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July 1, 2009

Case-Shiller: Beware the Head Fake

There was some reason to take comfort about yesterday's data from the Case-Shiller Index—the rate of price declines slowed for the third straight month nationally. But before you break out the champagne and check books, get a dose of what the Wall Street Journal had to say yesterday:

The bloodletting may not be over. Here’s why: If price declines accelerate for the mid-to-upper end of the housing market, then that could generate enough large declines in values—even among a small segment of the overall housing market—to push the index lower still.

Meanwhile, here in New York (where there's plenty of "mid-to-upper" properties) housing prices ticked down another 1.6 percent in April for a total of 21 percent off the June 2008 high, as the chart above shows.

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Comments

The stock market is the best leading indicator of overall economic activity. More importantly, it is a better leading indicator of the proensity to spend on consumer discretionary goods by the top 20% of the population who collectively spend over 40% of total consumer discretionary expenditures.

The stock market is telling you what the economy is foing to look like 6 months out. Even today, with an ADP Employment number worse than expected (but far better than the last one), the futures indicate an "up" market.

All this Case Schiller data is backward looking. Yes, housing is a big part of the economy but it is the most illiquid of all assets. It takes longer to clear; especially these days with mortgage activity so sluggerish because of onerous lending practices.

You continue to look in the rear view mirror at your peril. All this hand wringing and you've missed the 39% move in the S&P 500 since it bottomed in March (and a 45% moved by NASDAQ).

Gold is telling you today that easing will continue. Janet Yellen, who will probably get the Fed job over Larry Summers is all over the news this morning after having spoke in CA about rates staying low.

DON'T FIGHT THE TAPE.

Posted by: daveinbedstuy at July 1, 2009 9:12 AM

Team Bear: If you passed on a million dollar condo, count an extra 17,000 a month into your salary.

Also -- I want to point out that the same group does a condo study. It only goes back to 95, but it is probably more relevant to our market, because it won't be heavily weighted to the suburbs.

http://www2.standardandpoors.com/portal/site/
en/us/page.topic/indices_csmahp/2,3,4,0,0,0,0,0,0,0,
5,0,0,0,0,0.html

Posted by: joe_the_bummer at July 1, 2009 9:19 AM

Dave- I agree with most of your post. But we're talking about housing prices and those still have much further to go down- regardless of the market.

The government is trying to head off the next bullet- student loans, starting today your payment can be determined based on income. All of these are good signs that the rope around consumers necks are loosing a bit but that does mean they have the means or the ability to go out and buy a home tomorrow.

Posted by: 7andfive at July 1, 2009 9:21 AM

dave-o that's hogwash. so your arg is: A. US stocks go up, B. US econ activity goes up, C. everyone buys NYC property? Both of those links have a lot of holes in them.

Why didn't you go for the simple and relevant argument from today's news:

New York City increased its population more than any other large U.S. city, helped by immigration, adding 355,056 residents between 2000 and 2008, the U.S. Census
Bureau said.

Posted by: joe_the_bummer at July 1, 2009 9:36 AM

Joe: reread my post. Nowhere did I say that NYC property was headed back up in the short term. If you don't understand the stock market's "leading indicator" status for the economy I suggest you go do some reading.

Posted by: daveinbedstuy at July 1, 2009 9:40 AM

The stock market is up significantly over the last three months but off of 1998 levels. We are still off 40% from the peak and the market (Dow, Nasdaq and S&P are at 2003 levels currently). Housing prices are still above 2003 levels, and if housing is indeed a lagging indicator, this would suggest there is more room to the downside.

Additionally, one other big factor in driving demand for housing is employment, and the unemployment rate is well above where it was in the last downturn (and still moving higher I might add).

I am not one who thinks real estate pricing will return to mid-1990s levels as some have argued, but if we are going to use the stock market as an indicator of housing strength, then housing is only moving one way from here.

Posted by: bkhabitant at July 1, 2009 9:42 AM

dave - I didn't say short term either. so what was the point of your essay this morning?

Posted by: joe_the_bummer at July 1, 2009 9:43 AM

bkhabitant: The collapse in the stock market was truly a panic reaction to all the shit going on in the banking/mortgage/finance sectors. It was the fastest way out for the world and a flight from risky assets, that's all. Confidence is rebuilding, risky assets are somewhat back in favor.

