ugly is one thing. Depression is another. you keep avoiding the point. You can only use personal insults for so long to deflect the fact that your argument for another GD is completely baseless in fact.
How much? I’m all in. You talk a big game, but you really dont know as much as you try to make people perceive. We all agree this will be ugly, BUT ANOTHER DEPRESSION??? C’mon… nothing you say even remotely suggests that.
I’m old enough to not need to work anymore and to know that age, as in your case, does not necessarily indicate wisdom.
“I make a very significant living on Wall Street” Who the hell ever said that qualifies you to comment on anything. I know some absolute nit wits who have made a significant living on Wall St. The problem was their clients didn’t make sh@t.
There’s a great Wall Street book called “Where are all the customers yachts?” It chronicles the money brokers and traders make compared to their clients.
You name your price buddy.
And don’t worry I’ll let you work it off.
DEPRESSION COMING/ World Markets Collapse. That plain enough for you.
I’ll ask AGAIN. How old are YOU???
Don’t be afraid we all had to start somewhere. :biggrin
Maybe you two should take this conversation to the PM system. I am sure that i am not the only one who is not interested in your little “personal attacks”. I am having a hard time seeing how it ties in with the thread title ( Re: Do you think the problems with subprime mortgages means major opportunities?
Not so fast. I think the topic is very interesting and directly related to our real estate futures. I don’t think calling each other NitWits is necessary, but the topic is very valid. In addition, the references to articles is very valuable.
For the record, I think that both of them are right. I think that there will be a recession in the short term (certainly by 2010 and probably this year). I would be surprised if a depression started this year, but I don’t see how we could possibly sustain the status quo much longer. We have turned into a big service economy and we have an exploding deadbeat population who thinks they are entitled to everything. In addition, who is going to support all of those baby boomers and pay for all of the entitlements? It simply CAN NOT continue.
As Pete said, the charts look VERY UGLY and the global situation is not good. In addition, we have forces on both sides who believe that the world is about to end and are literally trying to make it happen. All we need is a trigger. Is the subprime crisis enough? I doubt it. Is the subprime crisis plus a crisis in China plus a small nuclear device set off by some wacko islamic fundamentalist enough to do the job? Very possibly.
Personally I think that fact that so many people think it CAN’T happen
only makes it more unnerving.
I’d like to make one more point. NJREstudent mentioned that it isn’t going to happen because of all the safety nets like Social Security and FDIC ect. Let’s look at this a little closer.
First Social Security: It’s Broke and there’s not a politician in this country that will do what needs to be done to fix it. CUT BENEFITS.
The money is GONE, it’s already been tapped into. So I don’t see S.S. as a safety net at all.
Second FDIC insurance: How many people in this country have their money sitting in cash in a bank. (I mean their REAL money) Think about it. Is your retirement money in a bank account? If it is you’re all set up to $100,000. However if your money is in mutual funds, stocks, 401K’s wake up because we all read the fine print that told us NONE OF IT was insured and it could be lost. What happens if those people start heading for the doors???
I agree with Mike, This thing could unwind faster than anyone would like to think about.
My theory… Hope for the best and plan for the worst.
Want another investment book to read? Pick up Dave Dreman’s Contrarian Investment Strategy. It’s considered a classic. This guy has demolished the market averages for 30 years by doing the exact opposite of what everyone else is doing.
Mike, you’ll love this book, the guy’s a rebel. you’ll relate!
petemfa,
I too work in the securities industry and have family ties to the hedge fund industry, there are limited amounts of doomsday scenarios floating around…Pete keep in mind there are huge amounts of money on the sidelines…I agree there should be a severe correction in the RE markets but a depression I do not agree on and the people I speak with feel the same…
Let it be known I’m never a bull or the person who plays into the train leaving the station mentality of buying anything…But I just don’t see severe downside in the overall economy…Pullbacks,bumps ahead definitely but you speak about I highly doubt…I would bet my money on the long side of equity markets over the next 10 years,particularly tech…Nasdaq is so longterm undervalued that I firmly believe there is more risk not owning the index at these levels…
for what its worth I also own a large basket of closed end funds that pay monthly dividends…
I respect your opinion. I would like to ask you a couple of questions if you don’t mind.
I get worried when something becomes “popular” to my thinking that’s exactly where we are with the Hedge fund industry. I was around when junk bonds were all the rage. That did not end well. Where is this headed?
Where’s todays lender of last resort? The IMF is hurting, if they have to, can they step in as they have in the past to shore up currencies?
