I guess we're not having any more bulls v. bears discussions

not much to debate on that anymore; it's all finger pointing now

In flux right now and on the cusp of going strongly in one direction, IMHO. At least for a little while...

I'm no expert and my moniker is purely because I like to mess with personal investments, but, to me, the market is preparing for a big move. We've kinda bounced off recent support at 7845. Two days it has come within 10 points, but not broken it. If that breaks, next stop is 7450. We haven't come as close on the recent S&P low of 804, but we did break through a real weak support level of 850. If 804 goes, the next stop on that one is 741. If these hold, we might see a rally for awhile and everyone will come in claiming the market has bottomed.

The big key here, I think, is the stimulus package. The approval of this has gone down the tubes. Many people are beginning to believe (I think, rather correctly) that the gummit is pulling the wool over our eyes, using our money to bail out friends in high places, and not giving us the full truth about the gravity of our situation.

After the last stimulus passed, the market tanked. It has proven, for the most part, to have not done a damn thing. Who knows if the market's (ie, the people's) view on this one will change.

Honestly, I'm more afraid if we do have a recovery from here. We've built ourselves up to this point on a shaky house of cards built by debt. The only way out of it, is to embrace the very thing that put us in this situation in the first place; record home prices, unimpeded consumerism (via debt, as salaries have not really increased comparatively to debt ratios), an extreme gummit monetary expansion program, and record low interest rates.

Basically, if it reinflates, I'm scared; it's only gonna come crashing down harder and faster if we try to continue this.

Just my humble ramblings.

I've been saying for a few months notice how the conversations changed. From UP vs. DOWN to DOWN vs. VERY DOWN. And now there is little else but VERY DOWN and SteveF.

You'll always have a few left in denial...

You guys still post about real estate? I thought the boards were just Chicago and anti-Obama posts now. Doom-and-gloomers can't seem to get enough of either.

Exactly.

So let's talk about something else. Pitchers and catchers report in 22 hours!

"You guys still post about real estate? I thought the boards were just Chicago and anti-Obama posts now. Doom-and-gloomers can't seem to get enough of either."

Probably because the intelligent people have now accepted the crash as a given....

only a few retards left to deny...

"only a few retards left to deny..."

oh don't you worry nyc10022... when the real crisis hits once we get past the current appetizer, there won't be much denying going on.

fasten your seatbelts. and i hope you've all prepared accordingly for what's about to come.

"what's about to come"

Can you spell this out a bit more explicitly? You keep saying this, without offering much substance behind it.

positivecarry, regarding the pitchers and catchers. the other day I saw a headline on msn that read something like "A-Rod's steroid news may deepen baseball's recession" You just can't escape. I so need a beach (but maybe not in the Mexican Riviera region, where the economic conditions have caused a huge spike in drug-related crimes). Sigh.

> Can you spell this out a bit more explicitly?

Decline even more... not sure what else you think he might of meant...

Really? Do you mind not being a spokesperson and let him answer for himself? Thanks. And I think he actually does have a lot more to say than "decline even more."

"Really? Do you mind not being a spokesperson and let him answer for himself? Thanks. And I think he actually does have a lot more to say than "decline even more.""

Baiting the trap?

type3secretion, LOL

bjw2103,

Essentially, the loss of confidence and mistrust in the banking system will spread to a loss of confidence and mistrust in the state/nation. The banking crisis will devolve into a nation/state crisis.

This stems from the massive amounts of gov't debt issuance. Now think of all the implications to FX, interest rates, the bond market (currently much larger than the equity market cap) and the negative feedback loop to already existing problems in the residential real estate (soon to be joined by commercial real estate), derivatives (over a quadrillion in notional value now) and economic contraction.

It will add fuel to the fire. Yes, the fire has started, but it's still just burning on a few sticks of wood at the moment. The jet fuel is about to be poured on. And as we have seen, the drop in confidence can happen shockingly quick.

Thanks, MMAfia (and yes, your answer was way better than "decline even more"). I don't see how you can quite label that a "state" crisis (unless you posit that infrastructure will go to hell), but it certainly is a global financial crisis. I doubt I read as much Roubini as you do, so curious when this is all expected to occur. Commercial real estate is already in big trouble - I don't think that's new.

> Baiting the trap?

Funny...

> Do you mind not being a spokesperson and let him answer for himself?

Don't confuse me pointing out the mistake with your post for being a spokesperson. Anyone can say whatever they want, but you missing the obvious was something pretty relevant.

And, aren't you the hypocritical hall monitor today...

> The banking crisis will devolve into a nation/state crisis.

Only problem with that idea - and I agree with much of the other parts - is that there isn't much of an alternative. As bad as we're doing, the rest of the world is in many ways doing even worse. The commodity economies are SPANKED. UK is getting hit worse than us.