If you overlay the large moves (volatility) in the stock market over the strength & weakness of the economy, the picture will become clearer.

Again, what happened in the past is history. It was an unprecedented selloff in the market because people actually started to believe all that crap about another "Great depression" That belief has now been rightly categorized as "lunatic fringe" so the market is rising.

Posted by: daveinbedstuy at July 1, 2009 9:47 AM

dibs, all very insightful, but what does it have to do with this post?

Posted by: joe_the_bummer at July 1, 2009 9:53 AM

I think bkhabitant has it right.

Dave, in some ways I hope you are proven correct, but I think you are too optimistic. Think the damage done to our economy is still quite significant and the damage done to consumer psyches will not heal until long after the finance sector is fully stabilized.

I think the worst is over for residential real estate, but that doesn't mean price declines won't continue in NYC or other areas that were among the last to begin declining. I think the bottom is around 2001/2002 pricing and cannot come until we see some bankruptcies among new developments (because some developers literally CANNOT lower prices without going bankrupt).

Posted by: northsloperenter at July 1, 2009 9:57 AM

Dave, you can claim that the stock market's moves over the past few months were an over-reaction. I would agree - we saw 6,600 on the Dow only because of panic selling. Let's be honest though - the stock market and housing pricing we saw for the past few years was equally irrational - the result of loose monetary policy and over-leveraging. The stock market (reasonably in my opinion) is pricing in 2003 levels, but housing has not had a similar correction from its irrational highs, if we are going to use the stock market as a metric for the housing market. I never believed that we were headed for a great depression but an unprecedented correction had to be expected after an unprecedented and unrealistic boom in all assets over the past five years.

I tend to discount the stock market for exactly the reason you mention - it is too volatile and does not accurately reflect fundamentals. Here is the fundamental issue for housing - unemployment continues to rise. Until that ceases, housing is only going one way. Confidence is rebuilding, I agree, but that does nothing to replace the thousands of high paying wall street jobs that were lost and aren't coming back.

Posted by: bkhabitant at July 1, 2009 9:59 AM

joe...you're not getting the "leading indicator" part and the fact that Case Schiller data is backward looking. The market doesn't care about the housing numbers anymore, an probably not the employment numbers either because it sees beyond them.

It's an indication that the housing numbers are starting to turn and will be bottoming soon. If someone's in the market for a place and the whole process may take them 3-6 months then they better get off their ass and start looking.

As much as Janet yellen will keep the Fed Funds rate low, the market will move the price of Treasuries in the 5-30 year range down and rates will rise, another reason to be wary. A 30 year mortgage at these historically low rates is going to be worth a lot in the coming years.

Posted by: daveinbedstuy at July 1, 2009 9:59 AM

From Rolfe Winkler at Reuters:

My colleague Chris Swann says to beware of housing false dawns. I couldn’t agree more. While the pace of decline in house prices moderated in April, one has to consider the stupendous monetary stimulus that helped drive that improvement. With rates about as low as they can go, the only way to drive a sustainable increase in prices is to increase buyers’ income. With the employment picture continuing to deteriorate, don’t look for rising incomes any time soon.

http://blogs.reuters.com/rolfe-winkler/

Posted by: bridges at July 1, 2009 9:59 AM

The stock market is actually back to 1996 levels if you look at the chart.

Rolfe Winkler and Chris Swan are reporters. Christ. At least quote some economist or strategist.

Posted by: daveinbedstuy at July 1, 2009 10:09 AM

Hi dibs. Stating that Winkler's a reporter is not the same as disputing what he's written, is it?

But, to go to your point, his is what he says about himself:

"Basic background info….former Internet and Media Analyst at hedge fund Matador Capital Management in St. Petersburg, Florida (long/short U.S. equity); University of Chicago Economics; CFA charterholder. I’ve contributed articles/op-eds/quotes to the NY Daily News, Baltimore Sun, Chicago Sun-Times, FT’s Alphaville, Housing Wire Magazine, NPR’s Planet Money, the Christian Science Monitor, and others."

Posted by: bridges at July 1, 2009 10:15 AM

While the stock market is a leading indicator, it is not "the best" leading indicator -- it is one among many, and economists debate how reliable it is. DIBS I think you are endowing it with too much predictive power. It is true that this recession must eventually come to an end, and that house prices will eventually stop falling. It is also true that households have taken a huge hit and will not do much to contribute to a rebound in spending.

