Hedge Funds Calling it Quits?

Question

Saw this video today - what do you guys think?

Hedge Funds Dump Housing: FoxBusiness.com

Tevis Verrett · Answer

Although Samantha M. you might disagree with me on Harry Dent, I appreciate you more than you know.

We all need to have an intelligent conversation about the prognostications of our industry. The crash is coming, whether sooner or later, what goes up, will eventually come down.

My beloved sister, Karen Margrave brings maad local intel in her community.

We, as a collective community of wise investors, can spank any national soothsayer or guru.

. . . and by this amazing community, we are able to see the changing tide of the market by a rash of small local changes, and even more importantly, reposition quickly to take advantage.

THAT is the most cherished MASTERMIND of N. Hill!

Tevis

Jimmy Hong · Answer

Well said, this really puts the hedge fund impact in perspective.

Sam B. · Answer

It's an inverse pump & dump...fear news, price drop, HF acquire more at a better entry price.

I can't speak for appreciation seekers but as Tevis Verrett mentioned, income producing property is a solid hedge.

Meanwhile, we'll ride the wave.  HF, talking heads, fear mongers drive prices down, we accumulate with them at a better price.

For incoming producing property; values go up, good for us, nice bonus.  Values drop, people lose homes, the market flees to rentals, good for us.  Respect your leverage and pick good entry prices.

My .02

Samantha M. · Answer

Tevis Verrett
"http://www.harrydent.com/

The stunned silence and mouth gapped open of us audience members was telling."

Another fear mongering individual looking to push product, not surprised and I would take this information with a HUGE grain of salt. DOW at 3,000? Bogus.

Remember those who were fear mongering that HEDGE FUNDS would run all the mom and pop shops out of business in real estate? They had something to sell too the "secret to surviving hedgefunds" or "working with hedgefunds". Now look where we are. The hedgefunds are losing their shirt and bowing out. The fear mongerers were wrong once again.

I actually read a book where Dent made a claim that the DOW will go over 20,000 in the near future (that was several years ago). Like someone else said in the book review, after enough guessing maybe eventually he will get it right.

Eric Tait · Answer

We will have another large opportunity to purchase these assets at a steep discount, this is a local game where local knowledge is the key. Hedge Funds do not like to get their hands dirty, they are not business operators they are skimmers and traders. We will have another good wave from Hedge Funds exiting, the HARP/HAMP failures, and the shadow inventory. 
I would say to everyone keep their powder dry.

Matt Devincenzo · Answer

I like how in this case the REPORTER is the one saying, "hey this didn't work the way you guys thought huh" and the consultant is the one saying "we need to be making an appreciation play...until things go whacky again then get out before we get caught"

Almost seems like she understands the possible implications better than the consultant does haha.

I also like his mention of the sub-prime issue that will come up again since those guys are still out there. He acknowledged that they contributed to the last bubble and they will contribute again.

This is why I stick with the numbers that work and don't get caught by "what everyone else is doing"...guess we'll see how it plays out.

Robert Steele · Answer

@Jason Tinder My view is that house price appreciation is between 2-4% a year here in Dallas TX. Last year we saw 8-10%. So either prices go nowhere for a few years or they gravitate downwards once builder supply comes online. I don't know. What I do know is that Texas is still an affordable place to live with affordable housing and the possibility to make money from renting.

Jason Tinder · Answer

Robert Steele - What do you mean when you say that you expect prices to normalize in Texas? Do you feel that it's still under priced?

Tevis Verrett · Answer

Um no, Albert.  The Fed is printing money like a whore on holiday and we are at numerous iterations of quantitative easing that, as a stimulus, are not working and are horrible failures.

Not only us, the world banks in other countries are doing the same thing (stolen from Harry Dent's website):

+++++++++++++++++++++++++++++++++++++++++
To summarize, Harry is practically falling off his chair because there is finally another voice of reason backing up what he’s been saying for years. Finally, someone else – someone with some clout – gets it.

Austerity IS necessary.

In short, the Bank of International Settlements of Switzerland (BIS) 
statement warns central banks around the world that they must stop retarding economies with loose monetary policies. Instead, we must finally make the necessary reforms to our balance sheets… we must write down loans… we must do the hard work necessary to return to health.
This central bank of central banks says that the low interest rates and quantitative easing since 2008 has not been used well…
That if this craziness isn’t stopped now, any further action will simply compound the risks they’ve already created.
Quantitative easing should be for emergencies only. For when a tsunami hits or a major bank melts down.
It should NOT be used to cover up structural problems.
+++++++++++++++++++++++++++++++++++++++++++

As soon as Bernake said "tapering the QE" the market hemorrhaged last week.

Can you imagine what would happen to world economies if the world woke up from the hangover?

THAT right there will cause the meltdown.

Tevis

Karen Margrave · Answer

What hedge funds are doing in any given market is impossible to predict. Each local market is unique and the reasons for their investing in each is too. Orange County has an unemployment rate of 5%, and has natural beauty, recreational opportunities, universities, research facilities, high tech (Google) companies, cultural offerings, and PERFECT year round weather. People come from all over the world to live, work, and vacation here.

More than likely the market is never going to be lower than it is now, and the hedge funds buying here know that, and are putting their money behind that belief.

Every area that had high foreclosures meant there were as many people being pushed into the rental market. No matter what the local economy, people have to live someplace, therefore; buying houses and turning them into rentals makes sense.

On the other hand, holding huge numbers of houses creates a big burden in regards to management, maintenance, etc., and some of those hedge funds are beginning to realize it's just not feasible long term, and will off load their inventory.

I think the point, as always, is, KNOW your local market, or where you are investing your money, and don't worry about the hedge funds. At least that's how I see it.

Hedge Funds Calling it Quits?

Most Popular Reply