DOW CLOSES UP 11% - record day

Yeah, lets just forget about the fact that stocks are still down 30% YTD.

And the wave of hedge fund implosions yet to come, plus the new comp structures taking root at GS and MS will only ensure further price appreciation . . . oh, wait a sec . . .

Or, you could look at it this way. We were down 20% from peak levels and hovered. Then we went down another 20% in 1 week. We bounced back 11% and Im sure many people couldnt stomach it and sold stocks before this snap back, which was as a result of some big news by the way.

Unemployment is pretty low until it goes higher. To suggest it stays here is quite ridiculous. To suggest it wont rise is also fairly narrow sighted. To suggest GDP will stay at last quarters levels is outright blindness on your part.

Your statement is flawed everywhere.

I won't bother commenting on the real estate prediction, as it is so absurd as to not warrant a response.
As to the market, while I began building positions beginning last Thursday, I still believe that people need to be cautious. On Friday I began building positions in nwl and mhp to go with wfc, ge, bac and msft. While I am not happy to see such a strong upward move at this time, I guess everyone realized that, at the very least, what we saw last week was forced liquidation which of course leads to bargain pricing.
My hope is that there will be some profit taking tomorrow so that I can continue to add to nwl and mhp (no way am I buying something that goes 15% in a day), and once earnings come in I may start building positions in Dis and CB. For investors, like myself, it is imperative to be patient and deliberate during these volitale times. There are still many companies that are selling too cheaply, but today is not a day to buy them. Don't be greedy. Even if we only see a 5% pullback by Friday, I would rather have that money in my pocket for the long term, that piss it away in what may be a suckers rally.
Again, what makes this market so interesting, and challenging, is that while the sell-off of the past month was definitely irrational, there is a big recession that is real, and it is really hard to get a handle on earnings.

Yog, you are trying to look ahead by peaking through the rear view mirror

The stock market only goes up. Buy now or be priced out forever!

mh23, some great points. I was very tempted to jump in after Friday, and some of those positions would have looked good after today, but yes, this could very well have been a "suckers' rally." Easy to lose sight of what's going on big picture when you start to see "DOW up 11%!!!" headlines

Well that one bedroom I've been dreaming of for $450k just went out the window.

do people really think todays market move equates to someone raising their bid significantly or deciding to jump in and buy and forget the fundamentals?

Please say it ain't so! This broker babble bullshit really takes the word 'moron' to a new level.

"bottom line is that the opportunity to get a deal on NYC real estate is in the next two weeks because after that begins a slow recovery and with it, a refusal by sellers to panic and sell at crazy prices, as happened last week with stocks. "

yog, no offense, but are you being serious? how much real estate do you own that you would need to convince yourself that the only time to get a propoerty is in the NEXT TWO WEEKS?? or maybe you don't own any and instead are a broker. or maybe you're neither and have been at the wacky tobacky...

Julia I see ads for apartments under 500K in the Upper West Side all the time. You seem fixated on insisting. here are 47 www.streeteasy.com/nyc/sales/upper-west-side-manhattan/status%3Aopen%7Cprice%7E505000%7Carea%3A137

It was a one day rally. It might keep up and I personally hope so as I have lost much in the past year especially the past few weeks. I blame nobody but myself as apparently I thought I was immune to losses as I have been investing since my 20's which wasn't yesterday and have always done well in bad markets without shorting.

It's been discussed many times on StreetEasy that real estate has a lag time after the stock market. However I think that lag time is less now because this is the first real down market where we have so much instant communication. In 01 blogs weren't big

A one day rally equals nothing. Many one bedrooms have come down in price. Others were taken off

I meant that Julia seems fixated on talking how pricey the market is when that's not true for many UWS one bedrooms. I guess they would be very pricey other places

> Smh23, some great points. I was very tempted to jump in after Friday, and some of those positions
> would have looked good after today, but yes, this could very well have been a "suckers' rally."

Could be...
I already took a chunk of profits in the SSO (up 38% since I bought early Friday morning).

