Bullitt's Account Talk

[coolhand]

That's too bad about your house Coolhand. My city is so depressed it will probably take a nationwide 50% drop to have any adverse effect here. That's not to say it won't happen.

I've been making mortgage payments for 6.5 years now. At the peak of the market I may have been able to fetch about $360K for my house. I paid about $225K. Last valuation I got yesterday it fell 7.5% to $189K. I didn't expect another drop that big. And yet they come.

Fortunately, I'm not looking to sell right now, but this isn't my retirement home either. I may be lucky to break even after 10 or 12 years if it keeps up like this.

Did you read that COMSTOCK report in my account thread? Good read.

 

[Tsunami]

Coolhand,

As long as you're not hoping to retire in the next 4 years or so, and you can maintain employment, you'll be fine once inflation finally does pick up again. Unfortunately, and I think you guys agree, I think the next round of asset defaltion is going to be as bad or worse than the last round, and home prices will suffer even more, even in areas reasonably priced. Whenever I need a dose of real estate reality I peruse the headlines over at patrick.net http://patrick.net/housing/crash.html I escaped California in 2004 (lucky timing) and also have owned our home (in the demographically favored city of Albuquerque) for over 6 years now, and per Zillow.com it's still just above what we paid for it, but I have no dilusions of it staying that way in the next fall.

While most of us on this board are paying attention and will thus get through this decade relatively unscathed, what worries me more is how this will affect the many millions of already retired or about to retire folks. Using my own parents as an example, they're in their mid-70's, retired for 15 years.... my dad did so well in the 80's and 90's, including a big wad of his 401K in Fidelity Magellen, that they have plenty for their golden years. But then things happen. I just returned from an emergency trip home, my dad, who used a total of one day of sick leave in a 40 year career and never had surgery in his life, was diagnosed with a brain tumor last week (no need for a flood of emails please, his 8-hour surgery last week went well and he's recovering well considering his age, thanks to the miracles of modern medicine... the 6 cm tumor was benign, and he's starting to talk and almost walk again today (he wanted to anyway, he threatened to throw his diaper at the nurse and hit my mom with an imaginary pipe wrench, but we're told those halucinations will go away soon) and I was forced to dig into their finances while there. He'd never had a late bill in his life but just missed a couple, the taxes needed to get done, etc. I also learned that he recently turned over all of their savings, both IRA's and otherwise, to Fidelity to manage for them. Naturally Fidelity has and will continue to have a large portion of their accounts in their stock funds. So when the crisis hits, there goes their accounts, perhaps 60% or more of the stock portion down the drain. I'm not worried for my parents, they get by on just social security and a pension these days, but I am worried for the tens of millions of others out there that pay no attention to their life savings and will get whipsawed into poverty by first deflation of stocks/real estate, then possibly very high inflation and heaven forbid hyperinflation, in which case we're all pretty much screwed.

Anyway, I agree with all the fundamental issues you guys point out, but I'm just hoping to ride the final up waves ahead before the masses realize there's no hope of escaping the mess we're in later this year. I don't think we're there quite yet. I'll pull in my sails and bail out in an instant though if I see a reason to think the top is sooner.

 

[Birchtree]

You know this bull could simply be discounting the future out as much as 18 months from now - so if we are indeed in a new secular bull market I think this bull will run for at least 10 years. Simply said, only traders can lose money in a secular bull market.

 

[coolhand]

You know this bull could simply be discounting the future out as much as 18 months from now - so if we are indeed in a new secular bull market I think this bull will run for at least 10 years. Simply said, only traders can lose money in a secular bull market.

There's a sucker born every minute. - P.T. Barnum

 

[PessOptimist]

I feel for you on the house Coolhand. Probably should be posting this on your thread. I apologize for that Bullitt.

I just got the valuation on my house, about 77% of what I paid to have it built in 98. I had a chance to move my job near the real estate peak here and could have taken a 40% profit. My wife, however, did not feel the amenities of Hinton, IA would match those available in the Phoenix metro area. Fortunately I have been able to pay down the mortgage to less than 50% of the new valuation.

I am not blind to all the fundamental issues you point out and do not believe that "everything is A-OK now". I am 57 and have no delusions about retiring any time before 66. If then.

My "yeah..." comment was flippant and meant to be so. I feel fortunate to have yourself, Bullitt, Birchtree and many others diverse opinion's on the board. I can understand your frustrations with each other occasionally.

BTW, that six pack of Moosehead got consumed last night and for a guy approaching 60 I felt pretty good this morning. I wouldn't recommend making a habit of it.

