Big Investors See Recession, Wall Street Depression

stevejhx, what is the point of posting this?

what does this so-called Wall St. depression and all this recession talk have anything to do with Manhattan real-estate?

investment bankers don't think this is a major issue...

(:-

MMAfia-

Brokers can't one year say the market is hot because of all the bonus money sloshing around and then the next year say the strees on Wall Street has no effect on real estate prices...pick a side and stick with it, right or wrong

Speaking about brokers, here is that I read today from Bloomberg regarding Hamptons property prices:

``If you don't price it properly you're going to sit,'' said Prudential Douglas Elliman CEO Dottie Herman, who owns a second home in Southampton. ``Price matters in this market. You're dealing with more inventory so there are more choices for buyers. Sometimes people will look at houses and if it's not priced right it will help sell someone else's who is.''

Apt_Boy, read the threads - that's what all the property bulls say on this website. Somehow, housing prices cost twice as much as rents, incomes are falling throughout the city, yet property prices will stay sky high.

I did a little analysis today. In 1998 I bought a 2-br 1-ba 800 sq. ft. co-op in the West Village in a wood-joist 1962 building with fire escapes, paid $218,000 for it. It would now sell for about $1.3 million.

I rent a 2-br 2-ba ~1,100 sq. ft. apartment in Chelsea in a brand-new building for $4,500 per month. If I could even get a 6.5% 30-year mortgage and put down 20%, with maintenance my old WV apartment would cost me $8,000 a month to keep. Why would I want to spend $8,000 a month for an apartment nowhere near as nice as what I have for $4,500 a month, which price lets me keep a vacation house on Fire Island?

I know! The tax deduction!

Steve, I worked for Ken. I talk to Ken a few times a year. He is probably one of the most confident human walking the face of the earth. He is all about flushing the bottom 10% out. Every year he kills his team. If I could put words in his mouth I bet he is loving evers second of this unwind. Still markets are the worst. Besides, nothing could hurt his net worth. If we went into a slow burn Depression tomorrow he would die more wealthy than 99.9% of the pop. And is wife is both beuaitful, brilliant and in the biz. So, something tells me you're injecting the hysteria.

If I can give you some free advice, Steve. You've never made it because you're negative and afraid. You may have some solid net worth and a good mind. But you're so chicken little. Even if the sky IS falling you should be talking about the money to be made in it.

Well good for you, eah, but I want your spin on this: "'It is the Great Depression on Wall Street. It sure isn't on Main Street,' Ken Griffin, chief executive of hedge fund Citadel Investment Group, said during a panel at the Milken Institute Global Conference in Beverly Hills, California."

and you say: "I talk to Ken a few times a year. He is probably one of the most confident human walking the face of the earth."

So you have "the most confident human being walking the face of the earth" saying "It is the Great Depression on Wall Street," and I'm "negative and afraid"?

First, I may have "never made it" in your eyes but that by definition means you're judging me by what you think "made it" means. That's your problem. From when I was a little kid I dreamed of learning foreign languages and traveling around the world, so I am doing EXACTLY what I always wanted to do, and what I was born to do. I did not and would not want to be a trader, or a hedge fund manager, or the CEO of a bank. I do not need to be endlessly wealthy and don't judge myself based on that.

Second - in terms of success - I make five times the median salary in my industry. I am probably the highest paid translator in the world. I know lots of them, and not one comes close.

Third - I even have time to do something I find enormously fun: stand-up comedy.

That said, who said I'm not "talking about the money to be made in it." In fact, that's exactly what I'm talking about: the opportunity cost of owning an asset whose value has only one way to go down. I have precisely been the one saying that it is far better to invest in stocks than it is to invest in housing. It's you and your friends who are telling me I'm crazy.

But then again, you have "the most confident human being walking the face of the earth" saying "It is the Great Depression on Wall Street," and I'm "negative and afraid"?

No sir.

Well, Steve, I am glad you feel totally self actualized. That's fantastic. I always imagined that self actualized people post obsessively on anon. boards. A translator? Ok...whatever. Sounds like one of the more boring jobs on earth but, I suppose it fits your profile.

You're very good at twisting context - which must be interesting in your business. WHen your clinets get their "translated" contracts back do they have a clue with you mean? The investors were basically saying they aren't wearing part hats and dialing it in anymore. The now have to work and watch and worry unlike a few years ago. It happens. I assure you Ken was being blunt and being who he is. If he truly thought it was the Depression he would slow his fund down and not risk a blow up. You should write him and ask for clarification. Ask him how his energy desk is. Bet is is smoking.

You are negative. Very negative.

Then you as well must be as self-actualized as I am, as a poster here.

I did not "twist context." In fact, I copied both what "Ken" said and what you said. The party on Wall Street is over. And - as Apt_Boy so aptly noted - "Brokers can't one year say the market is hot because of all the bonus money sloshing around and then the next year say the strees on Wall Street has no effect on real estate prices...pick a side and stick with it, right or wrong."

