October 14, 2008

I hope there are tons of stories out there like this one

Here's a note from a reader that made my day. I hope there are lots of stories out there like this one. People who didn't believe their realtor, their mortgage broker, their leaders, their MSM, or those housing porn shows, and who stood their ground and made wise financial decisions these past few years.

Thank god for the internets and the google and the blogs. Here's his letter, with his permission, but details blacked out.

(p.s. I'll be on trains the next two days - comments will be slow)


Keith, I wanted to write a heartfelt letter of thanks. You have personally saved me from financial ruin and set me in a position that I'm about to make money hand over fist when the market returns to its pre financial crisis levels. I've been a daily reader since the Summer/Fall of 2005 after I visit to my local countrywide office with my then wife about getting pre-approved for a mortgage because my wife (much like Suzanne)was nagging me to buy a house.

I left the Countrywide office feeling very uneasy because they were going to approve us for a loan that would have been a monthly payment that was 50% of our combined take home income. I went home and did a
Google search for housing bubble and came across boring Ben's blog, Another f-d borrower, and housing panic. I immersed myself in reading and educated myself by reading Manias, Panics, and Crashes and Empire of Debt and truly started to understand the fundamentals of the market.

To make a long story short, in the Summer of 2006 my wife asked for a divorce because she wanted a house and I didn't budge. She re-married and her and her new husband bought a new house in the Fall of 2007.

I'm a
XXXXXX, with no debt and I live frugally on about 25% of my take home income. I ride my bike to work, support my local library, and listen to NPR. I didn't have the stomach (and didn't understand enough to make a play) in gold or shorting any of the financial, homebuilder, or mortgage stocks. I live close to the things that I enjoy, skiing, great beer, hiking, climbing, and cycling. But moved out of stocks in November of 2007 I've slowly been building a war chest each month in my Money Market account waiting for the right moment to deploy my tremendous cash position.

I used about 10% of that money as
mad money (that I didn’t' mind losing) and had 300% return on SDS, DUG, and XLF, which I got out of earlier this week. The moment that I've been patiently waiting for has arrived this Friday afternoon October 10, 2008. I'm moving my cash position back into stocks that I thought were value stock bargains before the crash and vanguard mutual funds. If you are ever in Colorado, I'd like to buy you dinner and a few beers.


WTF1920 said...

There will always be people out there who appreciate truth-tellers. It might not seem like it at times, but that's because of all the bullshit that's going on, and all the clueless people out there talking about sports and whatnot.

kilgore said...

I might have believed this letter if it wasn't for the 300% gain that he closed out this week.

Lying 101: keep it simple!!!!

Ben said...

Great Article! I wish no ill will on anyone, but I get it feels good deep down that his ex wife got her "dream" of owning her own home!


What an inspiring story, I wish that I had the foresight to pull out of the market when this guy did!

Anonymous said...

The question is.... Does he miss his wife?

Anonymous said...

It's shocking that his wife left him for not wanting to get a mortgage. That's very irrational.


Anonymous said...

Good story. Time to get back OUT of stocks though.

poor dad said...

Wow. That sounds like my story, except no ex-wife. Well, and I was trolling REALTORS™ and speculators back in 2004. I bet we've passed each other on the singletrack somewhere.

Anonymous said...

This guy made a killing today... the question is, do you ride the rest of the volatility, or cash it out and thank your lucky stars?

Jonathan said...

I think it is sad that his wife would divorce him because he wouldn't buy a house... There may actually be more to this story than what was written. It turns out his wife was a house plant and the 300% returns was an ice cream sandwich he ate for dessert tonight.

Anonymous said...

"Keith, I wanted to write a heartfelt letter of thanks. You have personally saved me from financial ruin and set me in a position that I'm about to make money hand over fist when the market returns to its pre financial crisis levels."

I am still amazed at how many people out there needed this blog to tell them that there was a housing bubble. It was so obnious to anyone outside the MSM, the REIC, and anyone not flipping houses.

I came to this blog around 2006 because it, along with Ben's, was printing views that you did not get in the MSM and to share views with people who thought like me, not to find the answer of whether or not it was a good time to buy a home.

Also, a blog is just someones opinion. It should never be considered a source of facts.

James said...

A 300% return on SDS, DUG, and XLF was not even possible, unless the guy's a major day trader taking an extreme amount of risk. Even then, it is highly improbable.

Ross said...


I'd be curious to know what the ex and the new dummy hubby paid for the house and what it's worth now.

Anonymous said...

He forgot to tell you that his new girlfriend is a swimsuit model, like everyone else's g-friend on the internet.

FrankGiovinazzi said...

Let's not underestimate the importance of "nutty" blogs like Keith's and hundreds of others in many categories, that dispense ideas that are not filtered down into mush.