 

[coolhand]

I feel for you on the house Coolhand. Probably should be posting this on your thread. I apologize for that Bullitt.

I just got the valuation on my house, about 77% of what I paid to have it built in 98. I had a chance to move my job near the real estate peak here and could have taken a 40% profit. My wife, however, did not feel the amenities of Hinton, IA would match those available in the Phoenix metro area. Fortunately I have been able to pay down the mortgage to less than 50% of the new valuation.

I am not blind to all the fundamental issues you point out and do not believe that "everything is A-OK now". I am 57 and have no delusions about retiring any time before 66. If then.

My "yeah..." comment was flippant and meant to be so. I feel fortunate to have yourself, Bullitt, Birchtree and many others diverse opinion's on the board. I can understand your frustrations with each other occasionally.

BTW, that six pack of Moosehead got consumed last night and for a guy approaching 60 I felt pretty good this morning. I wouldn't recommend making a habit of it.

My house situation is nothing compared to some of my co-workers who bought in at much higher levels. They can't walk away as easily as many since they are Gov employees. Some are well over $100K under. I'm 52 and have time on my side yet, but that doesn't mean I'm comfortable that things will work themselves out favorably even in the next 5 years. I just don't see that. We have many more obstacles to get past yet, and unless the pols stop the record deficit spending, we're done. That assumes we haven't already fallen over the cliff and just waiting to hit the ground now.

I wouldn't poke BT in the eyes every once in while if he'd at least acknowledge the obvious sometimes. But he's one-dimensional. And that'll make you right about 50% of the time in the market.

 

[Birchtree]

We are involved with the most hated bull market in history and that's perfect from my contrarian perspective. Let them eat more bonds for safety - but when the tide changes there will only be one place to invest. The small speculator is still very bearish and that's classic. Jeremy Grantham a biggy bear says: "U.S. stocks look to be one of the better asset classes in the world today, particularly blue-chip issues that have lagged small and mid sized stocks for a decade. High-quality U.S. stocks probably will be one of the best asset classes in the world in the next seven years, returning nearly 7% a year after inflation." And that comes from a permabear.

 

[Bullitt]

Unfortunately the master planners managed to fool us into believing a house is an investment in order to prop up the economy instead of just using a house as.... a house.

Tsunami, you're right. Most importantly, I also believe that the ones frequenting this board live below their means and have healthy financial lifestyles even if they were unfortunate enough to get the rug pulled out in the housing market.

Optimist, It's a Saturday, what's on tap tonight?

Birch, I have no idea how you can come up with new 3 to 4 sentence response about the bull market in every post you put out. It's almost like you should make a daily calender with 365 separate pages that I can put by my bed. That way, first thing in the morning I could tear off a page for every day the sun comes up reminding me of the power of the Bull. Should you ever pursue an endeavor of those sorts, keep me in mind, I'd like the first autographed copy.

It's all good fellas. No hate from me whether you're bullish or bearish; for, there will always be bulls and bears, and that's what makes a market.

 

[PessOptimist]

Friday's are my Saturday. AWS M-Th 6-4:30. Abstinance today, cracked open a nattie lite this evening. It's getting warm so looks like moderation and alcohol abuse (pouring out a nearly full beer) is the MO for tonight. I'm not a 20 something single Airman anymore.:laugh:

 

[Bullitt]

Last dip to buy was early February and I missed it, but I'm thinking we get a top any day now. This break out has been nothing but a low volume head fake and has convinced many that it's different this time because of government stimulus. The rally off the Feb lows reminds me of an NCAA Cinderella story team where the announcers know the team doesn't belong there, but they sound like a broken record anyway and repeat how "They worked hard all season long" to get here.

It is amazing how the headlines talk of how 'cheap' stocks are and how awash with cash companies are compared to a year ago. I remember in March 2009 how it was just the opposite in that the market was going to continue to go down for eternity.

We are setting up for a massive heartbreak here. How can there be a recovery when nobody is working? Where is the money coming from that is allegedly leading the recovery if nobody is working anymore? And while I'm at it, another question that I have no explanation for is, "How does everybody in LA afford an iPhone?" There are kids riding around on skateboards all day on their iPhones. I can't figure it out for the life of me.

Extremes can go in either direction for a time, but eventually must correct. OEX traders are calling for a turn here after the 10 day hit 1 and the Equity put/call ratio 10 day hit a reading below .55. Couple this with all the calls for a new bull market, insanely low VIX with countries at risk of debt default, and low volume since February and we could be in for some turbulence. Much of this buying was most likely tax return money flooding into stocks (along with portfolio rebalancing out of bonds) in Feb-March. To me it already appears that the ammunition is running low.