That's been my point, hasn't it? Haven't I been saying that property prices are tied to income and leverage, and that's why they've been going up in Manhattan over these years: because both income and leverage have been rising?

I think that's what I've been saying.

And now - real estate being cyclical - incomes are falling and leverage has dried up. Or, as today's New York Times says in "The Road to a Jumbo Mortgage Was Supposed to Get Easier": "The effort to make it easier to get jumbo mortgages — loans over $417,000 — has yielded frustration and disillusionment."

If you mean "negative" = "bearish," then you're right, for one particular sector. I've said all along that I don't believe we're in a recession (and today's GDP figures confirm that) and I don't think we will fall into one. But I do think that Manhattan real estate is vastly overpriced by any measure, and that it will fall.

You know "Ken," he's a positive guy. I don't know him. But if I were a trader and I saw a market headed downward, I'd short it. Only a fool would go long on a sinking market. If that's not "talking about the money to be made in it," then I don't know what is.

I'm not taking your words out of context, or anyone's. That's for the JuiceMan to do. I'm just repeating what I've been saying for a long time. No one who believes a market is about to crash would enter it.

That's not "negative"; that's prudent.

ps: my energy investments are doing quite well, as well: up 35% in the last year.

BTW, eah, so positive am I about the future that I have about a $1,000,000 borrowed on margin, invested in the stock market at a 4.5% interest rate. It's been doing quite nicely, thank you.

That takes some degree of positiveness - I think - not to mention balls of steel when the market corrects 20%.

You don't know what you're talking about. The real estate market in Manhattan is about to crash.

I said I was self actualized when..?
No one who believes a market is about to crash would enter it. hmmm..that is very nuanced and not entirely true.

You said I was self-actualized as a poster here, so you must be as well.

And what I said is entirely true unless: you go short.

eah, you (and the other bulls here) are like people who won the lottery (happened to buy just before the largest bull run in real estate since WW-2) who believe that buying lottery is sure and certain way to riches.

it worked for some - those days are gone.

Exactly my friend. Only if you go short.

why do you think Ken acquired E-Trade's $3 billion of asset-backed securities for about $800 million? Think he is going short or long? DOn't you tihnk he built the housing bust INTO his bid? They're betting the housing losses priced into this tranche will be less than 27%; based on all the numbers.

That's right eah, short, just like I said the first time: "If I were a trader and I saw a market headed downward, I'd short it. Only a fool would go long on a sinking market."

I'm not familiar with Ken's acquisition of E-Trade so I can't comment on it directly. This I will say and have - said since I've been somewhat involved in the contracts, and in bank accounting: all these mark-to-market = $0 transactions that have been going on will be marked right back up someday (who knows when). It's a potentially huge writeup, but nobody knows how much. I think Ken is betting that the underlying assets are worth far more than what they must by GAAP be marked down to when there is no market: $0.

That, sir, is not directly related to real estate prices, but rather to the performance of the assets. Real estate prices could collapse, but as long as people keep paying their mortgages, those securities will be worth more than $0. Perhaps not their nominal value, perhaps only 90 cents on a dollar, but if he bought them at 50 cents (I don't know) then he'll make tons of money.

Maybe that's why you don't work for Ken anymore: you should know that the price of the securities is related to how they perform, not to the price of housing. No one knows how they will perform; no one will buy them; they're worth $0 under GAAP. But the houses aren't, and neither are the future cash flows.

I'm nowhere near as negative as you think, nor as dumb.

I don't think yopu're dumb. Never said that. If you can talk the market down, bully for you. I buy cheaper for a bit. If not, I buy at market. I don't care. I just call on you when you seem ridiculously OTT. But buying short is not usually how people buy real estate. So, bringing up short positions is not relevant.

eah, you're right again, I never said you could short real estate. You brought up trading desks, not me, which is what my "short" comment relates to. What I said was that if a market were going down I would short it, but since you can't do that in real estate, you need just to avoid it.

I think I've been saying that, too, for some time now, and not discussing whether a particular apartment has granite countertops, since housing is valued at its output value, not its input value.

And if you think little old me writing on a thread that maybe 100 people read am "talking the market down," then you're mistaken. I don't have that power here or anywhere. I can't broadcast email traders with false rumors in a highly liquid market to take advantage of a temporary price dip. Real estate is not liquid.

I have merely been absolutely consistent in what I've been saying.

lets get to whats important. is it too early for a lunch that includes booze?

It's never too early for booze.

True. See you guys later.

Any update from inonada?

Did you post this just to show how wrong Steve was all those years?

stevejhx? at least w67thstreet can't be proved wrong since he owned commercial property, residential property occupied by his mother, and then bought even more residential condo property.

I wouldn't take financial advice from stevejhx unless you want to go broke.

To bad I didn't do the exact opposite of what he preached over the years for I'd be in the category of the super rich by now.