I'm doing pretty well for finding bubble blogs. First, they are a place to go for people who were ostracized for thinking their own thoughts. Right or wrong, contrarians in our society are often driven away from polite company for saying the emperor is au natural, so it's good to be able to get some validation, and in Keith's case, wacky entertainment.

Second, I paid off debts in 2007, and recently sold a business that was at the end of its useful life. Haven't hit a home run or won American Idol, but am doing better than others who didn't think things through.

Now I'm looking for the next career/business, taking care of my health, my family and just trying to be a better person. And for all that, I'm grateful.

Anonymous said...

Clearly this person knew there was a housing bubble, noone who was reading HP in 2005 was unaware of the bubble.
My story closely parallels this guys. I got into gold, bonds and euro stocks a little early to the party but I held on and made out nicely. I also got out well before the collapse, missed some gains, but feel no pain. I too thank HP for illuminating reality that the msm ignored.

theloknesmonster said...

*This post is long but written in paragraph form for readability* (maybe)

This letter is probably more of a philosophy or ideology than actual fact.

My story is that in April of 2005 I qualified for a 185,000 mortgage with a "stated" income of 40,000 USD. The terms of the no-doc, little down, 80/20 ARM were confusing and an accident waiting to happen if you bought the pitch.

The mortgage salesman/liar assured me that houses always go up, I would be making more money (he was right about that because I wasn't even making half of what I said, and now my business is fairly steady---but you can never count on never having another rainy day, and that your business won't tank, or you won't lose your job. They never did mention this possibility when seducing you did they?), and that refinancing to a more stable fixed mortgage would be the move to make when the teaser rate expired.

I called BS on the whole scam and was determined to figure out what in God's name was going on in this country.

I stumbled onto bubble blogs and HP a few months later and have been sifting through the good, bad, and ugly articles and comments ever since.

If I've learned one (or 3-4) things it's this:

Don't listen to anybody.

Read everything.

Use the brain that God gave you and make up your own mind about the direction your life is going to go.

People are panicking and like the often referred to phrase on this forum, "going off the cliff like the lemming". Let them, it's their life.

To conclude:

I dumped most of my US stocks when the market jumped last spring. I got lucky and sold at approximately that particular peak.

I should have dumped it all, but I was still feeling the regret of not selling last October when every instinct told me to. I suppose my reluctance to sell was a greed impulse that I am loath to admit I have.

I will continue to save and put money away because there will be a day when it is time to invest in this country again. It is up to every individual to decide for themselves when that time arrives.

Good luck and God bless...

Miss Goldbug said...

A nagging wife, a divorce. Thank god he walked instead of giving into her demands.

I wonder how stable that new marriage is now?

I have friends who nagged their husbands without the threat of divorce to get their way. All believe their homes don't go down to the price they bought...

Greed combined with trying to keep up with the Jones will hurt just everyone in this downturn.

Anonymous said...

Long- But worth reading.

James & Kilgore:

You are partly correct...there is a mistake in there... in my haste, I mistakenly confused XLF (Financial Sector Select) and SKF (Ultra Short Financial) because I was buying XLF on Friday and it was on the brain.

I don't appreciate being called a liar... so if you feel you are smart enough to call me out then I want to give you a chance to see if my claims were correct using (DUG, SDS, SKF*). I'll give you a hint, there were only 6 transactions and all were bought in the late summer/fall of 2007 (when I divorced) and were all sold within the last 4 months.

I’m not a finance guy and I mentioned that I wasn’t smart enough to pick individual stocks… but I was able to make some rational and concrete arguments and hypothesis why sectors were going one way or the other.

You are correct; I am not a day trader... I am but a simple man making “bets” with a relatively small amount (about 10%) of my total portfolio. If I had brass balls, I would have place a huge stake in these “bets” , but I didn’t….I’m a chicken.

I’m sure that you would be thoroughly bored and unimpressed with the rest of my portfolio as they are mutual funds

Vanguard 500 Index VFINX
Vanguard Health Care VGHCX
Vanguard total bond VBIIX
A Vanguard lifecycle fund

I’m still sitting on 30% of my cash reserves, either for a down payment on a house if I find one that I consider to be on sale or to move another 10% in to the markets after this recently rally (10/13-14)

Update & Happy Ending:
Man oh man was I in the dumps for months when my wife left me in Summer 07, she was a hot piece of ass with a killer body, but had ZERO domestic skills and a pension for shopping. I was a tough pill to swallow, when some of our friends were trying to convince me that she left because I was a cheapskate.

I was single for a bit and dated around town and that was fun…but here comes the punch line…I have an awesome girlfriend now who cooks, cleans and is smart as a whip. I recently put some perspective to this all when I answered the question, who would make a better Mom to my kids someday in the future. I’m just sayin’


Anonymous said...

oh to those who are wondering about whether there is more to the story...there of course is.