But I agree with UD on the larger point. I'm SURE brokers will use this. As if everyone's portfolio being "only" down 25% is somehow going to bring a bunch of new buyers to the market...

hahha! that is because Julia is a broker and wants to create the illusion that the market is still strong.

Yeah, the conclusion off the thread seemed to be that... her story changed too many times to make sense from anyone but a shill...

jadedinNY...I appreciate your list of apartments but they are all studio size. I'm not fixated on anything I'm being sadly truthful. 500sq Not A One Bedroom!! And the prices you listed were over $500k for a studio.

Riv_Drive...shut up

Today's Market = Clasic Dead Cat Bounce

urbandigs - always on target! Thanks for being the voice of reason. Today was a big rise - but anyone who suddenly things that our problems have been solved is living with Alice in Wonderland.

The jobs situation is going to get worse. Hopefully, some of the news/changes can help to contain the damage. The unemployment will be over 7% before the end of the year. It will need to stay below 8% for this recession to not be crippling...at least from a jobs perspective. The more contained it is, the better shot at recovery.

MONDAY: Bond market closed for Columbus Day holiday; stock market is open.
TUESDAY: Earnings from Johnson & Johnson, Pepsi
WEDNESDAY: Weekly mortgage applications; Empire State manufacturing survey; PPI; retail sales; business inventories; weekly crude inventories; Fed's beige book; Earnings from Abbott Labs, Coca-Cola, JPMorgan, Wells Fargo and eBay
THURSDAY: CPI; weekly jobless claims; industrial production; Philly Fed survey; weekly natural-gas inventories; Earnings from Bank of New York Mellon, BB&T, Citigroup, CIT Group, Continental, Harley-Davidson, Hershey, Merrill Lynch, Nokia, PNC Bank, Southwest Air, United Technologies, AMD, Capital One, Google and IBM
FRIDAY: Housing starts; consumer sentiment; Earnings from Gannett, Honeywell and Sony Ericsson

the first one bedroom 32 West 82nd Street--a real one bedroom for 475K ask price
214 Riverside Drive $475 says it's 650 square feet. I never believe square footage but...

They might not be your ideal apartment but this is Manhattan. That is a reality.

If you're looking for a luxe apartment for under 500k with all amenities you're not going to get it. I could afford to sell my apartment for less as I paid less over a decade ago and don't have a mortgage. Sadly or not even though I sold my apartment for just under 500, I made more of a profit than the people who bought "better" one bedrooms at 850K, have a mortgage and want 900K

You really have to think whether you want a flawed apartment or a perfect apartment because perfection for 500K or under just doesn't happen

I don't mean this as an attack but you have to look at the whole market. Just like a one day stock market rally doesn't make a real rally

and a very mature broker at that!

"As I suspected"

I never saw you post anything before.

"but the bottom line is that the opportunity to get a deal on NYC real estate is in the next two weeks because after that begins a slow recovery and with it, a refusal by sellers to panic and sell at crazy prices, as happened last week with stocks."

OMFG. What deal? It has another 40% to fall.

Did you see - when Wells Fargo takes over Wachovia, another 3,000 NYC investment-bank jobs gone.

Real estate is dead. Long live real estate.

I agree with Yog.

As we type, an Aer Lingus 777 is turning around on its approach to Shannon and returning to New York, a cheering throng of Irish carpenters aboard and ready to BUY!BUY!BUY!!!!!!!!!!!!!!!!!!!!!!!!!!!

Riv_Drive...Im definitely not moving to Riverside Drive...you ruined the neighborhood. Stevejhx..I hope you're right.

There's nothing on Riverside Drive that you can afford anyways.

Julia, did you see my post to you a few days ago?

