All Forum Posts by: Account Closed

This has a lot people in and out of the industry worried.

I don't know if we are at a bottom or not, no one does. There is no way to really tell if we are at the bottom, half way down or oscillating prior to an increase or further drop.

But, we are reaching an interesting point where buyers aren't willing to pay more and sellers aren't willing to take less. It is of course an unstable point but it gives an artificial point of view to many who should know better.

Rent demand is going up and as landlords can, they will raise rents to maximize their profits given the rising demand. Because of the tightening credit markets, rental demand will not decrease any time soon. What's more the anticipated increases are stronger in multifamily than in houses. This has happened before but usually they run close to parallel and often landlords holding houses are able to increase rents faster than apartment landlords. That is not the case now and will not be the case for the foreseeable future. Much of it has to do with the different demographics between apartment and house dwellers. But, that is for another discussion.

As I said, earlier, I don't know if we are the bottom in relation to the residential housing market. It sure doesn't feel like it and that is the reason I am holding onto my SFH through quads even though I'd "like" to sell but not at the prices the current market demands. There is no pressure for me to sell and they all have positive cash flows. However, I am not adding to those holdings. I am adding to my multifamily holdings - aggressively.

The lesson many in all markets have to learn over and over again is trying to call the bottom is foolish and dangerous, you will almost certainly call it wrong. I can guarantee you this, two years from now, I will be able to tell you to the day when the bottom happened. I can also guarantee that by buying based on cash flows anyone buying now will do fine. :cool:

The asset markets are not going to zero. Sheeeesh!

The number of bank failures this year is very low. In the early 1990's banks failed by the hundreds per year. So far, this year, you can count the number of failures using both hands. That is less than ten for those not paying attention.

As for the stock market in general, you can't really compare the diversification in the asset markets of today with the lack of it in the 1920's leading up to the crash in 1929.

What is "happening" in the markets is more hype than reality. The credit default swap market is the tail wagging this dog at the moment.

It depends on what you are doing.

You obviously have something in mind but since I am not clairvoyant I have no way of knowing what you are going to do with whichever one you ultimately choose.

WaMu may fail, the stars are certainly aligning against them. But, even though their bonds have been reduced to junk, and they are in pretty famous company there, their balance sheet does not point to imminent failure. We will see.

There are no metrics you can use about the Great Depression that compare to what we are seeing today. Unemployment is over 6% today, but it was over 25% then. Homeowners in default is about 7% of all households, it was WAY over 50% then. The stock market fell over 50% over night, now that is a crash! The closest we have come to that since then was in 1987 when it dropped 22% in one day and later analysis showed it was a combination of programmed trading and changes in tax policy. Now there are automatic stops in the programmed trading and as for tax policy, well, until the fair tax gets here it will continue to have unintended consequences.

I am being sarcastic but that is really my point. The financial world is not coming to an end.

Yeah, unfortunately, it is very hard to figure out what is really vapor paper and what is really real.

For example, part of the Lehman Brothers problem was the rating agencies insisting on a 30% write down on the commercial paper they carried. But, the actual losses due to current and projected write-offs is only 1%. But, because of the convoluted way these deals were put together there is no real way to figure out which figure is closer to the "truth".

The media hype is really funny now. They focus on the 500 point drop yesterday, yet fail to point out it was a 4% drop. Compare that to the 1987 Black Monday 508 point drop. That was 22% of the market. In historical terms, yesterday was little more than a blip on the screen.

Hype, and not rational analysis is driving this stuff. Fortunately, for real investors this creates opportunities.

I agree, Ray Kroc until Walmart came along.

However, I did put exactly $138.79 into the transaction for my very first rental house purchase in 1984. Since that time, I have not taken one penny from my personal funds for any other real estate investment deal. Once it moves from the real estate investing side to the personal side, it does not go back. Now, I have not taken that many transfers into personal funds because I did not try to live off my investments. I wanted them to continue to grow and compound and so far that has proven to be a wise plan.

The other businesses I started were bootstrapped with my personal funds and loans from the investing company. But, that as they say, is another story.

Only part of Lehman is toast. The broker/dealer side is still operational and being shopped.

The pattern used to liquidate Lehman is one you will see repeated if any of the other "too big to fail" guys like Citi, Chase or Barclays do fail.

However, all three of those have an advantage Lehman didn't have. Lehman did not have any retail banking operations to help generate cash.

Yes it will.