US might be on its knees, but we look better relatively speaking each day.

bjw2103, the "state" crisis i am referring to, more specifically, is that there will be a lack of confidence is new government debt issuance, as in, not enough buyers (foreign central banks/entities or even local entities). that's when things will start accelerating- when the gov't can sell debt to finance its spending to combat the problems we are facing currently. the pressure is starting to cook in Europe already as contagion has spread to ireland, spain etc...

many postulate that absolutely cannot happen here in the US, as the dollar is currently the world's reserve currency.

think again. at some point, the rest of the world will have had enough of America's debt.

and while you are right in that commercial real estate is already in big trouble, it is a laggard with respect to residential in terms of the CMBS on other securitized market streams. it's full impact is still on it way as the negative feedback loop cycle hasn't matured as much yet.

The baseball recession! I love it. What a joke. Another reason for owners to lowball players. Bobby Abreu just signed for $5 Million, when he was looking for 15. Reminds me of the chris rock joke: "Shaq is rich, the guy who signs Shaq's check is wealthy".

"but you missing the obvious was something pretty relevant."

Dude, you're flaming me for asking a question? And then assume you know what someone else meant (and he quite clearly had a lot more to say)? You've got a bit of a complex, spokesman/hall-monitor.

MMAfia, that makes a lot more sense. Agreed about Ireland and Spain (you can throw Iceland in there as well). I used to live in the latter, and I've been hearing from friends how bad it's gotten. It's a bit of a shame. I'm not sure I see the dollar collapsing as much, but I'm not as versed in these things as I should be. It would be quite a disaster though - where do people put their money then? I know you'll say gold, but I don't see that development as a good thing for most people. Anyway, I'll ask again: when do you see all this really kicking in?

> Dude, you're flaming me for asking a question?

bjw, relax, nobody flamed you.

Just responding to your childish "Do you mind not being a spokesperson and let him answer for himself?"

> You've got a bit of a complex, spokesman/hall-monitor.

Pot, meet kettle...

You are awesome at using that phrase.

relax, bjw, nobody flamed you he's just calling you childish.

Sorry if it came off that way. It's just a wee bit hypocritical to call someone childish when you're the person butting into a conversation and calling someone a "hall monitor."

"when do you see all this really kicking in?"

see, that's the difficult part. just like when people were calling the housing bubble to pop, the timing of it was hard to predict exactly.

some were ahead a few years, others by a few quarters... this is exactly why i don't try and time the market. i've learned that its a sure fired way for me to lose my money from past experience.

instead, i play longer term investments... a year or so... perhaps a couple of years and stick to the fundamental analysis.

if people recall, i started calling the housing bubble pop about a year early on these boards, so clearly, i am not good market timer.

i got a lot of haters stalking me back then, arguing till kingdom come about why Manhattan would be spared. and they were technically right for about a year.... until the bottom fell out and life savings were almost instantly put into peril.

i told people not to buy apartments in Manhattan last year and instead stick the money they were going to use as a downpayment into Gold instead. i spent WAY too much time arguing with people here who thought I was a chicken-little who made dumb investments (Gold has not intrinsic value!!!!).

well, i took my own advice, and i hope others did back then. i've been sitting on cash and a good amount of Gold since then while continuing to rent.

and i tell you now: we are still in the beginning of this crisis. mark my words.

Thanks MMAfia, great post. There are people here who consider "long-term investment" a euphemism for "rationalizing a depreciating asset," but I totally agree with your sentiment. Impossible to be pinpoint-accurate, but read the trends and fundamentals and act accordingly. As for putting an entire downpayment into gold, it's quite a gamble, but I hope it pans out for you. I just don't see too many people following you there (which may be precisely what makes it work so well in the end, if you're right of course).

"Sorry if it came off that way. It's just a wee bit hypocritical to call someone childish when you're the person butting into a conversation and calling someone a "hall monitor.""

Wait, you just tried to chide someone for "butting in" to a MESSAGE BOARD THREAD.

bjw, seriously, you need to get a grip here.

This isn't your house with you making the rules. You have no more rights here than anyone else.

Wow, you're a little extra nutty today.

"see, that's the difficult part. just like when people were calling the housing bubble to pop, the timing of it was hard to predict exactly."

Its why they call it a bubble.... you see it growing bigger and bigger, and sometimes it goes longer, and sometimes shorter, but you know its gonna pop at some point.

That being said, you might not call yourself a market timer, but pointing out a bubble and saying "don't buy", well, that is a form of marketing timing.

As you have basically said - you don't have to be perfect for the absolute top and bottom to benefit from understanding the cycle.

But it is market timing nontheless.

sorry, nonetheless

"Wait, you just tried to chide someone for "butting in" to a MESSAGE BOARD THREAD."

