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House Price Crash Forum


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Everything posted by carseller

  1. I predict that gold will not go below 940 dollar in 2009. It have broken out.
  2. http://www.bloggingstocks.com/2009/02/18/c...-sells-america/ It really seems like he is giving up, and going for fixed income. I think it reminds me of something Robert Babson said. http://en.wikipedia.org/wiki/Roger_Babson He wrote that he had not seen a crash, where there was not some Rich man trying to prop up the markets. Sad.
  3. Looks like Alan Greenspan is pregnant again: "Is China Pulling an Alan Greenspan? " http://seekingalpha.com/article/120715-is-...-alan-greenspan Somehow I am sure we would be out of the problems now if Alan Greenspan still had been at the Federal Reserve.
  4. I have a Russian radio station I like to listen to because of the music. I'll just get the impression, from everything to the the news, the tone of their voice, everything, that their still is in a bull market, even I don't understand what they are saying. The tone of their voice reminds me of news transmissions, in my home country from the 1950-s, after the war. These kind of psychological judgment probably sounds a little insane, but I think there is something to it. They still have the future ahead of them. In our countries, it's all about the complete downfall of the baby boomer generation. I blame this generation on most of the problems we have today, and I think the right thing had been to cut them off, in the sense that all pensions had went away, that we had a big hyperinflation, and could start over again. I think hyperinflation would be the best course ahead. The promises to the baby boomers are made from the ruling boomers, and must be fullfilled by the next generations (it's similar to the War debt the weimar republic had after WW1). When this generation comes in charge, it's clear that the promises will not be kept.Many of the BRIC countries have the most important thing, human capital, factories, resources, and even skills in things that are productive, and most important they are not bogged down in debt and promises they can't keep. Bank shares in those countries have behaved similar to the best blue ship stocks of the west in this downturn. I read an article about a company in china, that made PC keyboards, the workers made around 1/3 dollar a day I think, and had it like if they lived in a prison. The big "companies", just blamed a company in Taiwan, that was delivering parts for them. I know about that. You have two big companies in Taiwan, that the big brand names put up against each other to get as low price as possible. Dell, HP, and the others, don't make or produce anything. It's just platform companies. All the factories, everything that's worth anything is in the "poor" countries. Think if the treasury market was to "blow" leaving china holding the bag, and china responded by confiscating all foreign property in China. The problems in the west is the burden of to much debt, and terrible demographics because of the aging boomers that's basically more of a burden than a resource. I think China are less risky than Russia. Russia need the oil income, so if Russia are going to avoid a default, the other emerging countries needs to turn, so oil turns, before they default, however, some of the russian companies are having incomes in dollar and debt in ruble, so it's not that big of a problem.
  5. I admit that I don't know India. I really don't, other that inflation is slowing there to, and their growth will be lower. Lower growth, and lower inflation, and lower interest rates is good for stocks, when interest rates are coming from a relatively high base, as easy credit if the market will take it, coupled with low inflation and low growth (supports low inflation), is perfect for stocks, as lower borrowing costs and lower inflation increase corporate profits, and also increase the relative value of stocks, as seen in the 1980-s or 1920-s. I think it's similar in India to the dow jones in 1988. Warren Buffet bought railroad and oil, remember he is a genius. I don't think India, look that different. It's "on trend" with these things, the ftse is certainly is not. http://finance.yahoo.com/echarts?s=^BSESN#...ource=undefined Meaning that you will have a further boom extending from what might seem like a high level.Another country that's very promising is the Philippines. Thailand to as stock's there are very cheap. The reason as mentioned, is that especially in Philippines, you have a slowdown in inflation, a property market that can react very well to lower interest rates, and most of all lot of room to lower interest rates. A stock like Apple have benefited as it's a high end item for consumers in emerging markets in the sense that they have a different relationship to brand names than those in the more developed word, typically the growth path apple have been on, since 2002, can last for decades, I think apple have a much stronger brand in Asia than in the West. "MANILA (Xinhua) -- Philippine economy will remain resilient as steady overseas remittances, rising revenues from the services sector and increased government spending on infrastructures will cushion the impact of the global economic crisis, economists and government officials said." Maybe they are going to blow up debt, and phony service sector economy as we did in the 80-90s If we should feel that we have borrowed enough, and that cause a slowdown in inflation that perhaps turn to deflation, it's going to benefit those countries that have consumers that are happy to explore credit cards, rack up consumer credit, and take advantage of the slowdown in inflation our lack of spending cause....This again, will give very cheap credit, 0 % interest rates, similar to japan, for us, with a potential for carry trades directed toward these emerging economies, if quantitative easing were to be started. Note that in China, the stimuli package is not borrowed in the way the US does as a 800 billion cash package. Just a small portion of the stimuli package maybe 20 %, is actually cash, as in selling treasuries, the rest is extended upon that base, through borrowing. The US don't have banks, that are willing to loan, in that way. Chinese companies have much more potential than any other, similar to japan in the eighties, to create inflated earnings through investing activities. To the investor it looks as the company are making lot of money, but in reality the companies are all investing in real estate, the stock market themselves, inflating earnings through investing activities, rather than selling actual goods or services. Had the US banking system extended credit in the same way as the Chinese system (in the US M2 have really stalled, while in China it's at 18,8 % for january), the whole crisis had been over.
