Anonymous said...

due to the Fed's rate cut and housing tsumani, i bought the euro, gold, international staples, energy, international materials, europe/japan large cap, and china fund.

still own some u.s. tech stocks and fidelity contrafund.

Anonymous said...

Keith Could you post a link to the Penner article? I'd like to read the whole thing to see what he as to say. I'm guessing Mr. Penner is seeing something happen to his innovation that he never dreamed of happening.

Anonymous said...

"No doubt suckers will be buying gold, but I guess they will learn that gold is just a relic with no practical use."

a relic of what, 1980?

I'm the sucker who bought at $450.

Anonymous said...

Accellerating my asset reallocation from short-term bonds to stocks, with emphasis on growth stocks, international stocks, and big cap. Delaying asset allocation into small-cap US stocks. Indefinite deferral of RE portion. Completed allocation into commodities with metals position. Being more careful about the FDIC limit with CDs, and checking the soundness of any banks I put money in.

Anonymous said...

http://www.bobbrinker.com/books.asp<<<<


bob brinker?????

hell, that guy is one of ....them........

his advice is so over it is not even funny.......i remember several years ago listening to him on the radio back when i thought i was a conservative....and he got real pissed when someone had the nerve to criticize their fearless leader, alan greenspan, God forbid...

i knew right then and there, even in my blind state, that he was with them and not with us.......and his advice is to keep buying on the dips and keep you in the market and pretend the financial meltdown that is occuring is not really happening.......yeh sure.....

Anonymous said...

Heck yes. I sold my long positions into the rally. Short via puts and quite a bit in depreciating dollars. I don't have enough to open an off shore account and avoid the killer fees, so I'm considering trading currency futures (or commodities, like oil).

TM said...

"I'm not about to listen to some blogging morons and change the strategy that has made me a mllionaire."

HA HA...you idiot will lose it all. Dollar will be soon worthless piece of paper.


His money is in stocks, not cash. In the hyperinflationary scenario that you're implying, his index funds would fare better than cash. In fact, they'll appear to kick arse as they become worth more and more dollars per share (even if their "real" value remains unchanged or even drops).

Anonymous said...

Yea I emailed the White House to tell them how pissed off I am!

FaceDown said...

I just did what any prudent person with some savings would do; put ~5% of my savings into gold. I did that about a month ago in anticipation of what happened a couple of weeks ago. I've also pulled some of my money out of stocks and put it into cash (USD).

As this thing unfolds, my goal is to try not to get totally raped. I understand that I don't know enough to truly prosper, so I am going with a diversification strategy.

As it stands, since everything under the stars is in a bubble, I am doing great. It will only be when that bubble bursts that I find out which sector of my savings gets hit the worst. You know the World is upside down when everything increases in value relative to the USD. That tells you right there that something is wrong and someone will be a loser in the game eventually. I just don't want it to be me. Hard to win against the house, though.

devestersheep said...

I bought a bunch of cool stuff at a garage sale. Now I have cool stuff.

Anonymous said...

No doubt suckers will be buying gold, but I guess they will learn that gold is just a relic with no practical use.
==========================
Gold has lots of practical uses!

Just ask old Greenspan, who said, "I have always argued that the gold standard of the 19th century was a very effective stabilizer. It kept inflation essentially at zero, and I felt it was critical for the tremendous growth that occurred for the American economy in the latter part of the 19th century. When we went off the gold standard essentially in 1933, we then had to have what we call "fiat money" which is essentially money that is - it's printed paper money. Which unless we restrict the volume of, can be highly inflationary.

The type of interest rate regulation that I and indeed most central banks in the last 20 years have been involved in...has been to try to replicate the laws and rules that were governing the gold standard. And so it is an odd situation where all the central bankers -- while none of them are advocating a return to the gold standard -- nonetheless try to replicate the various types of interest rate policies that the gold standard would have created. And it is an interesting question whether you call that regulation, or basically functioning of a central bank in stabilizing the economy."

Link


THE VALUE OF GOLD will continue to climb north now that Wall Street has burned the BIG INTERNATIONAL MONEY with deceipt and corruption. Its possible that the international bankers are now ready to destroy the dollar and merge the U.S., Canada, and Mexico into the North American Union. Gold will preserve your purchasing power as the dollar dies a slow death!!! How's that for a so-called useless relic?

Anonymous said...

Don't listen to the "shoe shine boy". (Bloggers)
=============================
And DON'T listen to the "talking heads". (media)

Wait a minute, the media is controlled and its propaganda messages are designed to manipulate your perception of politics, investments, and life.