Posted by: Back40 at July 1, 2009 10:15 AM

dibs, 9:40: "Nowhere did I say that NYC property was headed back up in the short term. If you don't understand...I suggest you do some reading"

dibs, 9:59: "It's an indication that the housing numbers are starting to turn and will be bottoming soon...if the whole process may take them 3-6 months then they better get off their ass and start looking"

oh wait, I get it now. you're advising me to hurry up and buy a place in stockton?

Dave, you can't just throw out econo-babble in the hopes of confusing people enough so that they throw in the towel and agree with you. So what's this about Yellen then, are you saying long term rates will rise? I agree. Educate us, dave. what does that do to housing prices?

Posted by: joe_the_bummer at July 1, 2009 10:15 AM

bridges, good point

Posted by: joe_the_bummer at July 1, 2009 10:18 AM

I'll stand up to those credentials anyday...Northwestern University JL Kellogg Scool Finance Degree, CFA holder since 1983. Managed various International Mutual Funds since 1989 including a few teams of analysts. Guest on CNBC and Bloomberg TV from 1998 - 2007. Retired in 2007, now back in hedge fund business running international exposure.

Posted by: daveinbedstuy at July 1, 2009 10:22 AM

joe...the interest rate thing is pretty complicated right now but there are two issues:

First, although rates at the very short end will remain low (the fed can keep them there) the rates at 5-30 years are more "market driven" and have been rising. That's where mortgage rates are priced.

Additionally, those 5-30 year rates are what are most indicative of inflation expectations, and inflation expectations ultimately, over the longer term, drive the price of assets including real estate.

Posted by: daveinbedstuy at July 1, 2009 10:25 AM

Oh yeah, and I've been a regular contributor to the Asian columns in the WSJ (Craig karmin) and Barrons (Leslie Norton) from 1998-2007. Can't now because we are an uregistered hedge fund and no "advertising" is allowed.

Posted by: daveinbedstuy at July 1, 2009 10:27 AM

DIBS is at it again.
Even those who believe that the stock market is a leading indicator of economic activity recognize that there is at best a loose corelation. A favorite aphorism is "the stock market forecast 5 out of the last 3 recessions."
if you would take the time to do the analysis yourself you would see that there are enormous problems with the stock market predictor theory. The most obvious one is that the sample size is miniscule.
On the otherhand, there is a huge body of evidence connecting employment data with home values. In order to believe that home prices in NYC are going up you must also believe that employment at the high end is either about to rebound imminently, or has already turned up. That is magical thinking.
I'm still looking for any sign of a ...

Dead Cat Bounce
P.S. DIBS why don't you do a little homework instead of blathering back the common garbage?

Posted by: DeadCatBounce at July 1, 2009 10:37 AM

dibs an MBA is not an economics credential. Sorry.

Listen. An elaborate argument is the surest sign of a weak thesis. Keep it simple. When rates go up, housing gets less affordable, and its price falls to compnsate. You are WAY overthinking it.

Posted by: joe_the_bummer at July 1, 2009 10:37 AM

There are problems with every predictor theory. Most people actually in finance believe this is the best one out there. There is no larger sample size than the trading activity in the market.

I think you've blathered back the
popular misconceptions.

Posted by: daveinbedstuy at July 1, 2009 10:41 AM

Actually, as rates start to rise, borrowers crowd into the market fearing further rises. That didn't happen over the past few weeks because of the tighter lending policies.

Give us a hint at your credentials and your experience in buying/selling properties.

Posted by: daveinbedstuy at July 1, 2009 10:44 AM

Oh for heavens' sake dibs it's not a competition. Most people on this board probably have no clue who Winkler is, so since you brought it up I posted his info so they can draw their own conclusions.

peace out!

Posted by: bridges at July 1, 2009 10:45 AM

Yes, but you specifically posted it to try and discredit my thoughts. I did not bring up Winkler.

Posted by: daveinbedstuy at July 1, 2009 10:47 AM

I have two theories about dibs: either he has a major personality disorder, a meth addiction, or he just doesn't exist, and b-stoner made him up to bait us all day.

dibs are you seriously telling us that higher rates are going to be good for the housing market?

Posted by: joe_the_bummer at July 1, 2009 10:53 AM

DIBS -
there are problems with every so called leading indicator, so I agree with you about that.