"Julia, are you still keeping an eye on 303 West 66th St? So much for prices on 1brs going up over there. There are two 750sf high floor units (11C and 11CE) w/ dining room and balcony for a price-chopped $525k, and a low floor unit w/ the same layout (2HW) for $495k. "

You are all missing my point. You have suggested that the 30% decline in the stock market somehow also suggests that real estate should promptly march down 30% as well. That proposition is erroneous. Stocks can be sold instantly by pension fund managers who stop losses and whose lives don't change depending on whether they are holding a stock certificate or a bank deposit slip. Homes are sold by people who live in them (except developers, I know). Therefore, the 30% instant dip many people are drooling over just isn't going to happen in the housing market. Housing markets, unlike stocks, do not drop overnight. (They didn't rise overnight either -- there has been a long, long run up in prices.) I reiterate that you can expect a 5% average decline in median price-per-square-foot by the end of the year, and then a flat line for 2009 or another 5% drop. The reason the next two weeks is the best time to get a deal is because the panic is still out there and there are some sellers who will jump at a lowball bid if you make one right now. If you wait a month for things to stabilize, everyone is going to realize that there is no need to panic. Hence all the current complaints and surprise about why sellers haven't "come to their senses" yet. They won't because they are living in homes they like. And people who "need to sell" for employment or other reasons aren't enough to drive the Manhattan prime market. This is a place where people live close to their jobs with a lifestyle that can't be matched elsewhere in the country. The price drops will come from (a) people who already bought a house in the suburbs and need to sell; and (b) developers of "luxury" glass-box condos who realize their $2000 ppsf ask is too high (though the second group will convert to rentals and the first group could sublet). Bottom line: Neither of those groups will "make the market" in prime manhattan because they are too small. The city consists of owner-occupied coops. So, no widespread panic and no real estate crash.

I'm not saying buy right now at all costs, but if you see a place you like, make an offer you can live with and see what happens. It won't necessarily be cheaper next year, though everyone here seems to be wishing for it.

tenemental...I really like west 66th street. apt. 2hw for 495K was right over the lobby, but I made an offer of $460k and I got back No! I'll keep looking at the bldg. I like the size of the apts. and the area.

Yog, people have been predicting a 20-40% decline in NYC prices for a while now, way before the stock drop. Most people here who argue for drops don't see them as too tightly correlated, outside of a very indirect relationship. Inventory is going up, the first sign of the bubble pop. This is followed by wild broker "deals" to entice the vanished buyer, and then by the price drops once the low hanging fruit have been picked.

Yog, you just don't get it. You just don't get it. People have been predicting a 20-40% decline here on StreetEasy for years, so it is going to happen. That is what many of us are here for. We are waiting for price armegeddon to reach Manhattan. When Jesus comes and rapture happens and prices drop 20-40% or more.

After all, these rich guys who are now out of work aren't going to want to stay around Manhattan. They'll want to go someplace cheaper and warmer, like Venezuela. Or maybe Peoria, Illinois.

When you get down to it, Manhattan is nothing more than Detroit with taller buildings and further right when I look down at the map. Not a thing more.

The way inventory is skyrocketing now, it's going to be up to 10,000 by the end of the year. And with a population of just 1.7 million people in Manhattan, how do you expect to sell 10,000 houses?

The city really has little more to offer than the banks, and not much of that anymore. I mean the theater really sucks, and it is hard to find a decent rodeo on the little island. Now why doesn't all this industry go to Staten Island? It's a bigger island and has about the same climate. And many more family friendly restaurants.

So I tell you, Yog, you got to get with the program and talk down prices so dear Julia can find a home.

We're not leaving Street Easy till the prices come down and we can be on Easy Street. And your silly suggestion to make an offer. Silly silly silly. Why would we do that when list prices are going to like totally collapse in a few weeks?

Yog - while I'm sure several people appreciate your feeble attempt at broker bullshit, go talk to some of the people who work in finance and USED to generate 1/3 of the city's income. No IB bonuses this year (if they even keep their jobs through the end of the year), no PE carry this year (or next year or the year after), no HF carry this year (if the fund even survives). 15-20% of the city's income has disappeared from finance sector alone - who knows how much of it will come back in 4-5 years but it will likely be 50% at most. It's game over for finance for the next 3-4 years. Media is getting smacked with ad spend decline (which will last 2+ years) - 5-10% layoffs are happening right now (and in most sectors). So jumbo mortgage rates are up 25%+ (now 7.25% vs used to be 5.75%) and incomes are down 20%+ with no rebound in sight, and you truly think ppsf is going down 5% this year and flat next year - maybe you need to take third grade math again followed by econ 101 - if it costs 25% more to finance a purchase and you have 20% less income, what can you afford to pay? 5% less? Nope. 36% less? We have a winner. Who knows how much it's going to decline but 5% is a freaking pipe dream.