Yep, it's a message board, except that I asked him DIRECTLY to explain HIS opinion, and you butted in with a snarky comment and actual answer for what HE meant. Good stuff!

bjw, you misunderstood. see, he told you to relax, nobody was flaming you, and then he called you childish (or your position childish). I thought it was a bit ironic, was not faulting your post. Sorry not clear.

No worries, aboutready, sorry I misunderstood you. He's a character, isn't he?

mmafia, i agree with pretty much everything you say (I am not as certain of the scenario you paint, but I do think it's likely). I really struggle with the gold part, though, precisely because of the "it has no intrinsic value" argument that you mention. I am sure you recognize that gold's recent performance proves as little about its long-term prognosis as manhattan RE's performance in 2006-2007 did about its longer-term prognosis. Similarly, the fact that the gold standard was used in the past is not a sufficient argument to me - it seems just as arbitrary as the dollar, or any other fiat currency.

So I'll try again with the question (and it's a serious one): What makes you so sure that gold will hold/increase its value in the s&%tstorm that you're describing?

2 things newbuyer99,

1. when faith in government 'paper money' starts dwindling, Gold has always been and continues to be where 'money' goes to. it is known as the currency of last resort. the backup for the central banks.

2. inflation - the exact timing may be difficult to ascertain, but it is commonly understood that this will be a result of all the bailouts and stimulus actions the government is taking. the government itself knows this, and willingly pushes ahead because they would prefer inflation to deflation. they know how to deal with inflation. not so with a deflationary spiral.

If the gov't succeeds, you will have inflation, either accompanied with growth or stagnation (stagflation). This is what happened in the 70s and how Gold rose from $40 to over $800 by 1980.

If the gov't fails, and general confidence in the fiat based paper monetary system falls (the US dollar's status as the world's reserve currency goes along with Bretton-Woods), then people will turn to Gold, as it is the currency of last resort.

You see newbuyer99, whether you or I believe that it is in fact the currency of last resort is in material. The Central Banks and Governments around the world (and the super wealthy) believe in it, and that's what matters at the end of the day.

correction: Gold rose from around a $100 in the mid 1970s to over $800 in 1980.

MMafia, you may well be proven right, but your arguments are pretty circular - gold will be valuable because it has always been valuable and will continue to be valuable. Same answer you gave on another thread. I suppose I should stop asking.

Krugman paints some fairly bearish strokes on the economy today: http://www.nytimes.com/2009/02/16/opinion/16krugman.html

"By now everyone knows the sad tale of Bernard Madoff’s duped investors. They looked at their statements and thought they were rich. But then, one day, they discovered to their horror that their supposed wealth was a figment of someone else’s imagination.

Unfortunately, that’s a pretty good metaphor for what happened to America as a whole in the first decade of the 21st century.

Last week the Federal Reserve released the results of the latest Survey of Consumer Finances, a triennial report on the assets and liabilities of American households. The bottom line is that there has been basically no wealth creation at all since the turn of the millennium: the net worth of the average American household, adjusted for inflation, is lower now than it was in 2001.

At one level this should come as no surprise. For most of the last decade America was a nation of borrowers and spenders, not savers. The personal savings rate dropped from 9 percent in the 1980s to 5 percent in the 1990s, to just 0.6 percent from 2005 to 2007, and household debt grew much faster than personal income. Why should we have expected our net worth to go up?

Yet until very recently Americans believed they were getting richer, because they received statements saying that their houses and stock portfolios were appreciating in value faster than their debts were increasing. And if the belief of many Americans that they could count on capital gains forever sounds naïve, it’s worth remembering just how many influential voices — notably in right-leaning publications like The Wall Street Journal, Forbes and National Review — promoted that belief, and ridiculed those who worried about low savings and high levels of debt.

Then reality struck, and it turned out that the worriers had been right all along. The surge in asset values had been an illusion — but the surge in debt had been all too real.

So now we’re in trouble — deeper trouble, I think, than most people realize even now. "

There is certainly a downward spiral in place now in which a lot of jobs will be lost. This, the crashed market, and growing fears will continue to squeeze consumer spending, and there can't be a RE recovery generally in the country for a while. But this is clearly spilling way beyond that. Analysts are now going on television predicting 25% drops in Manhattan RE, which likely means, given their tendency to be unrealistically optimistic, a fairly larger drop. With no replacement bubble for investment and income generation, it might be a long haul here as well.

newbuyer99, you have a point there... it is what it is.

time will tell my friend. time will tell.

"Yep, it's a message board, except that I asked him DIRECTLY to explain HIS opinion, and you butted in with a snarky comment and actual answer for what HE meant. Good stuff!"

Ok, hall monitor...