August 07, 2008

HousingPANIC Stupid Question of the Day

Now that housing and stock panic is everywhere, doesn't it feel like we should be getting contrarian, and start heading the other way?

The sheep have come our way. We don't like the sheep.



Anonymous said...

Anonymous said...

From bull to bust: Tracking the plunge in commodity prices, and what it may mean for U.S. inflation
6:32 PM, August 6, 2008

"The committee expects inflation to moderate later this year and next year," Federal Reserve policymakers said in their post-meeting statement on Tuesday.

We've heard that before, but this time the Fed's optimism may be borne out: Commodity prices, which helped stoke the inflation fires over the last year, are continuing to deflate.

The steep slide in oil prices during the last month has gotten the headlines, for obvious reasons. Oil futures, which slipped 59 cents to $118.58 a barrel today, are down 18.4% since peaking on July 3 at $145.29.

But take a look at the accompanying chart. Natural gas has plunged nearly twice as much as oil since July 3, down 35.4%. Corn is down 32% in the same period. Soybeans have tumbled almost 25%.

Anonymous said...

there is not enough pain yet, not enough blood in the streets

when people panic so bad they start fleeing from their homes thinking there is no bottom in sight, then the bottom is in sight...but not until

Anonymous said...

i don't know, the G is proving very good at manipulating events (negating gravity).

Anonymous said...

Sorry Keith.

The sheeple just think this is a "correction" and in a few years their "equity" will be back.

Why do you think that so many have pulled their homes off the market?

Paul E. Math said...

We were never here just as a means of avoiding the sheep. Going the opposite direction of the sheep was a mere consequence of following our own inner voices.

What the sheep do is irrelevant to what I do. And my inner voice is telling me we have a long way to go before this decline is over.

I will also suggest that any Bernanke led Fed will find ways of flooding the market with dollars so commodity prices will continue their long-run rise as the US dollar falls in value. Bernanke will open the discount window to more and more companies until everyone but us working stiffs has access to unlimited credit.

You want to really avoid the sheep? Keep buying commodities - this dip is a great buying opportunity.

keith said...

When I look around and see we're surrounded by sheep, I get nervous.

No, make that, I get excited

And I go the other way.

Here's my guesses, I could be very, very wrong on everything except housing:

Housing - long way to go. Too much inventory, can't get loans, defaults going to soar

Stocks - feels like we're bottoming, but a bomb could still go off at any time

Bonds - huge bubble going to blow, interest rates going to go to the moon

Commodities - crashing. Long term will bounce back but it'll get bloody first

Dollar - will rally against Euro and Pound as their housing crashes hit

Anonymous said...

If you lead and a couple others follow, I'll take a couple steps in that direction then run to catch up.

That's what sheep do right. :)

Anonymous said...

The sheep have'nt seen anything yet, once they see the butcher at the end of the corral, they might wake up, but I'm not holding my breath.





Baaa aaaa aaaa said...

Enact a special sheep hunting season for 2008 - 2009.

Call it the George Bush Selective Service Act...

You know, thin the herd through selective harvesting so the strongest can get back to thriving once again...

Do It Now before Darwin has a chance to mess up the arrangement or we elect another clueless asshole to lead the nation into armaggedon...

Bye bye Blacksheep....

Anonymous said...

Prediction: Bernanke will be replaced sometime in 2009 as inflation gets out of hand and can no longer be masked by a lot of happy talk smoke and mirrors. Producers are making cuts in their company budgets but they are also more than willing to pass increased costs on to the strapped consumer by way of price increases and packaging gimickry. Some Fed governors are pushing right now for increasing the overnight rate but are being "shouted down" by Bernanke and the majority who are Bernanke followers. The rate cuts made by the Fed are not having the intended effect and as time goes by and housing and stocks continue to slip, even the most ardent Bernanke follower is going to wake up to that fact. The Fed.'s next "head chief" appointee is going to have some nuts and shoot interest rates upward to kill inflation and restore the Fed's reputation as being first and foremost an inflation fighter. Anyone who is hurt by rising interest rates is going to get killed (may they die a slow and painful death) and anyone benefiting from rising interest rates will do well. We will all see whether the rest of the world has truly de-coupled from the U.S. economy or if they are still riding the coattails of the U.S. economy. Personally, I believe they are no longer "holding on to the coattails" and being pulled along but I do believe they are "drafting" behind the U.S. economy and the U.S. consumer. It should be interesting.