Private equity: Look at what these guy’s are doing. Do you think with what you just stated about a down turn in real estate, Blackstone’s buying of Equity Office Partners was a shrewd business move? We’re at a top in the commercial real estate market.
Sam Zell became a Billionaire selling tops and buying bottoms in real estate. He basically just unloaded everything he has.
We’ve thrown the word DEPRESSION around a lot in this discussion, anyone know the true meaning? A depression is catagorized by a drop in GNP of 10% or more. A recession is a down turn in economic activity lasting more than 3 quarters. So I’ll ask you guy’s, with the run up in personal debt, real estate price declines, sub-prime mess, Social security blow up, private equity funds paying top dollar for everything, and the American consumer tapped out to a level never before seen, do you think a 10% drop in GNP is out of the question? THAT"S A DEPRESSION FOLKS> You won’t see guys selling apples for 10 cents a piece on Wall ST. People always assume these things will play out EXACTLY as before. That is not going to happen. But, by definition we WILL see a depression in the coming years. Just my opinion.
I like these types of discussions. Not everyone has to agree,the truth lies in the middle, usually!
petemfa,
I do agree that lately the horror stories about hedge funds has been rampant…It actually makes sense because of the bull market we have been in…Hedge fund traders are traditionally contrarian traders so bull markets hurt them more so than help them…But keep in mind that many great traders especially hedge fund traders use market neutral strategies,I don’t have to explain that to you…Everyone feels smart when they are long the market when it runs up but those same buy and holders will get mauled when the market turns around as it has recently…My motto is sell when you can and not when you have to…
Like I said earlier there is still an incredible amount of money on the sidelines waiting to be used…Not every American is in debt up to their eyeballs…Our savings per household could be much higher no doubt there but a depression is a tough call from where I am…Keep in mind that the US has already been through a market bust in 99/00 and then 9/11,we are in much better shape than most can imagine financially…Like I said earlier in the thread I never buy into hype,infact I short hype but I’m just not that bearish right now…I could be wrong though…
Thanks for your insite. I appreciate your comments.
Good Luck in Real Estate investing. I think you’ll be in great shape about 1 to 2 years from now. In my opinion IF things do get worse that is the time table for people to start throwing in the towel. Right now I am receiving lots of calls from people who don’t want to admit the market has changed. They are renting these homes that won’t sell but are upside down every month. People tire of that VERY QUICKLY. It’s no fun spending your extra money EVERY month on a house you have grown to hate. Do your due diligence and you will be able to buy properties in the next few years that people will look back on and tell you how LUCKY you were to get! :biggrin
In response to the OP, I agree that there will be an increase in renters and that makes it a good time to be a landlord. Also, to the extent that these renters were trying to buy starter homes, prices of these homes should be depressed as there are now fewer buyer. Add that in to the great interest rate maret, and I think it’s a great time to become a landlord.
As for doom and gloom, call me simple-minded, but I do think that there are better financial controls and systems in place that will not make it so easy to have another depression. The market ebbs and flows, but I don’t think we are headed for a crash. Some real estate markets will suffer more than others, but there are still places that did not enjoy the crazy run-up of the last few years, and they should be more or less okay.
Of course, the economy is the greatest Ponzi scheme ever invented, so we’ll go in whatever direction consumers take us. As long as people “believe,” they will keep borrowing and increasing the money supply. If they don’t believe (that is, they start believing the doom and gloom), then we’ll get hit hard.
It’s sort of like Henry Ford’s saying, “Whether you think you can or think you can’t, you’re right.”
As for Exxon et al., sure they are making money. Why? Because retail prices are high. And why are retail prices high? Not because of demand, but because of speculators. Retail gas prices are not set at the pump, they are set in the futures market. And the speculators have been lining their pockets as they drive up the price of gas in the futures market using Iraq as the backdrop and reason.
You can’t ask a question like your’s without looking at the whole picture.
Do I think problems with sub-prime will lead to major opportunities?
Yes for some, No for others.
Yes for those who know how to find the REAL deals in this type of market. Get ready for one sure thing, the lenders holding this sub-prime paper WILL eventually decide to dump these properties. That will lead to a couple of potential scenerios.
