Investing

bdams19 · Post by **bdams19** » 01 Aug 2007 07:23

Anyone interested in the capital markets? I'd like to spark some discussion about what is going on in the financial world today, which is the weakening USD, rising inflation, and as of last week, a shitty market that everyone seems to be jumping off of the boat trying to sell. Does anyone do their own research?

Iron Clad Ben · Post by **Iron Clad Ben** » 01 Aug 2007 14:13

I don't really follow the market too much. I have some stuff in stocks and it's not doing so well. I have a little bit in mutual funds and that is pretty much just treading water above inflation right now.

Anyone can see though, real estate is a gold mine. Get your foot in that door if you can. Property is appreciating like crazy. In some areas more than others. I hear about people who bought their houses in the 80s and they have increased 8-10x in value. Absolutely nuts.

Scott · Post by **Scott** » 01 Aug 2007 16:23

Iron Clad Ben wrote:

Anyone can see though, real estate is a gold mine. Get your foot in that door if you can. Property is appreciating like crazy.

I'm not in the US but that's not the story being told by the financial press.
In fact the recent troubles in global equity markets have been attributed to problems in the the US housing market.

An article from Bloomberg stated that median house prices were down 2.2% in June and called the current situation "the worst housing slump in 16 years".

In regards to the USD, its value is determined by supply and demand. Importers sell USD to purchase foreign goods, since the US has a large trade deficit the supply of USD (importers selling) is greater then the damand (foreign importers buying).
This deficit can be offset by demand for USD for investment but with comparatively low interest rates and economic growth, the US has not been attractive enough.

Inflation is also determined by supply and demand. If the demand for goods increases without a corresponding increase in production then the price of goods will increase. The reason for rising inflation this time is that the economy is operating at nearly full capacity, ie can't produce any more goods while the availability of credit and rising asset prices has been encouraging increased spending.

The sharmarket troubles seen in recent weeks are a result of worries about the possibility of a falling US housing market and its effect on US and global economic growth.

bdams19 · Post by **bdams19** » 02 Aug 2007 06:28

I agree that real estate is certainly not the way to go if you have been reading about the housing market in the past few years (which has been steadily declining). People's properties are not appreciating in value in a market that has been over saturated and it's growth has been reversed. In fact, many real estate companies are reporting that they are in trouble and in danger of bankruptcy. Here is an except from the WSJ:

the wall street journal wrote:More poor housing data only underlined the mortgage worry. Sales of single-family homes dropped 6.6% to a seasonally adjusted annual rate of 834,000 units, the Commerce Department said. Inventories stayed about even, and the median price of a new home fell 2.2% to $237,900. The data failed to meet even low expectations.

Adding to the misery, home builders got hammered as three major players fell into the red in the recent quarter. Beazer Homes USA fell 8.7% after it swung to a loss of $123 million. D.R. Horton fell 1.8% after the company said it swung to a net loss for the period as it took land-related writedowns. Pulte Homes shares fell 3.1% after the company said it too swung to a net loss in the second quarter and that its revenue fell 40%. Also, WCI Communities tumbled 13% after it said there are no definitive proposals to buy it.

All stocks have been getting slammed recently, most notably the financial sector (with the market putting up the worst intraweek numbers in years) but putting it in prospective with the weeks leading up to the decline, it wasn't as bad as people make it seem although we might be looking at the start of a bear market.

It is my personal belief that oil is going to be above 100 a barrel if it can breakout to about 85 in the next year or two but I have no experience in trading commodities so I don't even know how it works. But if i could I would go long on oil.

Right now I have almost all of my liquid assets in equity, with about half in stocks and half in mutual funds in order to diversify during this garbage period in the market.

bdams19 · Post by **bdams19** » 03 Aug 2007 06:57

Good example of the housing market, check out stock ticker AHM, American Homes. Ouch.

Blue_turnip · Post by **Blue_turnip** » 04 Aug 2007 05:15

Your capitalist empire is crumbling. We will bury you.

Outsider · Post by **Outsider** » 04 Aug 2007 19:17

We will bury you.

Ya know, its funny, but I can't shake this feel like I've heard that somewhere before...

Blue_turnip · Post by **Blue_turnip** » 04 Aug 2007 20:48

If you were being sarcastic then excuse me, but if you were serious then I believe its what Nikita Kruschev said in like the 50's or 60's

HighDemonslayer · Post by **HighDemonslayer** » 05 Aug 2007 20:11

Real estate has drawbacks.

What are you going to do with it?

It is non- liquid, and annually taxed.

Thousands, or millions of people have borrowed themselves to the max, depending on property value gains that will not occur.

Foreclosures are at insane levels.

Lenders get stuck with many of these properties.

I heard a few days ago that the 10th largest mortgage or lending company just went belly up.

You should be very careful getting into real estate.

All the real pros have probably moved all the "smart" money into foreign stocks, metals, and critical U.S. infrastructure.

All of these things will retain value when the U.S. dollar finishes going belly up.

Why the US dollar is dying.... and why" real estate" stands on the precipice, is complicated and probably belongs in the discussion thread.

Blue turnip's Nicky quote describes some of it.

Id love to theorize why some of these downturns are intentionally created, maybe in another thread.

p.s.

Be very careful with real estate you dont intend to actual live in/at.....unless you set up a sweetheart deal with a connected politico or elite....... thats how the real money is made.

-hds

james_dean · Post by **james_dean** » 06 Aug 2007 05:10

The financial advisor at the bank branch I work at told me real estate was terrible and recounted a story about a friend that lost heaps of money by selling her investment property like, 3 years after she bought it. No, she lost money? really? wonder WHY?? this worried me...

aussie dollar is doing well