Yog, the stock market decline is not the problem with RE. The problem is and has been a credit bust/freeze, rising unemployment, financial companies collapsing, wage reductions, employment insecurity, fall off in state/city tax revenues and the sorts which do impact the value of NY RE regardless of the type. The stock market decline was attributable to the severe liquidity crunch which necessitated the sale of liquid assets. It is simply another victim of the credit fall out.

I think you underestimate the near and long term adverse impacts of a credit bubble bust of this magnitude. The major industrial economies will feel the ill effects of this for at least the next two years with the financial sector being at the center of the storm.

Yeah, Bremlig is right. I mean, we started predicting 20, 40, 50% price declines a year ago and it has already come down by, well, it hasn't, but it will. So take that, and another from all the others.

It's gonna be really, really bad. We gotta be afraid, freaking very afraid.

I'm heading for Vegas.

OMG -- did you guys see the market went up by like 11%??? My god, there is going to be, like, inflation.

Yog, put the glue down.

Hey, I am one of those traders who is currently out of work and I don't plan to move anywhere. I don't know anyone who is in the business who is leaving. For the most part, we're just riding the wave and looking for new jobs. Barclay's, BOA, and Wells Fargo will all have an expanded presence in Manhattan. And the House of Morgan is going to get bigger and bigger. So it may be rough for a year or so, but we'll have a smooth landing.

And with the trillions making it into the economy, I doubt that the recession and credit crunch will be deep or long lasting.

So, I would be inclined to agree with OP. Could be that there will be a brief and small decline in RE prices, but not much and not for very long. As one of the other posters sardonically pointed out, in a population of 1.7 million, it may not be that tough to sell 9 or 10,000 units.

All OP is saying is "make an offer." That seems reasonable to me.

>And with the trillions making it into the economy, I doubt that the recession and credit crunch will be deep or long lasting.<

The only problem with "all the trillions: is that it's borrowed funds. I'm looking forward to watching the Treasury yield curve during 2009 when the Treasury begins to unload $1.5 trillion of paper.

Well Serge, not to sound like a Simpleton, but I think the funds will allow us to ride the wave until the next big thing comes along. And it is coming.

It was a sucker's rally today. Sorry folks.

People here forget history oh so quickly..

http://www.lulubellechihuahua.com/chihuahuas-images/lulubelle-long-haired-chihuahua.jpg

After the initial 'crash' in 1929, there was a 60% REBOUND - that's 60% people- before it all unraveled and the dropped 90%!! afterwards.

Yesterday's (and today's and tomorrow's) may rally even 50%, but that does not mean much in the big picture.

Hahahah cute puppy eh?

Here is the real link:

http://www.marketoracle.co.uk/images/1929-stock-market-crash-dow-chart-image005.png

As you can see from the chart above, after the initial Crash of 1929, the DJIA bottomed out in November. Its ‘bounceback' lasted until April of 1930, (a typical .618 retracement, check your S&P500 chart of the recent rally, yes same .618 rebound) at which time it was generally accepted that the ‘worst was over.' Even Hoover remarked in a speech on December 5 th that the worst was behind them.

MMAfia, what we are experiencing today is distinct from the Great Depression, and therefor your entire thesis is flawed. I agree that the rally we are experiencing is at least tinged with irrational buying, if not fueled by it. That being said, anyone who examines the coordinated response by central banks and our Fed can see that this is not similar to the great depression. I would recommend The Forgotten Man by Amity Shlaes. If you read that, you will identify many distinctions between today and then.
I am not going to be adding to any of my existing positions in WFC, BAC, MSFT, or GE which I began building a week ago. Against my wishes, I will begin building positions today in MHP and NWL because I think the market realizes that these companies are way oversold. Hopefully there will be a big selloff later in the week, and I can load up some more. However, I don't want to be too greedy, so if I missed out on the first 15% of this run, so be it.