 

[Birchtree]

Don't forget the margin players that get to pyramid gains on top of gains - with interest rates destined to remain low now is the time to get into debt. Margin is still tax deductable and will become even more valuable to off set new taxes on dividend income. I've been fortunate to make 802 individual stock buys since last June 26th and I'm still going strong to do more - the deeper the hole the more the win with leverage. So money is not a problem for this bull market - we'll drain the shorts and wait for mom and pop to return with their bond fund money. The fear out there now is one of missing the boat and my friend that is classic.

 

[Bullitt]

I was hoping for a bit more of a creative reply Birch. Amazing how 3 months ago the markets would have sold off on the technical move by the dollar but now it doesn't faze it one bit. The dollar made a technical move similar to that of Gold when it went on it's frenzy over $1,000 last year; does that mean the dollar has further to run?

What do I know. Maybe the VIX and dollar don't mean anything because it's different this time. . Or, maybe the fact that the only big volume days are on days when the market is down doesn't mean anything either. Hey, while the music is playing you might as well be up there dancing. Starbucks announced it's first dividend ever today and I think I woke up to some good Salsa music on the radio this morning. The dance floor looks a little too packed for me though.

BTW, telling people to invest on margin in March 2009 (which I know you did and I think is flat out awesome) was good advice. Acting on that advice right now is reckless.

 

[Birchtree]

By the way I don't encourage anyone to invest on margin - that's simply my strategy to get rich. And if we are in the early cycle of a secular bull market the top is years away. Now with a stronger dollar is the time to ramp up the debt with an interest cost that remains tax deductable and an interest cost that is moderate and will stay that way. I've waited a long time to exercise this strategy and I plan to make several million dollars before it's completed. Reckless - nah, just aggressive while the timing is right. Today was a non event in the equity market but the bond market may have reached a pivot and the money of over $500 billion is starting to flow - I want to bathe in those bond dollars.

 

[Birchtree]

Just trying to spread a little manure and sunshine.

"A brief historical review of the major turns in the S&P 00 Index over the last 10 years seems to clearly demonstrate that the snapshot afforded by mainstream economic data may tend to give a completely false picture of what might lie ahead for stocks. Our review below, rather, suggests that such data failed miserably to give any inkling of huge moves ahead in the stock market which turned out just the opposite direction as might have been predicted."

http://safehaven.com/article-16282.htm

 

[Bullitt]

IFT for tomorrow. Basically all I did was put 30% into the F Fund. Yeah, yeah I know, I'm not a fan of F either but they are bonds and the correction is either here or on the brink. Those watching merely the S&P, Dow or AD Line are missing the big picture. This market is a house of cards ready to at least correct. Once the margin calls come on a 10% drop, watch your six. The reason I say 'at least correct' is because JPM or GS are liable to take out a nice loan at .25% and gas the futures on any given Monday with their computer traders to give one more good short squeeze.

The fact that anyone has the audacity to call GM a success is proof that euphoria has set in. I guarantee financial history books focusing on manias, panics, crowds and madness will be written about this time period in the near future. The wheels grind slow, but they grind with GS having been exposed for the crooks that they are. The problem is, GS is like that boy in that Twilight Zone episode that turns you into a cartoon if he catches you thinking unhappy thoughts. GS has got the power, but the masses have had it. Mainstream media is finally coming to the realization that pension funds are unfunded and that employment is at the same level as it was in 2000, yet those seeking work as increased. Housing and finance jobs have been forever decimated and forever removed from job pool. The only recovery has been bank balance sheets with addition by subtraction (downsizing) and leverage proprietary trading desks. What does that do for main street? Nothing, yet I still have no idea how so many 20 somethings can afford an iPhone with a $100 a month plan or an iPad so that they can label things that they 'Like' on Facebook.

China will save us though right? Give me a break. Talk about a house of cards.... Jeeez. North Korea wipes out 50 some sailors and their media squashes it. Same deal in China where we have no idea what is going on right now. It's a greater fools game. Buy high in hopes of selling higher, yet I'm sure Jimmy Rogers is still trying to teach his daughter Mandarin. I wouldn't want to fighting for the last chopper out of Saigon this time around. Chinese futures open just in time for the Shanghai to get hammered down by 4.7%. The divergences are abound and the market has been talking to us since January, do the right thing and turn off the Comedy Network of Boobs and Cramer (CNBC).

I'm keeping 30% invested in equities because there still is a good chance for a May-June low with the bubble blowoff in August according to some cyles. Again, with that much credit floating, the boys are liable to blow out the first group of bear fund buyers. Personal accounts, I am a fan of deflation, and have walked the talk with purchases of PRULX whenever somebody talks about bonds collapsing with yields going above 4%.