We were fighting for months about money, sex, and the future. The arguments over buying a house were just the tipping point. It was bound to happen eventually...

Follow up #2
The Ex lives in Boulder now and is underwater on her house at least according to Boulder Country property records and what Zillow values her home at.


Anonymous said...


Anonymous said...

Sounds like a fake letter to me. But it's a good analogy for the position that many men do find themselves in. With the money he's made since ditching the wife... he can splurge a little on hookers and blow.

frede said...

i want to know how the ex wife is doing with the gotta-have-it house. i have resisted similar pressures for many years though it hasn't come to a head. as a city boy, i hate the suburban house obsession. not only is homeloanership a scary move, being locked into a location for thirty years is not a smart forward looking strategy. labor mobility will be the word of the next twenty years if not this whole century. eventually we (the smart we) will all live in rvs so we can follow the economic trends. one year in a job will no longer be seen as job-hopping, it'll become seniority.

Anonymous said...

These dopey broads. Guys too. Just living one step up from poverty and destitution on their looks and sexual performance... They have a very short shelf life...

Some learn the easy way, some the HARD way...

Do yourself a favor, boys and girls:


THINK (or not) about it.

Out at the peak said...

300% returns are easy with options. I made about that much with buying puts on LEH.

I do love this blog, and I wish I could credit it as my financial savior. I sold my house at the peak mostly due to Ben's blog. If I believed in Countrywide as much as Keith did, then I would have made another $100K. Then do the same with Lehman. I made decent profits from both, but I really missed out on the big payouts.

Thanks Keith, I hope you made some good money on your puts.

Anonymous said...


Anonymous said...

I hope she gets donkey punched.

Anonymous said...

For the guy who divorced and has a little money, and is looking for love in the wrong places.... my advice, come to Thailand! You will be treated like a king as if you had the looks of Brad Pitt. Just don't spend everything you have too fast.


Anonymous said...

I have a similar story. I moved from Wisconsin to a SEVERE Florida bubble area in mid-2005. I nearly got a job working IT at KBhome (thank god they picked the other guy) but ended up in a much more stable firm where I have grown and been well compensated.

Nearing the end of 2005 my wife and I started looking for houses, stopping at the new communities and viewing the models as well as pre-owned homes. By myself I make nearly twice the 2000 census numbers for average household income in my area and my wife adds a significant portion as well.

Although I could easily afford the mortgage payments for a new home, I was made uncomfortable by the fact that I didn’t believe the average Joe in the area could. I always understood that houses in an area should cost about 2 to 4 times your annual income. I spoke to my friends about it. They all said that Florida was where everyone was moving and the demand was real. I lived in a rental home owned by a REIC surrounded by other rentals (mostly empty) in the same position. The home was 2 years old and I was the second renter…

My company considered sending me to CA to inspire a team with broken management. I started looking at the home prices and census statistics for income in Los Angeles and found that it was even worse. I was doing extensive online reading about home prices and I ran across an article with a statistic that read something like this “In 2004 the average annual household income in San Francisco was 70,000 and the average household was spending 100,000 per year”. From that statistic I figured that people must have been taking significant Credit Card dept or they were using their homes as ATMs. The more I thought about it the more it started to make sense… All my friends talking about flipping houses to make money, my wife and other female family and friend’s had been addicted to housing porn for years.. That led me to another set of google searches which resulted in finding Housing Panic. Keith’s posts as well as Crash Proof and some other books I bought as a result of this blog brought the whole picture into focus.

In the end, I convinced my wife of what was happening and she agreed to rent until the crash was over. I can’t say I’m prepared for what I think is going to happen to our economy before this is over, and I haven’t been as frugal and careful as the person who wrote the letter in this post. However, I am still renting. I have managed to save up some cash and will be much better off than I would have been if I had grabbed that $300,000 McMansion my wife and I had been looking at… Special thinks to Keith, all the friendly HPers, The Housing Bubble Blog and everyone else who cared enough about their fellow man to warn those who would listen. The trolls can say what they want, but regardless of what happens next, I have already avoided being 120-150,000 negative in equity as a result of Keith and his well educated band of readers. This is a matter of fact as I know the asking price when I was going to buy and what those VERY SAME HOUSES are auctioning for today….

lalaland said...

this guys story is similar to one of my friends. My friends girl friend broke up with him not long after he laughed about her sister and hubby buying a big house. told the gf that he does not want to get into debt, and it was slavery. She realized that he doesnt fit into her future, as she was imagining a big house in it.

Ola Dunk said...

I think I made one person change his mind, but he was underpaid as well, so I don't know.

All the rest, for many years, thought I was weird and depressive (though still friendly and otherwise intelligent).