  6. I can't get past the idea that this third wave (because the resistance is so strong, that it takes so much QE thrown at it), that we could be looking at hyperinflation. On the other hand, if we don't throw a lot at it, you get into a deflationary spiral that just get worse and worst, until UK'S AAA turns to crap, thus giving hyperinflation that way to. So if you print, you risk hyperinflation, but if you don't, it's a certainty. An even worse possibility is that China wait until we have an insane amount of stimulus in the system, and then revalue the yuan, as they are free to charge whatever they want for their goods. That's what I would do if I was China, just push hyperinflation in the west, through causing local short term pain on themselves as they sold less. I think we are so dependent that they could cause hyperinflation through just holding back supplies.
  7. I think this stock market is cheaper than the numers suggest. I can take some numbers from the market during sept 1971 recession, right after nixon took the US of gold (something similar might happen now, therefore the numbers are relevant: Proctor Gamble P/E 24,2 , div yield 2,1, price/book 4,6 the 2009 numbers: P/E 11,78, yield 3,2 % price/book 2,46 Back then gov bonds were yielding around 6 %, now it's 2,88 % In strict valuation terms that suggest that todays price is around 1/4 of the price in 1971. Or cheap. Another stock in sept 71 (utility) American Electric Power: P/E 11, div yield 6,5 % price/book 1,4 2009: P/E 8,8 div yield 5,2 % price/book 1,16 another: Dupont: PE then: PE 24,5 ,yield 3,2 % price/book 2,8( now p/e 10,13, yield 7,3 %, price/book 3 Another GE PE 23,4, 2,3 % book 4,1 (now p/e 8,6, yield 10,8 %, price book 1,08) Another Alcoa 10,7 , 4,0 % price/book 0,84 (now yield 9,1 % loss, price/book 0,51) I think stocks now are almost as cheap as during the 1974 recession, and these measurements clearly show that the CPI measurements, that are used by some to justify that the stock market still is in the stratosphere, are simply using faulty measurements. I'm pretty confident that buying at these levels, in the US market is likely to prove good in the long term.
  8. I don't think it have. But it was close. Sunshine in Asia. That will be the outcome out of this, when you have a bull market in treasuries, it tends to suck up investments and money, when treasuries no longer are in a bull, money just floats everywhere, especially in emerging markets. However the world don't have the oil resources to support it this time around, we did back between 1950-1981.
  9. I can tell where this don't add up. Let's say that credit destruction was to accelerate, the unemployment to go up, tax revenue down, and the UK to keep it's various obligations of the welfare state. The result would be a downgrade of the government debt, and a up tick in inflation. Think of Spain or Greece as I have shown (and are on the way to very high inflation). They can't just print money to replace less than the credit destroyed, giving you deflation, as that money that are destructed are lost, and the money to replace it have to come from somewhere, borrowing at higher yields or the printing press. It's in this process, the qualitative destruction of AAA ratings, that you move one step towards hyperinflation, not in the speed money circulate. If trust is gradually lost as the quality or integrity of money is compromised, as shown in the exchange rate, to other currencies, or to gold, there is more than enough money out there to cause hyperinflation in a very short period of time, no printing is necessary.
  10. I don't think it will turn out that way. Graphs can't predict the future. I think Japans prices deflated through deflation, and that ours will deflate through inflation.