On the other hand, bloggers (other than Shills) are regular folk sharing common sense and common experiences in life with no propaganda agenda.

Never take direct advise from any single blogger, but surely the whole of blogger content is far more CORRECT and valuable than the media will ever be!

Anonymous said...

I was talking at work the other day with a couple of colleagues. (Mid 30's foreign born men in high-tech, PhD level educated, very sharp, not homeowners except me). They think that house prices are very high and they want them to come down.

They said that immediately after Benny cut rates, some home sellers in their neighborhoods raised their asking prices in San Diego quite significantly, like $50-100K.

As commodities go, gold is almost as useless as salt. 500 years ago salt was a crucial international strategic commodity, and nobody could imagine it being otherwise. Guess what? Salt never came back.

Unquestionably the new gold is oil. Go by the laws of physics.

"The market can stay irrational a lot longer than you can stay liquid."

That was Keynes, the economist that right wing Ayn Rand masturbators love to hate, but is a whole lot wiser than they are.

Anonymous said...

I moved to insured FDIC CD accounts about 2 years ago . I can't take any risks .

I don't understand the stock market and I don't understand why it get's a bull rally after bad news comes out about the economy . I don't really believe that global markets will keep the stock market up ,but maybe it will .

DB said...

I'm an American living in Europe.

For the past two years I've hesitated to bring over dollars... at first when the dollar was at 1.20 euros, I thought I didn't want to lose 20% of my petty cash. (I go back to the States twice a year and love having play money.)

As the euro rose, I felt great with my decision. I figured I didn't need the money and eventually the dollar would come back up. After the fed move, I realized I was mistaken.

I believe there will be a recession and the dollar will continue to fall. I'm better losing 40% and investing and using it here than waiting it out further. Then when I visit the States, I'll just do what all tourists do and convert my currency for the vaction.

Now with my long term investments, which I don't intend to touch until retirement, I'm diving further into stocks - dollar cost averaging my fund purchases. IMHO, stocks are gonna drop when people lose their jobs or fear as much, pay arms and legs for gas, and hestitate in consuming. Prices fall = good time to buy. I'll buy now and hold on for 10, 15, 20 plus years.

Anonymous said...

"As commodities go, gold is almost as useless as salt."

Gold isn't a commodity, it's a store of value. This has been true for thousands of years...which is longer than any government has lasted, let alone any fiat currency.

Think of gold as a stateless currency and you'll be closer to understanding.

amigauser said...

HOW did your store of value work in the 80s and 90s, didn't do too well did it?

Golds bugs will not tell you that their are tonnes of the stuff in central bank vaults.

Gold bugs will try and con you with the idea that India and China will keep on using Gold as a "store of wealth" - sorry not going to happen - they have already discovered the stock market

You should buy stocks in large multinational companies that have erected large barriers to entry - the Warren Buffet way of investing

SPECTRE of Deflation said...

Anonymous said...
I have been investing in s&p500 index funds for 20 years. I have close to $2M all from putting in 10-15% of my salary every month.

I'm not about to listen to some blogging morons and change the strategy that has made me a mllionaire.

You lucky little shit. You have been in a 25 year Bull Market which required about one brain cell for your investment decisions. You and the Chimp are tied for profit on dart throwing.

You like Bill Gross are having a very hard time understanding that the Bull Market is over. How does it feel to have had a 1/3 loss of your portfolio's purchasing power over the last 3 years? How will it feel when the Dollar goes to 70...60...50 against other major currencies?

Anonymous said...

have been investing in s&p500 index funds for 20 years. I have close to $2M all from putting in 10-15% of my salary every month.

I'm not about to listen to some blogging morons and change the strategy that has made me a mllionaire.

September 26, 2007 8:47 PM

==================================
Let me see if I understand you. The United States is bankrupt, the banking system is bankrupt but you on the other hand are a millionaire?

How is it that you can prosper within the confines of a bankrupt system?

You think that your paper claims against the economy will be paid to you when you go to collect?

SPECTRE of Deflation said...

Anonymous said...
I have been investing in s&p500 index funds for 20 years. I have close to $2M all from putting in 10-15% of my salary every month.

I'm not about to listen to some blogging morons and change the strategy that has made me a mllionaire.

In 1977 Dollars your investments are worth $589,781.02 factoring in inflation but ex the decline in the Dollar. Figure the decline in the Dollar , and you haven't done very well. Cheers moron!