However, since you are in love with the idea that the stock market is an indicator of rising home prices, you should consider that the stock market has been rising on thin volume. And worse yet, down days have seen much heavier trading than up days. In other words, an ever smaller pool of greater fools has been accounting for the rise in prices. Sounds a lot like the former housing boom.

There is always the possibility of a ...

Dead Cat Bounce

Posted by: DeadCatBounce at July 1, 2009 10:53 AM

I only said that a rising stock market is an indicator of an overall better economy from the point where everyone was predicting another "great depression." Home prices will eventually follow.

"I have two theories about dibs: either he has a major personality disorder, a meth addiction, or he just doesn't exist, and b-stoner made him up to bait us all day."

Posted by: joe_the_bummer at July 1, 2009 10:53 AM

Those would add up to three theories, so you're skills at math or anything that utilizes math are suspect.

Posted by: daveinbedstuy at July 1, 2009 10:57 AM

Dibs. There are a number sites I read, including this one, trying to suss out WTF is going on. That's my goal...so that I can navigate through this shitstorm as best i can. I wasn't trying to discredit you, I think you're being a bit testy there. You made a statement that contradicted other things I'm taking in, so...who's right, who's wrong? That's what I want to know. I read Winkler. I read you, on Brownstoner.

Posted by: bridges at July 1, 2009 10:57 AM

Joe the Bummer:
I like theory number three out of the two.

Posted by: DeadCatBounce at July 1, 2009 11:01 AM

I'm too lazy to start my own blog, bridges, and when I do it wouldn't be a finance blog. There's more easy money to be made elsewhere on the internet. I'll let you know when it's up and running but the corporate firewall will likely block it. :)

Posted by: daveinbedstuy at July 1, 2009 11:02 AM

Notice that when I post so much neither Return of the What and BHO are not here???

Posted by: daveinbedstuy at July 1, 2009 11:03 AM

Mish Shedlock, Calculated Risk, Patrick.net are others I read because the "green shoots" perspective receives lavish coverage on cable. But it's true I'm more Team Bear than not. I found a link to that article featuring What on Patrick.net, that's how I found brownstoner

Posted by: bridges at July 1, 2009 11:11 AM

Actually I did notice then when DIBS is posting, the what is silent. They can't be the same person because DIBS lives in BS and the what lives in Lodi, NJ.

Posted by: DeadCatBounce at July 1, 2009 11:12 AM

my mistake dibs. but give me some more flesh on your interest rate argument. my rates derivatives desk is intereseted in setting you up as a counterparty. your 9:59 post has your original rates argument. now, you are saying:

"A 30 year mortgage at these historically low rates is going to be worth a lot in the coming years"

so, we are to assume you are advising people to borrow now so that they pay back weaker dollars. but it's a secondary effect, dibs, and it's way too cute when you're talking about investing your life savings.

Why would you EVER buy an asset that you know is declining in price, let alone borrow money to leverage your losses!!!

Posted by: joe_the_bummer at July 1, 2009 11:14 AM

I assume you rent, joe.

Posted by: daveinbedstuy at July 1, 2009 11:15 AM

Yeah dibs, of course I rent. Once you own, what's the point of caring about prices, other than to torture yourself? Anything you want buy is cheaper by the same amount as what you want to sell. So square foot for square foot, you're even. The only time it's important to get the timing right is the first time. note to owners: relax -- enjoy paying back your mortgage after dave's inflation makes the payment meaningless.

Posted by: joe_the_bummer at July 1, 2009 11:24 AM

Dibs, if the stock market is such a good leading indicator, why did the RE market, represented by Case Shiller, peak first? CS peaked summer of 06. Stock market peaked 3Q of 07.

Posted by: Colonel Steve Austin at July 1, 2009 11:25 AM

More "facts" from today.....

Manufacturing in U.S. Shrank at Slower Pace in June
July 1 (Bloomberg) -- Manufacturing in the U.S. shrank in June at the slowest pace in 10 months, another sign the worst of the recession may be over.
The Institute for Supply Management’s factory index rose to 44.8, the highest level since August, from 42.8 in May, according to the Tempe, Arizona-based group. Readings below 50 signal contraction.
Stabilization in consumer spending, the biggest part of the economy, may prompt factories to boost production in coming months. After trimming stockpiles at the fastest pace on record in the first quarter, companies continued to cut back in the last three months, meaning any pickup in demand will spark a recovery in manufacturing.
The index “is consistent with a third-quarter recovery in manufacturing,” said Dean Maki, chief U.S. economist at
Barclays Capital Inc. in New York. “Inventories are starting to approach levels where production will have to pick up.”
Economists forecast the gauge would rise to 44.9, according to the median of 73 forecasts in a Bloomberg News survey. Estimates ranged from 40 to 47.5.