  11. I think this is more or less the model for what is going to happen : http://www.bloomberg.com/apps/cbuilder?tic...=GGGB10YR%3AIND This is the government debt of Greece All government debt, in the UK, Spain, Ireland, Portugal will probably go down the same path, creating inflation similar to the default of a third world nation. Greece have not felt a decline in the exchange rate, that would normally follow such a development as they are going through, as they are fixed to the Euro. But if this thing goes on, the Euro is going to be history.
  12. Only if the current system breaks down and we return to a gold standard will a high level hold. If things are as before and the federal reserve at one point manage to push up interest rates and kill inflation, gold will head down. With todays environment where the oil gold ratio is around 25, I'm sure it's a more sound investment to buy an oil company, than to buy a gold mining company, IF the current system breaks down, and we enter some sort of gold standard.
  13. I disagree. The key to success is to buy good companies, even at a premium price, for the long run and hold on to them. All the transactions back and forth between different assets is what cause bad results.
  14. At some time a bull market can turn into a bubble, I think gold is around the price where that transformation takes place. As some might have noticed, in the 1998 debacle the only thing that did not sell off big time was the nasdaq. This time, everything is selling off, but gold have been "firm", that means that it for very very many have a preference over treasuries. Like in 1998, the NASDAQ was at a low of around 1400, then entered a speculative bubble phase, that went on to over 5000. If gold was to enter such speculation that it would double in around 6 months time, let's say gold goes to 1600 in 1 years time, then to 3200 in 6 months time, then you get into a rise so fast that it is unsustainable because you don't have enough new money to sustain the rise, and it falls on it's own weight, I think the doubling in 6 months is a rule of thumb for when to get out, even in most cases it's usually some trigger, like higher interest rates that ***** the bubble. That assumes that it's more the psychological effect of quantitative easing and gold fever, rather than actual hyperinflation that takes place, the gain must be a "real gain".
  15. I try to think more about individual stocks than the entire market. What I know is that I don't own a single stock with a P/E higher than 8. I found those stocks attractive based on price. I think stocks like Kraft Foods: http://finance.yahoo.com/q?s=kft trading at a P/E of 13, are reasonably priced. I think it becomes meaningless to demand the market as a whole to be trading at 6-8 times earning if the level of long term interest rates is in the order of 3-4 % . Like Kraft. If long term interest rates goes up from 3 % to 10 %, I think it's likely that inflation follows in a way, that means that Kraft can increase their dividend from todays 4 ,6 % (that is way better than 0 % in the bank) to 12 % if the long term rate is 10 %. Based on that Kraft is not overpriced, rather it's cheap as it pays 4,6 % vs 3 % on 10 year government bonds. I think the guy in the article don't have any skill in valuing a company. I think his argument series is wrong, especially argument 2. Again: buy kraft at todays price, see long term interest rates go to 10 %, and kraft will yield more than that. That's a good investment. Where the stock price simply does not matter, as the dividend is the important thing provided you never intend to sell the stock. Back in 1971 the average holding time for a stock was 5 years. On the housing bubble, I think it was china that pushed down US long term interest rates, more than greenspan, but he is to blame. greenspan is a notoriously bad forecaster. I think bonds are in a bear market, I can sense it from Pimco's Bill Gross, that's a very bad liar in trying to explain why pimco are putting up equity funds. I think P/E's can stay elevated for a long time, just look at japan that started their printing series from 2001. In todays system I think it can take a very long time before the value comes back for the general market as corrections take time. http://www.investmenttools.com/equities/fu...nings_yield.htm This is the earnings yield, note the technical trend. Look at soybeans, note the trend: http://www.investmenttools.com/images/wfut/soy/soycpi.gif Or gold: http://www.investmenttools.com/futures/met..._about_gold.htm What is likely is that inflation is going to go up, interest rates will go up, and stocks on the dow will go back up to around 11000, while the earnings yield through inflation just increase. And a company like kraft will yield much more than 4,6 % in the next bear market, even it's at a higher share price than today.
