I hope one day it can come back to the price I paid. But by then, Ken will claim: "wow, our fund has a thrilling 90% growth in xxx period of time".
How ridiculous is it?
"rivvr, interest rates over the past few years... ever since 9/11, have still been at historic lows,..."
I know Ryan, though i think you should say historic for us. They were pretty low back in the 50's and before, not until the 60's i think did they get above 6%. That's what i remember my boss telling me back then, never researched it myself.
It didn't have to be a bubble. The bubble was not greenspan's fault. It simply did that reversion to the mean people talk about, catching the average home appreciation up fully from the housing price recession of the early 90's. I had this argument with some economics prof who around 2005 had advertised online for ideas on whether this was a bubble or not. He never did accept my argument though. He was wrong for another couple of years, until we truly were in a bubble. His vengeance is being wreaked now.
Hey, i can make believe i was right and he was wrong for at least a little while, no? I still think i was right, housing prices played full catch up to the long term mean then. No longer, not since we went alt-a and subprime heavy to keep it going. I don't care who's to blame, i want the lesson learned for next time.
The "bubble," whether it was or not through 2005, did not have to burst. Drawing the speculators, the flippers, in, 25% or more of the housing market in 2006 as i recall, did not have to happen except someone got very greedy and wrote those mortgages. People blame the less advantaged for defaulting. They totally ignore the speculators. How much do they contribute to defaults? I know of two of them myself, and i don't get around much here. be well
rivvr, interest rates over the past few years... ever since 9/11, have still been at historic lows, even after his interest rate increases. This all stems from a housing bubble. Unscrupulous lending and unscrupulous real estate investing have been well documented. The good news, is, I think the majority of the fall is over in real estate prices. I look at the chart of Phoenix, Nevada, and certain California house prices, and they're back to early 2004 levels, 2004 being the banner, peak year. Miami, on the other hand, is still near all time highs. This was a bubble pop that was going to happen regardless of Bernanke. Remember GDP and business was still fine up until the subprime meltdown. This financial situation stems from a housing bubble burst, not from a slowdown in general business. And remember higher interest rates help increase the value of the dollar. I see nothing wrong with what Bernanke did. I think he is doing a good job for the most part. The Bush administration and their thought that printing money is a good idea??? I disagree on that one. Another thing to remember, the economy has been sluggish ever since the tech bubble crash. The super low interest rates may have helped prevent a depression similar to the last time we came off such an economic expansion and stock market rise. It may have softened the blow but the excess still seems to be working out of the system... Now, it's the taxpayer paying for it, and propping it up. Bad ida.
The solution is to do automatic dollar cost averaging. That is the only way to take advantage of these lows. It is the ONLY way to buy low and sell high. It works.. I have bought stock that did nothing but bounce around for a few years until I finally sold, but I mad money on it, because I dollar cost averaged. It is important to remember we will eventually get out of this situation, but it is also important to remember to have ample cash on hand in case of unemployment. NO MARGIN!!! People who used margin are probably already wiped out anyways. You must dollar cost average but remember, the free fall may not be over yet. If you simply dollar cost average, you won't have to figure out when the bottom is, which is next to impossible. Let Heebner do the stock picking and let dollar cost averaging get you shares at the lowest possible price. I did think Heebner stayed in commodities too long, I can't disagree with his financial buying because he seems to know which ones were destined to fail and I would hope he will know which ones will survive. Everybody makes mistakes, and I left my money in this fund because I thought he would know to get out of commodities when oil dropped 5 points in one day when it was at 140 per barrel. He didn't. Oh well, the losses are there forever so let's look toward the future. Stocks are getting cheap now, people are losing their heads, and if you can buy shares without having to sell because of job loss or whatever, you will come out ahead, eventually.
"one strong dramatic rate cut a while back might have done the trick."
Imo he lost it all when he repeated greenspan's mistake of raising too many times, rather than wait for the effect of the rate increases he'd already done. For me that set off the whole chain of events, starting with increasing mortgage payments on those arms to significantly higher, and unaffordable, levels.
Not his fault on the securitization fluff of course, but those last couple of rate increases, not necessary to slow anything down since the the bottom of the barrel of housing was probably about already reached. Who was next to sell to, some chinese peasant in canton whom you'd have to pay passage for on a junk to get him over here to sign the papers? Or the residents of the local mental hospital? Imo, he got spooked and there took the fast route while now he took the slow route. Devastatingly wrong in each direction.
fed is having a ton of problems with timing anything. there actions, if taken at the right time, could have at least instilled confidence in the system - at the very least, the meltdown would have been postponed a bit. one of the reasons greenspan helped turned the markets around after 9-11 was his immediate drastic rate cut. if it were bernanke and paulson, they probably would have dawdled forever and who knows what would have happened. this isn't to say that i'm a fan of greenspan, but bernanke doesn't too the simple things right like making sure he doesn't spook the markets through his words. the problem with this administration is there is no efficiency. one strong dramatic rate cut a while back might have done the trick. instead, we're just throwing things up like a juggler now and hoping they land.
Well I am just trying to make some sense out of all of this nonsense.
I know that Ken will make this up, and he could very well do it by the end of next year. But one issue I see is the tax consequences for 2008 and 2009. I will elaborate more on that in a post tomorrow afternoon. I have an exam tomorrow that I need to finish up studying for. Good night all.
"And there is the issue of possible large redemptions that occurred and probably still are happening even more now which is not helping matters."
Caught pisani on that today, though it was off the hedge funds, not fx. Lotsa forced selling by them lately.
"If it wasn't for his ill timing of getting out of the commodities and getting into the financials too quickly, I bet our losses peak to close today would be half of what it is."
Run a chart and see where commodities started doing worse than financials. You might be off base with that and it could be the other way around, but i never thought to look myself. My top of the head impression is commods had come down in % terms at least as much as financials for the period you note, i'd guess mid july to the 9-30 listing day.
Remember, he did still have his financial shorts at that time so he certainly wasn't keen on the whole financial sector, just those he thought the strongest. When we find out what he thought were the strongest, off the 9-30 listing, maybe we can get a better impression if you're on track or off. 2 months from now though, long time to wait and keep from making a final judgment. Plus i still say he interpreted the climate right off the feds' move, only got stabbed in the back, as did we all, when the feds didn't follow up until it was too late.
I was waiting for an uptick to sell a chunk of my holdings but hasn't happened
this guy was supposed to be ahead of the curve
but he is behind it and getting smacked in the head by the ball
CASH is a position. let him buy an S&P index fund and we won't lose as much
Put down the bottle