Smug Bastard

Miss Goldbug said...

Anon said:"
When people panic so bad they start fleeing from their homes thinking there is no bottom in sight, then the bottom is in sight...but not until"

Agree, no panic yet... but I imagine the level of the stock market at years end will greatly affect housing prices.

We'll see.

Sheeple ALWAYS Lose said...

The first few sheep have come to our side and begun to panic but they are just the beginning. Once the majority of the flock follows those first few over here and the whole herd is panicking, thats when we get nervous / excited and go the other way. Thats when fleecing season is upon us.

Peter T said...

Have most people now come our way? Yes, most agree that we have recession and the job market sucks, but few seem to expect a looong recession (and this is what I think we're going to get). There is now capitulation anywhere yet.

keyser soze said...

I feel there will be some hellacious buys in real estate and bonds, the next 5 years. I'll probably keep 50% cash for upcoming possibilities.

Devestment said...

The sheep have been sheared and have no wool to take to market. All they can do is graze and hope they don’t end up as mutton. They need a liquidity injection to stimulate productivity.

K. Your predictions are consistent with mine. Welcome to the last frontier, the interest rate bubble.

seth said...

Here a little article from the zillow blog (fwiw) that describes the ongoing cognitive dissonance regarding housing prices.

I moved out to PHX in Oct 2007 and have been renting while watching the meltdown. I rent on a cul-de-sac consisting of 16 two-story and 2 one-story homes between 2000 and 3300 sqft; 4 homes are REO, two homes for sale, one is for rent (goes for rent every couple months), and my house is a rental. The two that are for sale are asking crazy 2006 prices and the 4 REOs are not even getting walkthroughs anymore. Many of the neighbors want to get out but are "waiting a couple of years until the market comes back." Good luck.

I do go out to look at houses that are for sale and make what I believe are realistic offers although they are generally 40% below the list price. I have tried offers that were in the $80 per sq ft range on a couple of REOs in PHX zip codes but the banks are still listing these houses in the $130 per sq ft.

In conclusion I am calling this the bottom of the 2nd inning. I'll just keep renting and waiting for a couple quarters of flat home prices, sales, and inventories before I consider jumping. It is tough being patient sometimes though.

Anonymous said...

You're confusing yourself. You think that if the sheep are following you, then you must be following the sheep - which isn't the case.

Moving away from the herd is also not always a good thing especially when there are wolves around. But it is definitely a good thing when the herd is moving towards a cliff.

At some point you have to grow up and do the right thing rather than base all your actions on what the herd is doing.

The fact that you get nervous or excited because you're surrounded by sheep means you still haven't learned to stand on your two hind legs and look beyond the herd.

The sheeps' distace, number, color, size, or smell really shouldn't have any impact on your decisions. It's hard... I know.

Anonymous said...

What happened to your talk of gloom and doom and the next Great Depression? Is that what this looks like, or were you just being hyper?

Keep your pants on, dude.

abb said...

Contrarians tend to forget that the sheep are RIGHT for most of the move.

But we're nowhere near the bottom yet. The banks will sell the low. Wait for RTC II.

Hell, we haven't even seen credit contract all that much yet. Chase just gave me another 30k at 0% last week. I bought gold. Thanks Chase!

David said...

Spring 2009 will be the start of the bottoming out. By that time, the false oil price lowering (always seems to happen right before an election - hmmm??) will have rebounded and prices will be hitting $200/bbl. Not because of supply/demand, but because the dollar will be getting dumped, thanks to Bernanke's dimwit policies.

The debt avalanche that's been discussed here will then start sliding. First, a few small, daring banks will liquidate their dollar holdings. The Fed will retaliate against them, act to shore up the dollar. But the seed will have been planted by that point, and angry discussions will occur in boardrooms in China, Saudi Arabia, Dubai, Moscow, Kiev, Zurich, etc. They will start to try to "trickle out" their dollar holdings ... which will green-light the other banks and central gov'ts to do the same.

Give it a week and the rout will be on. Central gov't banks in Norway, Australia, Malaysia, Chile, etc., that have been sweating it out will freak and decide to get out while the getting is good.

The dollar will start falling like the dot-com stocks, dragging other currencies pegged to it down too. We'll probably see repeated 50% devaluations, followed by desperate "re-denominations." Current example: Zimbabwe.

That will be the meltdown that we've been seeing coming. At that point, yeah, the commodities will be about all that's maintaining value.