  16. Emerging market's likely are in a position that be compared to the US markets in 1988 and have many good years to come. The reason is that they are able to re-start credit growth. That will typically lead to an inflow of capital if our economies stagnate, and credit goes into non productive inflation hedge type assets. That would be my pick. The perception of an undervalued currency is likely to drive values from cheap to super expensive. China is probably my first choice. Some interesting companies are found here: http://www.usxchinaindex.com/ (look for very low PEG ratios) Here is a prime example of a stock that have potential: http://finance.yahoo.com/q/ks?s=BIDU There is different China funds. Another country I put faith in are Brazil and Russia, I think Russia are cheap, especially a company called Vimpelcom or VIP, I simply refuse to believe that the boom in Russia is over. Brazil are expensive, it's always expensive to buy growth stocks, it's not a value play, but more of a speculation, as with all emerging markets. I am not optimistic for growth in the UK stock market. I think it might level out and go flat for 10 years, while emerging markets outperform. I also have a certain faith in fertilizer, and agricultural commodities. Note the divergence on these Oil companies: http://finance.yahoo.com/echarts?s=PBR#cha...ource=undefined One thing you can notice is that you had this divergence between mid 2002 and 2003 as well. I think COP is the value play here and a good way to play emerging market growth (look for as low price/sales as possible). PBR is a growth play, however I think the reason PBR is outperforming are all the funds that people pour money into that invest directly in PBR. I think it's likely that the oil price have a fair value around 90-100 dollars and are likely to head back into that range. Another stock I like is the US railroad stocks. Inflation adjusted US railroad is selling at 10 times the 1921 price. There is a nuclear, electrification project that I think will arrive some time in the future. railroads tend to move with emerging markets, and gold. Current railroad pricing is like buying gold for around 550 dollars, oil gives an even greater discount. I think it's very likely that our developed world oil consumption have peaked, while the developing world will consume more. Due to price insensitivity, I don't think we will limit our consumption very much before we hit 3-400 dollars. I think the developing world will increase even as the prices goes up, however I think they are more likely to settle for "green cars", motorbikes rather than cars, etc. I think there is a big potential on solar energy, I know it does not make sense, but I just love the growth numbers those companies throw out. Some Chinese companies are selling of P/E of 2-4 and PEG of less than 0,2. If oil rebound strongly those stocks are likely to perform extremely well.
  17. I think the sector rotation suggest that a bottom might be in place, as the nasdaq, was relatively higher compared to last time (in nov) when we were at around these lows on the low in the intraday session. oil related stocks were lower then, even oil was higher, fertilizer stocks was much lower. I guess the things that are lower now are financials. I have not looked to deep into it, but the rotation towards the things that really should be the core of the problem are relatively lower, while things that might not be directly involved in the mess such as fertilizer and oil are higher, even many china related stocks are much much higher, many stocks I bought when the dow was higher, that were trading at a 10-15 % gain now, even the dow was much lower now than when I bought the stocks, make me think that the worst might be over.
  18. I think that the situation we are in, are the same as in 1988 for stocks. Everything seems to get more wild in the age of the computer. THerefore, I'm afraid, we will be talking about oil, gold and the like even 10 years into the future. I suspect it, however, that does not add up to the bubble mentality in gold. So what should be make of it? I think what could happen, if the dollar make it, is that the coming boom for gold, is the cycle where inflation get's killed and interest rates raised.
  19. really a day for the PPT conspiracy people today:))
  20. This kind of crap, could mean the top is yet to come, but there is definitely something of a bubble in gold, as all kind of morons are saying it's smart, as these guys are:) http://cash4gold.com/
  21. Japan did not have the fall in revenue and our deficits as the rest of the world was booming back then. Now it's a global downturn, it's more similar to WW2, in spending, without the war, than japan, the ultimate outcome is rising long term interest rates, I'm pretty sure of that. It's not going to be a 10 year malaise like japan had.
  22. I think those who envision a repeat of Japans deflation is wrong. This article mentions some of the reasons: The other arguments are the shift in the commodity cycle. It was in a deflationary trend then, while the trend is inflationary now. "But what if Japan provides the template? Many people thought Japanese bonds were overpriced when yields fell to 1-2% in the late 1990s. They have stayed around that level for the past decade, despite a vast amount of issuance (at $8.7 trillion, according to Bloomberg, the Japanese government-bond market is the biggest in the world). Even the expected $2 trillion of American issuance this year will leave its debt well below Japan’s. The crucial difference, however, is that Japan has been running current-account surpluses, not deficits. The Japanese owe the money to themselves whereas the Americans are in debt to foreigners. Such investors could lose twice over: yields could rise and the dollar could depreciate." http://www.economist.com/finance/displayst...ory_id=12906397
  23. This is a good opportunity for shorting gold and going long oil.
  24. You can never know the direction of the gold price if up or down, but you can find a good company that is able to pass on the price of gold to their customers. In the long run, the latter provide a much better protection as it does not require speculation or timing to succeed.
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