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    Thread: Subprime Meltdown, the US Housing Market & the Direction of the US Economy in 2009 and 2010

    1. 01-11-2008 11:38 AM #106
      Honestly, thats the million dollar question. The conservative answer is what you hit already, just sit tight, ride it out and it will come out strong.

      Others will tell you to try and time the market, liquidate before the major drop, sit on defensives for a time until the market is bottomed, buy back in to equities.

      Realistically, I tell people to just stay with diversified accounts, but the allocations are changing all the time.

      For instance, right now most people are putting alot more of a % into internationals, certain funds/areas/industries, but more so than was the norm in the past.

      Past that, it depends on the individual.


    2. Senior Member beng's Avatar
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      01-11-2008 11:48 AM #107
      Quote, originally posted by dubatwork2 »
      Honestly, thats the million dollar question. The conservative answer is what you hit already, just sit tight, ride it out and it will come out strong.

      Others will tell you to try and time the market, liquidate before the major drop, sit on defensives for a time until the market is bottomed, buy back in to equities.

      Yes, the fundamental argument in finance. Does market timing work? Is it possible?

      I'm personally in the camp of shifting allocations (moving money out of consumer discretion for instance) and maybe carrying more cash then you would usually. The more you buy on the downside and the bottom, the more you can make when the markets recover (dollar cost averaging). The strategy of a rational long term investor.

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    3. 01-11-2008 11:50 AM #108
      Quote, originally posted by beng »

      Yes, the fundamental argument in finance. Does market timing work? Is it possible?

      I'm personally in the camp of shifting allocations (moving money out of consumer discretion for instance) and maybe carrying more cash then you would usually. The more you buy on the downside and the bottom, the more you can make when the markets recover (dollar cost averaging). The strategy of a rational long term investor.

      I agree. Thats where professionals come in and being able to differentiate where the market is going sector wise. Much safer to allocate within the market, then out and back in, which is what I tend to think of as timing, that is going from stocks to cash back to stocks.


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      01-11-2008 11:59 AM #109
      having your 'house in order' before the recession is the best way to come out strong.

      - have manageable debt to income ratios
      - have a sound portfolio ahead of time
      - have enough free cash flow that you can still dollar cost average into your 401(k), Roth, NQ Brokerage account, or whatever you use all along the way
      - have enough cash on hand so that if some opportunity really presents itself you can move on it

      They're steppin' on my rhythm and they're stealin' all my lines

      Every day on the bike is a day not in the Fusion.

    5. 01-11-2008 01:06 PM #110
      Quote, originally posted by jnm1point8t »
      having your 'house in order' before the recession is the best way to come out strong.

      - have manageable debt to income ratios
      - have a sound portfolio ahead of time
      - have enough free cash flow that you can still dollar cost average into your 401(k), Roth, NQ Brokerage account, or whatever you use all along the way
      - have enough cash on hand so that if some opportunity really presents itself you can move on it

      For people that prepared themselves it can be a great opportunity. Personally I like real estate. Rates are still low, prices down and rents are going up (how long who knows). But there are buying opportunities out there that make financial sense. It's always a numbers game.


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      01-11-2008 01:50 PM #111
      Quote, originally posted by jnm1point8t »
      having your 'house in order' before the recession is the best way to come out strong.

      - have manageable debt to income ratios
      - have a sound portfolio ahead of time
      - have enough free cash flow that you can still dollar cost average into your 401(k), Roth, NQ Brokerage account, or whatever you use all along the way
      - have enough cash on hand so that if some opportunity really presents itself you can move on it

      Don't forget my #1 "house-in-order" task:

      - have a recession-proof job (or be very marketable should you become unemployed)


    7. Member jnm2.0t's Avatar
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      01-11-2008 01:52 PM #112
      Quote, originally posted by tbvvw »

      Don't forget my #1 "house-in-order" task:

      - have a recession-proof job (or be very marketable should you become unemployed)

      yes, very true... i suppose nothing is guaranteed but i feel pretty safe myself.