SPECTRE of Deflation said...

area 51 said...
NO,
because everyone except for tinfoil hatters and Amateur Investors here knew the rate cut was a foregone conclusion.
All my moves were done already. Just enjoying the gains now.

And this is a very funny quote from that article:

"The Fed threw the yield curve for a loop. Three-month T-bill rates sank 23 basis points last week to 3.76%. Two-year US government yields were unchanged at 4.04%."

HAHAHAHA
The curve was "thrown for a loop", as in IT'S NOT INVERTED ANYMORE!

Head for the bomb shelter!

Let me explain how the Bond Market works for you. While the short end has indeed declined [yield], the long end where mortgages are set has moved up. Your gains are on paper, and can vanish [AKA 2000] in a heartbeat. Have you figured in inflation and the Dollar decline on your gains? How about the taxes you must pay if you cash out the gains? It's not nearly as pretty as you claim, and I hope you make some adjustments before your paper gain goes POOF!

Anonymous said...

morons:

you can't have a dollar in the shitter and a housing crash at the same time.

It's oil and water, dog people and catpeople, red sox fans and yankees fans. In other words the two cannot mix, it is physically impossible.

See what happened to house prices in the 70s, last time we had high inflation. Median home prices tripled during the 70s.

It is amazing how you dolts think gold will go to $5000 an ounce due to inflation but housing will fall 50%. It's as if you have no formal education and only read lunatic fringe blogs or something. Oh wait, never mind.

philosopher said...

Took my whole nest egg out of Vanguard Target Retirement 2025 fund and put it into Vanguard Inflation Protected Securities fund. Did that at the end of last week, I figured why not use a couple more days of stock market irrational exuberance from the rate cut. The cut(s) will not prevent a housing crash, recession, or a stock crash.

Anonymous said...

I have been investing in s&p500 index funds for 20 years. I have close to $2M all from putting in 10-15% of my salary every month.

I'm not about to listen to some blogging morons and change the strategy that has made me a mllionaire.



Apparently, the concept of opportunity cost is not part of your limited brainpower. Oh, and nobody here believes that you have the capacity to amass a $2 million figure; not even during a period of 20 years of your pathetic existence. Now go look at fat dumbass in the mirror.

Anonymous said...

"HOW did your store of value work in the 80s and 90s, didn't do too well did it?"

Keep beating that straw man: not everyone who invests in gold is a "gold bug". Just because it's a store of value doesn't mean it's always a good investment, especially in a post-gold-bubble environment of interest rates well north of 10% (early 1980s) or a period of low inflation and economic success (late 1980s, mid to late 1990s).

Post-2001, however, is a very different environment, and one that has been favorable for gold and silver due to high real price inflation, decreasing central bank gold sales, and increasing systemic uncertainty.

You can invest however you want. Just don't talk a bunch of insulting nonsense about things you clearly don't understand.

Anonymous said...

Yoski said...
Gold is just a yellow metal with no real use.

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

You really have no clue, do you?

Anonymous said...

philosopher said...
Took my whole nest egg out of Vanguard Target Retirement 2025 fund and put it into Vanguard Inflation Protected Securities fund. Did that at the end of last week, I figured why not use a couple more days of stock market irrational exuberance from the rate cut. The cut(s) will not prevent a housing crash, recession, or a stock crash.

September 27, 2007 6:20 PM

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

The problem with TIPS (what the Vanguard fund invests in) is that the government gets to tell you what the rate of inflation is. Right now, the BLS is saying is 2% over the past 12 months:

http://www.bls.gov/cpi/

Since the true rate of inflation is MUCH higher than what the BLS reports, I am not a big fan of TIPS.

Anonymous said...

It's funny to read brain-dead sheeple posting that because stocks did well in the 80s and 90s and gold did not, stocks are always a great investment and gold is a crappy store of value. Keep using that rearview mirror to guide your saving and investing decisions. Someone has to buy my gold once it hits $5000+ an ounce and I guess it will be YOU.

Oh, and for the thumbsucker that thinks you can't have falling home prices and dollar weakness at the same time, here's a question: what happens if there is NOT an offsetting increase in wages corresponding to the loss in purchasing power of the dollar? You know, thanks to the "magic" of globalization and all that. How will the sheeple bid up home prices from already unsustainably high levels while paying more for food and energy?

abb said...

Wow, lots of people don't understand gold.

It prevents banks from printing money. It keeps them honest and maintains the value of the dollar.

Inflation is covert theft.