Franklin Marsdhal - Serge is reffering to the after-effects of massive treasury issuance on the long end of the yield curve. NOT the running out of the bailout/rescue funds and what to do next; which is of course always an issue if this problem is not eased by these unprecedented measures.

Serge refers to the very likely steepening of the yield curve, and rising rates at long end. Which affects borrowing costs and lending rates in this new world. Think 8% 10YR yields. What do you think mortgage rates will be as the after effect? Understand this, and you understand what he means.

Ive been saying it for many months...shorting the long end will be 2009-2010 and maybe even 2011's trade. How can re recover with lending rates surging?

mh23, I'm not saying that what happened in the 30s is exactly what's going to happen now. just putting into context other situations in the past where the stock market had similar gyrations %-wise in the past.

in fact, this time around, they are doing exactly the opposite as the great depression (similar symptom, different remedy) by throwing as much money into the pitfire as can possibly be imagined.

we all knew this was coming- hence, the 'helicopter ben' jokes from 2 years ago.

now, do you think that the gov'ts of the world are so smart that they know exactly when to slurp back all these incredible money injections/deposits of so many vast flavors in time without causing massive inflation/hyperinflation?

how about this for history- every single government that attempted this is mankind's past has failed that test. from the weimar republic to zimbabwe to the romans.

it's an extremely DIFFICULT task to know exactly when, and by how much to reel back in all the printed money to avoid massive inflation.

could it be different this time? nope.

shoot first, ask questions later.

another 400 up...

"now, do you think that the gov'ts of the world are so smart that they know exactly when to slurp back all these incredible money injections/deposits of so many vast flavors in time without causing massive inflation/hyperinflation?"

In fact, the last time we did this in recent memory, was when Greenspan chopped interest rates to 'cushion' the DotBust collapse... which he did.

But again, when to pull back? Messed up there and caused the Housing Bubble with artificially low rates.

In today's situation, we have unprecedented injections and not just simple rate cuts. It's incredibly more complex, and as such, just as incredibly more complex to time 'pulling in the reins'.

Some profit taking today I think. NASDAQ is actually negative as of 10:40am.

MMAfia, I understand your point, and it is worth pondering. It looks like we may turn negative and have a selloff, which would be helpful. I am waiting until later today or tomorrow before pulling the trigger on NWL and MHP. Earnings are going to be ugly for at least a few quarters, so the question is how much of that is priced in. Since I am investing for the post recession economy, even if it takes ten years, I am not trying to time a bottom. However, yesterday's move was ridiculous, I think at least a 400 point pullback would be appropriate. I am also now looking at MO, the P/E is ridiculous, and I think their dividend is bulletproof.

As always, best of luck mh23- hope the strategy pays out.

Thank you, same to you. If Gold comes down I may buy some to keep as a perpetual position as a hedge against inflation. After the wild ride we have seen for the last 18 months, it makes one wonder.

Looks like we had some profit taking, then a stead up since.... back to up 100...

mh23 - what's your MO thesis? Hard to make sense of the numbers with all the spinoffs. Plus the litigation threat is a bit scary...

Morgan stanley is taking my portfolio to the moon.

To get to the heart of the issue, there are some vast differences in performance in the market, even after the promises of capital injections:

http://thelede.blogs.nytimes.com/2008/10/14/will-the-rally-continue/index.html?hp

Apparently, a rising tide doesn’t lift everyone.

Even as financial companies like Morgan Stanley, Citigroup and Goldman Sachs posted another day of double-digit increases, it appears that many home-builders are seeing few gains from the market rally.

The Standard & Poor’s homebuilding index has spent the day in negative terrain, and it’s currently down 3.7 percent. Shares in major builders like Toll Brothers, Beazer Homes or KB Home have fallen today, while a new report found that housing prices continued to crumble in August, falling 11 percent from the year before.