      They're steppin' on my rhythm and they're stealin' all my lines

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    8. Senior Member beng's Avatar
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      01-11-2008 02:25 PM #113
      Quote, originally posted by ImRollin »

      For people that prepared themselves it can be a great opportunity. Personally I like real estate. Rates are still low, prices down and rents are going up (how long who knows). But there are buying opportunities out there that make financial sense. It's always a numbers game.

      I think real estate is going to be a fantastic play by mid/late 2008. If you have sufficient liquidity...because the only barrier to entry will be the strict lending standards.

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    9. Member jnm2.0t's Avatar
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      01-11-2008 02:31 PM #114
      Quote, originally posted by beng »
      I think real estate is going to be a fantastic play by mid/late 2008. If you have sufficient liquidity...because the only barrier to entry will be the strict lending standards.

      whereby people who have their ish together ahead of time make out. survival of the fittest.

      They're steppin' on my rhythm and they're stealin' all my lines

      Every day on the bike is a day not in the Fusion.

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      01-11-2008 08:33 PM #115
      you can preach all you want about alternate safe investments. I will stick to my golds!
      And I am not complaining!

      http://money.cnn.com/2008/01/1...11111

      I guess we should agree to disagree and move on!


      Modified by marzen at 5:44 PM 1-11-2008


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      01-11-2008 10:05 PM #116
      Why no mention of the Countrywide purchase by BoA? I'm really worried now the M&I Forum is falling asleep at the wheel!

    12. 01-11-2008 10:41 PM #117
      Quote, originally posted by marzen »
      you can preach all you want about alternate safe investments. I will stick to my golds!
      And I am not complaining!

      http://money.cnn.com/2008/01/1...11111

      I guess we should agree to disagree and move on!


      Modified by marzen at 5:44 PM 1-11-2008

      I am sorry, but w.t.f. cares. That number is IRRELEVANT. I dont care if gold is at 9million an ounce. All that matters in investing is the two things... risk and return. Gold has a moderate amount of risk and historically almost no return.

      Like my last numbers demonstrated, 28 year return on gold ~1% a year. Wowsers, thats some good work.


    13. 01-11-2008 10:43 PM #118
      Quote, originally posted by haunted reality »
      Why no mention of the Countrywide purchase by BoA? I'm really worried now the M&I Forum is falling asleep at the wheel!

      Whats the question or the news? There was a thread on it earlier, and it hit it pretty dead on. BoA is trying, and has accomplished, buying themselves into the mortgage production business. They had some of the backend business, but they decided to buy the front end business in countrywide for pennies on the dollar. Why? They know countrywide is going to be a huge headache for a few years, but they think it is still a good deal. I am not an expert on that particular industry, but I am pretty sure BoA has quite a few investment banks in the analysis so I will defer to them.

      Oh yea, and BoA is *somewhat* interested in the 500million in tax breaks they will get.


    14. 01-11-2008 11:38 PM #119
      Quote, originally posted by haunted reality »
      Why no mention of the Countrywide purchase by BoA? I'm really worried now the M&I Forum is falling asleep at the wheel!

      There is a whole thread dedicated to CW


    15. Member jnm2.0t's Avatar
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      01-12-2008 06:09 AM #120
      Quote, originally posted by ImRollin »
      There is a whole thread dedicated to CW

      http://forums.vwvortex.com/zerothread?id=3619936

      They're steppin' on my rhythm and they're stealin' all my lines

      Every day on the bike is a day not in the Fusion.

    16. Member haunted reality's Avatar
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      01-12-2008 08:36 AM #121
      Quote, originally posted by jnm1point8t »

      http://forums.vwvortex.com/zerothread?id=3619936


      Ah thanks, I didn't read that one because I read it before and it was dealing with using CW Bank. I guess it's been updated now with the buyout information.

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      01-12-2008 09:19 AM #122
      So, market dropped to near 280 then settled at 246. In one day. Especially at the beginning of the year. Reasons are obvious as cited throughout major financial news. This is kind of correction I was referring to. The market will bounce back up after the rate cut, but that still doesn't address the fundamental issues.