Price declines as more and more properties hit the market and lending standards are tightened. I experieced a similar decline in housing in the late 80’s, times are different now but one thing has not changed. Banks DO NOT make money holding REAL ESTATE. I notice your new to the forum so I’ll add this. When a bank forecloses on the types of property we’re talking about here, (purchased at a market peak) THEY (the bank) is the winning bidder at the auction. Then the property is listed and they try to sell it at somewhere near the loan amount. As the property sits in their REO dept. it gets moved around as time goes by. A close friend of mine would send a letter every month to the same bank for the same property, he would LOWER his price by $10,000 each month. Eventually the bank would hit their time cut off and they would take the last qualified bid. A lot of times it was his 5th lower bid, but so many people had handled that folder it became a timing issue.
These lenders, like New Century Financial,
WILL GO BANKRUPT, it hasn’t happened yet but it will. Then the house of cards will be reveiled. A ton of big name banks bought these loans when things were good. If this mess speads, which no one knows right now, It won’t matter how good a deal you got on your property because you’re catching a falling knife. (If you intend to resell for potential profit) If you’re buying to rent and can buy at substantial discounts you will be buying at a great time. People need to live somewhere. And 10 years from now you’ll be a genius.
The problem I see in the Northeast is NOTHING is even CLOSE to postive cash flow. And I mean NOTHING. Don’t get me wrong if you bought 10 years ago all is right with your world. But try buying a 3 familly that rents for $800/floor and costs $375,000. This tells me the market will revert to the mean. There’s two ways a market can correct this situation. Rents increase and property prices hold steady, or an over supply of rentals come onmarket depressing rents (which is happening in my area) in that case the market will see housing prices drop to a level were people can again afford to buy. That happens because sellers of these properties are LOSING them to banks and the banks will do what they HAVE to do to get out of these units. This week there were 58 foreclosure notices in our local paper (check yours, weekly) The oldest mortgage was 2005!!! That is not good. This is NOT ROCKET SCIENCE it’s pure market driven capitalism.
My opinion, hope it was somewhat insightful, sorry if I hijacked your thread.
Is this a great time to short? And if so will other investers have a hard time buying properties I have obtained through a short sale?
Also I hear many folks talking about the Great Deppression and issues with money. Well a must see movie on Google Video is “Money Masters”. It is a long one but it gets into the depression. “Monopoly Men” is also a great one to watch. Its only an hour long I think. So it may be an easier pill to take than Money Masters.
I would love to read folks comments on these fllms.
I almost forgot to mention that fk sould do a google search on "
"joseph stiglitz will the dam break?
Mr Stiglitz was the chief economist for the world bank. I think he may know whats happening a bit more as we do. I hope this sparks more debate. Good evening folks
Kiyosaki article that was posted on yahoo yesterday. He details how the stock market run of the last 4 years was still a loss. If you compare it to the price of commodities, the stock market was badly lagging behind.
So even if you invested in stocks 4 years ago and rode the wave, today you would have less purchasing power than you did 4 years ago. It is a very interesting read.
Personally, I’m focusing on areas that have been down with low to minimal appreciation. There are plenty of foreclosed homes to choose from. There’s decent retail price activity and if you are the nicest house at your price point then you will sell fairly quickly. They are also houses that people an afford with lower paying jobs. Those jobs are still pretty plentiful.
Kiyosaki should stick to what he knows,real estate…His thoughts on the stock market are comical…He breaks the cardinal mistake that many investors make,having all their eggs in one basket…EVERY MARKET IS CYCLICAL…There is no bullet proof investment,thats the main reason why everyone should diversify…The stock market is definitely not for everyone but his article is pure nonsense…The S&P index is up %100 in the last 4 years…This guy should be egged for writing such garbage…
New home sales #'s out this morning. Estimates were for $985k annual pace and they came in at $848k. The month over month change was expected to come in at a positive 5.4% and actually came in NEGATIVE, -3.9%.
Economists are blaming the drop on cold weather and an already existing glut of unsold homes that will further depress prices, which have deterred homebuyers. Interesting to note that the actual number of homes in inventory may be more than the government reports because it doesn’t include cancellations. New homes sales is typically the most timely gauge of the housing market because it is recorded when a contract is signed. Existing homes sales are counted when a contract closes.
So, with subprime blowing up and a better chance of more foreclosures and tougher ability to sell houses , what does this mean as an investor? Obviously, it makes it more imperative to need to buy properly. But, does this mean it will be tougher to move a house once its rehabbed? If so, are you rehabbers more concerned about your ability to sell the rehabbed house? How do you deal with this additional risk? Also, does this bode well for rents (I would think so) and if so, should one pursue buying and renting properties now more so than rehabbing? Any thoughts?