40G, 30F, 15C, 8S, 7I

 

[Boghie]

To some extent I agree with you...

However, there is a very ugly thing happening. And, it is happening rather weirdly.

The boomers are being shifted out of the job market. And, they are broke. And, now they have to count on GenXers to fund their ‘retirement’.

That ain’t going to happen.

I don’t know what will, but I do know GenXers are independent and really don’t place a whole lotta faith in gubmint. And, they firmly believe Social Security won’t be there when they retire. They don’t want or trust gubmint benefits. So, why pay for folks who didn’t save for their own retirement. Example: Tea Parties.

I don’t know what will happen, but it probably won’t be pretty.

 

[Bullitt]

Made an IFT (kind of) on Friday before the open. Kept my allocations the same but it was a good time to rebalance, aka, sell the winners to buy losers. Since all future contributions go to the G Fund, the G allocation does grow a bit when the market falls. My F Fund was up 2% from my target and my CSI funds were off by 1-2% as well. Back on track now and I figure if I've got two IFT's, I'll use them.

Not that it's a sure fire winner by any means, but this is a tactic used by pension and endowment funds to some extent; on good down or up days, use the strength or weakness to rebalance accordingly. Hence, many times you'll see big up volume in a stock like XOM on a down day or selling volume in BAC on an up day as big money is rebalancing their allocations. Though I still have exposure to equities, I believe we are in August 2007 right now preparing for the double top before the big fall.

This market is completely broken. 7-9 of the last 17 days (depending on how you look at it) have been distribution days on huge volume- don't be fooled here. The entire WORLD is watching the AD Line along with the 200 DMA, and two weeks ago showed us what happens when everybody is watching the same technical analysis in unison.

A dangerous trend I see setting up here are the amount of people looking for a quick 2% bounce. Save that for algorithmic traders who have access to bids/ask prices that you can't get on Scottrade. But for those that can't resist the 'dead cat bounce', I have a better idea. Go to a casino, wait until a dealer wins a few hands in a row on the blackjack table, then join with 50% of your retirement money. At least that way you'll be able to get a free Spritzer or two while you sweat things out.

 

[nasa1974]

You where busy posting today. Have a great weekend and thanks for the information.

 

[Birchtree]

For a Dow Theory sell signal the Dow must close below10,012 - it had an intraday low of 9918 Friday but that doesn't count. The Transports must close below3813.91 and the Friday intraday low was 4077. No margin calls yet. We go much higher from here whether we base or not - could be a very fast big V back to 11,205. I prefer the slow route so I can catch a bunch of dividend reinvestments now that a positive blessing has been offered. I'm actually building my base for income - the capital gains will come from much higher levels.

From TWSJ: "If there's a silver lining, it's that the market's moves - including lower oil prices and lower yields on government bonds, which push down mortgage rates - could end up helping the U.S. economy. In addition, the uncertainty rippling out from Europe is pushing back expectations for an interest rate increase from the Federal Reserve. The worse things get in the markets, the more it takes interest rate hikes off the table."

The message from the markets is very clear - if one can't handle the pain then don't play in the game. Mom and pop have been scared off for another year - just think of the destruction that could have been created if they were back in the market. So far the pain has been tolerable to the tune of a $441K devaluation as a result of this 10-12% correction but the asset base remains intact. So hit me with your best shot - fire away.

 

[Bullitt]

Birch, the only real 'news' you had in that message was that you haven't had any margin calls. I am surprised, but I guess when you live by the gun, you die by the gun.

So what, low oil prices could be construed as less demand or inventory build from China (Super Growth Power of the Galaxy). Mortgage rates have been low and aren't making a difference anyway. Now that the fed is done buying back toxic waste and the first time buyer incentive is gone, who's going to buy? I know, everything is already factored into the market- so is the market telling us to sell out? Deflation is the biggest worry right now and it's happening. All the King's horses and men still can't create wealth out of thin air aka, inflate.

I'm so sick and tired of hearing that mom and pop are scared. Look, mom and pop have been screwed twice in 10 years and right now they're more than happy to settle for a 4% yield during the initial stages of a multi year deflationary trend. Up days equal low volume and the bots and algos play buy/sell/buy/sell 5,000 times a half second with Citigroup. Down days are people getting the hell out- including the algo traders.

THE bottom line. Chinese equities have entered a bear market. This entire scherade has been predicted on the belief the China's voracious demand will stimulate growth all the way from Earth to Pluto. We can't do it without China; and China is not doing it.