    18. 01-12-2008 09:57 AM #123
      Quote, originally posted by marzen »
      So, market dropped to near 280 then settled at 246. In one day. Especially at the beginning of the year. Reasons are obvious as cited throughout major financial news. This is kind of correction I was referring to. The market will bounce back up after the rate cut, but that still doesn't address the fundamental issues.

      There are alot of issues in the market right now, but I think it is at the bottom around 12.5k, seems to have a floor support there. The 50 bip rate cut will help, but its not the savior, because it doesn't correct the fundamentals. Also, the rate cut will happen around same time the 4Q results are published by alot of financials, so they may wash out.


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      01-13-2008 11:22 AM #124
      Article in the Boston Golbe this morning addresses the issue of government intervention in the housing market. Talks about how it is only helping to keep those just barely on the outskirts of being able to afford a house from getting into one as the prices stay somewhat artifically elevated and people aren't foreclosed on. Title of the article is 'Whose side are they on?'
      They're steppin' on my rhythm and they're stealin' all my lines

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      01-13-2008 06:31 PM #125
      Quote, originally posted by The Boston Globe »
      Whose side are they on?
      Government efforts to stem foreclosures mean fewer chances for people priced out of the market

      By Binyamin Appelbaum, Globe Staff | January 13, 2008

      Some people are cheering for a plunge in local housing prices: Those who watched the market rocket skyward and waited patiently for the return trip, resisting the temptation to spend more than they could afford.

      Linda Werbner and Mark Muzeroll sat out the boom in a small Lynn condominium. Now they're eyeing the housing market "longingly but cautiously," Linda said, hoping for "a slew of homes to be had for a song."

      They'd like to buy a small Colonial where Mark, a piano teacher, can play a partita at 2 a.m.

      In Boston and other hyper-expensive markets, the surge in foreclosures and the resulting drop in prices isn't bad for everyone. Government efforts to limit foreclosures have the effect of favoring people who want to stay in their homes over the people who want to move in next.

      Tom Callahan, executive director of the Massachusetts Affordable Housing Alliance, said he's torn by concern for homeowners, but "our hope for home buyers is that the market softens somewhat.

      "When a market has been as hot as it's been for the last while, your hope is for prices to come down," he said.

      Prices in the Boston area more than doubled between 1995 and 2005, even adjusting for inflation. Lax lending standards played a big part. Sellers raised prices, and buyers easily borrowed the wanted money.

      By 2005, the area's median housing price was $492,000. Under federal standards, such a home was affordable to families making at least $135,000 a year. The area's median family income: $82,600.

      Many families chose to stretch, agreeing to monthly mortgage payments that consumed a larger share of income than the recommended 28 percent - often a much larger share. Many of them are now are facing foreclosure.

      Werbner and Muzeroll chose not to stretch. Werbner is a social worker. Muzeroll teaches piano. In 2003, the couple paid $155,000 for a 750-square-foot condo, with comfortable monthly payments. They watched the housing boom lift Lynn. Abandoned industrial buildings became desirable residential lofts. Prices went up, up, and away. New residents came flooding in. Then they watched the market start to collapse. Desirable residential lofts became difficult to sell. Prices started plunging. Residents started leaving.

      They began dreaming about buying a sin gle-family home this spring.

      The opportunity is emotionally complicated for Werbner. If prices keep falling, their chances will improve. But prices are going down because other people are losing homes to foreclosure.

      The mortgage companies resell those homes at discounts of 20 percent and more, driving down the prices of other similar properties.

      "I feel guilty when I'm going through one of these websites and it says bank-owned property," Werbner said. "I know that there's a really sad story attached to that. It's like finding a wedding ring on the sidewalk."

      It is not clear how many people benefit from the falling prices.