The housing sector remains at the core of the financial crisis, and an analysis by Carl Reichardt, an analyst at Wachovia Capital Markets, finds that home prices and sales are still cratering, and fewer buyers are looking at houses. Reichardt’s survey of 150 homebuilding tracts across the country concluded that the fourth quarter of 2008 “may prove the weakest climate for new home sales since the production homebuilding business effectively began in the late 1940s.” One builder surveyed in Denver told Reichardt, “Everything is horrible all around.”

http://thelede.blogs.nytimes.com/2008/10/14/will-the-rally-continue/index.html?hp

I think we're past "crisis" and into plain old "serious recession".

urbandigs, I could not have said it better myself.:) Thanks!

Isn't there now an additional Pelosi proposed "stimulus" package. Who's counting at this point but it would add an addition $150 billion to the treasury's ballooning tab.

here is an easier way to think about it.... in a credit crisis, the thing that pretty much *everyone* can only buy with credit might take a bit of a hit..

Newbuyer. You make a good point, and the price may still be too high. My concern is not so much the litigation as it is the probability that it's main consumable subsidiary, Philip Morris, may be a brand that has far less value over the next several years. That being said, it is a powerful drug so I suspect they will always have a core customer base. I just think that when you have a company paying a 6% dividend with a p/e ratio around 6 it's hard to get hurt over the long term. That being said, I have still not decided yet, and based on what is happening, I won't be buying anything today as it appears we may see an appreciable sell off into this day. However, if one were to get into the tobacco business, these guys have the best brands.
Newbuyer, what are your thought on nwl. I love this company because of the dividend, as well as the fact that they have been raising prices due to resin costs, which have dramtically fallen since the last time this stock got beaten down in July. I am quite sure that they will pocket some of this difference, and they should be doing extremely well 2-3 years out.

nyc10022, I think you may be right. :)

Not that anyone would care but the equity prices of Vornado Realty-VNO & SL Green Realty-SLG, both significant owners of prime Manhattan commercial RE, are plummeting in today's NYSE trading. A 5 year price chart of these two is a bit of an eye opener.

Perhaps it's only a coincidence, but the value of these two REITs sky-rocketed from 2001-early 2007 lock step with the residential market. However, their fall probably has no bearing on the future price direction of the NY condo/co-op market.

of course not.

also, don't forget that these guys generally sign 10 or 20 year leases, and just came off a period of low vacancy. Imagine how bad it must be for the tank to be that much..

And imagine what happens with residential, which has no such price locks (only price caps).

mh23 - is that a "clean" forward looking PE ratio for MO? I have done minimal research into it, and didn't bother understanding what's clean post spin-off and what isn't.

I like your line of reasoning on NWL. However, I am a novice stock investor, so you definitely don't want to take advice from me.

I'm no expert myself, I have only thus far done a somewhat superficial analysis of MO, and the more I think about it, the less I like owning a company that sells cigarettes. As of now, I am done buying WFC, BAC and GE. If they break through their lows, I will add more. Right now I am now focusing on nwl, mhp, and I am starting to research V. If there is a nice selloff tomorrow, I will be buying nwl. I would like to start building my position before they report on the 23rd. If the news is bad, I will buy more, if it is good and the market jumps, I will at least have started my position and I will add more on the inevitable pull back. I think this market is still very sick, and we will not see real meaningful strength until the economy improves, which will most probably take years.

I agree with Yog all the way.

This was a nice walk down memory lane. Funny thing is, I just added to my NWL position today. When I last posted on this entry, V was at 48.

I love how a few distressed RE sellers here and there are gospel when it comes to predicting real estate prices, but the extremely liquid stock market is a dumb predictor of economic conditions.

from Office Space..... "f--k you (Karinab)", "F---k you (yog)", "f--k you (julia,Frnaklinmarshall )," you're alright (UD, nyc10022, MickeyD, type3sec, eobrian, RECraze).... I'm out.

:)

> but the extremely liquid stock market is a dumb predictor of economic conditions.

We're still 40% off peak...

You looking for a sign from god or something?

where's exit2?