      A Boston home purchased for a dollar in 1997, when the boom began, was worth $2.42 at the peak in 2005. As of October, it was worth $2.26. Forecasting firm Global Insight predicts it will still be worth about $2 when the market hits bottom in 2009. That will remain beyond the reach of many renters, or people hoping for a larger home.

      Furthermore, falling housing prices have broader economic consequences. Homeowners spend less, so companies make less, so workers earn less. For those workers, less expensive homes aren't necessarily more affordable. The entire economy is moving downward. As a result, the renters aren't getting closer to homeownership.

      And there's the issue of location. Falling prices don't change homes, but they do change neighborhoods. Some houses sit empty, while others are rented. People leave and communities dissolve. A home that sold for $300,000 may now be on the market for $200,000, but it could be worth even less if the neighborhood around it is collapsing.

      Still, Callahan said attendance has been increasing at Massachusetts Affordable Housing Alliance classes for first-time buyers.

      "I do think there's some renewed interest from people who may have been discouraged in the past," he said.

      It's also not clear that the government can prevent prices from falling, even if it wanted to. A number of modest efforts are underway to help people keep their homes.

      Lending companies will forgo scheduled increases in monthly payments on some loans. In other cases, they will reduce the payment. But there is no plan in place to forestall the majority of impending foreclosures.

      Even if there was, prices would keep declining. Tightened lending standards have thinned the ranks of potential buyers, or limited how much they can spend. The number of homes already on the market is enough to satisfy almost a year of demand at the current level. A normal backlog is about six months.

      Officials are talking about ways to reduce supply and increase demand: Cut interest rates to make loans cheaper; return money to taxpayers to stimulate spending; give money to borrowers who can't afford loans; and reduce monthly payments for more borrowers to help them keep their homes.

      George Marshall, a Boston renter who wants to buy a home in the suburbs, doesn't favor any of those strategies. He has money saved for a down payment, but he's waiting for prices to drop a little more.

      Marshall said he wants people to understand "how frustrating it is for people who are looking to buy a home to see their governor using their tax dollars against them."

      Leave the market alone, Marshall said, so he can buy a home.

      I don't know how people budget in places for NYC or Boston. It's hard to find a place that is respectable, which will fit the 1/3 monthly net income budgeting standard. I'm pretty sure most of these responsible homeowners are forking up to 1/2 just so they can live in a decent spot, and not a dump. That alone makes me sick, because it totally puts a leash on your savings and investment abilities.

      Quote Originally Posted by Turbiodiesel!
      It really is the perfect, no excuses all-rounder for the rich guy who's accustomed to having it all - the Hybrid version especially. It's like an F-150 Raptor banged an M5 in the men's room of a biker bar. Nobody really wanted the results, but damn - what a set of genes.

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      01-14-2008 12:44 PM #126
      Citi... there is speculation that they will announce during their earnings call tomorrow an additional $24 billion in writedowns and about 20,000 layoffs.

      http://biz.yahoo.com/cnbc/080114/22639976.html

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      01-14-2008 02:08 PM #127
      Quote, originally posted by beng »
      Citi... there is speculation that they will announce during their earnings call tomorrow an additional $24 billion in writedowns and about 20,000 layoffs.

      http://biz.yahoo.com/cnbc/080114/22639976.html


      They can burn down tomorrow for all I care.

      I feel bad for those who have families to support but losing job from Citi.


    23. 01-14-2008 02:30 PM #128
      What's the total of all write-downs so far?
      "None of you understand. I'm not locked up in here with you. You're locked up in here with me."

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      01-14-2008 02:41 PM #129
      In aggregate or for Citi?
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      01-14-2008 03:40 PM #130
      Quote, originally posted by adoniram7 »
      What's the total of all write-downs so far?

      In aggregate, about $82B. There another $24B expected from Citi tomorrow.


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      01-14-2008 04:18 PM #131
      Quote, originally posted by marzen »
      you can preach all you want about alternate safe investments. I will stick to my golds!
      And I am not complaining!

      http://money.cnn.com/2008/01/1...11111

      I guess we should agree to disagree and move on!


      Modified by marzen at 5:44 PM 1-11-2008

      I allerted everyone to this many months ago, and numerous people argued against my recommendation.


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      01-15-2008 01:23 AM #132
      Quote, originally posted by OldOyster »

      I allerted everyone to this many months ago, and numerous people argued against my recommendation.

      Wrong gold... should have bought into Randgold (GOLD) and you would have doubled your money in the same time frame.


    28. 01-15-2008 07:29 AM #133
      Hmmm i thaught this was funny

      Indeed, CountryFried Financial sure makes home loans finger lickin' good!

      Unfortunately, the grease and cholesterol are killers, and if you "eat too much", it's likely to impair your health ... permanently.

      Want to support CountryFried Financial? Well look no further! Via AnarchyWARE, we are offering two CountryFried Financial, "finger lickin' good" t-shirts!


      http://www.goodstorm.com/item/...sides


    29. 01-15-2008 08:16 AM #134
      Quote, originally posted by pops »

      In aggregate, about $82B. There another $24B expected from Citi tomorrow.

      So, we're just about at the Time Warner write-down of 99 billion in 2002, adjusting for inflation
      ithat was probably close to $115 billion.

      Savings and Loans crisis:

      http://en.wikipedia.org/wiki/S...risis

      $160 billion in the early 1990s. Adjusting for inflation, that's almost $220 billion.




      Modified by adoniram7 at 8:19 AM 1-15-2008

      "None of you understand. I'm not locked up in here with you. You're locked up in here with me."

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      01-15-2008 01:16 PM #135
      Another correction day today. someone said 12.5k was the floor? it wont be much of a support when the market see more bad news that are due.


    31. 01-15-2008 01:32 PM #136
      Quote, originally posted by marzen »
      Another correction day today. someone said 12.5k was the floor? it wont be much of a support when the market see more bad news that are due.

      It is not a science, but it is not the free-fall market failure you seem to be hoping for. The next two weeks will determine alot of the next few years. Two more major banks are reporting tomorrow and predictions are rough. That said, the market has generally been down knowing the predictions will be ugly, so who knows.

      Like they say, beat the predictions by a dollar and you are a hero, under by a dollar and shoot yourself.


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      01-15-2008 01:54 PM #137
      By the way, I think $82 bil in aggregate is conservative. That figure is just the bulge bracket banks no? Plenty of other institutions have been writing down their portfolios... it just doenst make as many headlines if it's less than a few billion.

      The retail data is the really eye opening news released today. That had to make Bernanke pretty nervous. The US consumer is starting to strain. Look for GDP to be pretty weak in coming quarters.

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      01-15-2008 02:10 PM #138
      Quote, originally posted by LA Times »
      Home sales, prices are down sharply

      Los Angeles Times Staff Writer
      10:20 AM PST, January 15, 2008

      Sales and prices of houses and condominiums in Southern California plummeted in December, a real estate information service reported today.

      The median price in December was $425,000, down 16% from the market peak of $505,000 set last year, according to La Jolla-based DataQuick Information Systems.

      The number of homes sold in December was down 45% from a year ago -- to a level that DataQuick called "by far the lowest" since the firm began its data analysis in 1988.

      The total of 13,240 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties was 24% below the previous record-low December sales count in 1990.

      "It looks like anybody who can is waiting this thing out," DataQuick President Marshall Prentice said.

      Still going...


    34. 01-15-2008 02:20 PM #139
      Quote, originally posted by Mister MK4 »

      Still going...

      Yes it is. For those people who have been conservative with their money in future looks bright for thsoe of us who want to buy a home. I'm seeing homes that sold for over $700k less than two years ago in the low to mid $500k range.


    35. 01-15-2008 08:51 PM #140
      I saw a house for sale in claremont today, from the outside it looked kinda shaby but the inside was nice, 5 bedroom 2 bath 2,200 sqft
      10,000 sqft lot in upper claremont in a really nice area, 559,000
      man thats a big drop from what that house would have been going for a year ago.

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