Posted by: daveinbedstuy at July 1, 2009 11:28 AM

The key to that story is actually the point made about inventories in the second to last paragraph. Even the auto companies have said that inventories are low and whe the Csh For Clunkers starts in late July, you'll seee some real spending on consumer durables.

Posted by: daveinbedstuy at July 1, 2009 11:35 AM

Equity markets and case-schiller index are of marginal and secondary relevance to the immediate future of NYC housing prices.

Factors of direct and immediate relevance inculde employment in NYC (not national), inventory in NYC (not national), wealth in NYC (somewhat correlated with equity markets but impossible to draw direct line from equities to housing) and affordability in NYC (irrelevant where the national market has been and how affordable it has gotten). Interest rates are just about the only common factor that can be expected to affect the national and NYC markets equally -- and they are almost certainly going up.

I am long equities and short NYC real estate.

Posted by: lechacal at July 1, 2009 11:36 AM

In other markets, the cost to own is now significantly lower than renting.
Still not so in NYC.
I'm no psuedo-expert like you guys, but that would indicate that prices still have a way to go down.
Why buy if you can rent the same place for less, and not tie up/risk your money?

Posted by: ontheparkway at July 1, 2009 11:36 AM

lechacal, I'm long equities, short Treasureis and long my home because my cost to live in it is far less than the cost to rent a similar place. Many here will not realize how that is possible since I bought it in 2007.

Posted by: daveinbedstuy at July 1, 2009 11:41 AM

dibs - understand completely.

Posted by: lechacal at July 1, 2009 11:43 AM

dibs that is SHAMEFUL CHERRY-PICKING. There were 10 economic releases today, including job cuts, mortgage applications, manufacturing index, construction spending, pending home sales, and vehicle sales.

for all who don't subscribe to bloomberg, they add the tag "another sign the worst of the recession may be over" every time data exceeds expectations. If expectations are for a calamity, and the result is just "really bad", it still gets the tag. They also regularly add the tag "another sign the recession may be far from over" when data falls short of expectations. There is nothing to read into their "color"; they are just robotically trying to turn data into complete sentences.

Posted by: joe_the_bummer at July 1, 2009 11:43 AM

Dave,,, I haven't traded since MAY 18th... What else are you looking at? I stopped when the vix kept going down while the market was going up.... I knew we would be in a tight trading range so I took a vacation.. Disney world was fun..

Posted by: HOBOKENROCKS at July 1, 2009 11:45 AM

Vehicle sales are not out yet, joe. They will likely exceed the estimates. Probably a SAAR above 10MM.

Skipo the color and focus on the number. Christ.

Posted by: daveinbedstuy at July 1, 2009 11:46 AM

Hoboken...own a lot of small cap stuff...favorites are GVP, GLG CN, a number of small Japanese auto components suppliers, China railway stocks, MR, MNRO and bought TSM back around $9.16.

Welcome back. You've missed a few real shitstorms here.

Posted by: daveinbedstuy at July 1, 2009 11:49 AM

Why japanese auto components suppliers? I will take a look....

Who started the shitstorms? MR WHAT... LOL

Posted by: HOBOKENROCKS at July 1, 2009 11:54 AM

A lot of foreign banks are in great shape...SCBFF, CICHF and also telcos: SGAPY, TLK & PHI

Posted by: daveinbedstuy at July 1, 2009 11:54 AM

dibs, the point is that you cobble together all of this fringe data to make elaborate, esoteric arguments about NYC housing (that is what we're talking about, right?), when the necessary facts are right in our faces. As lechical says, we should care about income and wealth in NYC, and most everyone I know here expects to living pretty lean for a long time to come. "ISM factory index sinks at slower pace"? come on.

Posted by: joe_the_bummer at July 1, 2009 11:54 AM

joe....do you have any idea how many new hedge funds have opened up in NYC over the past three monts? A lot. Investment banks have begun rehiring people in select areas. Goldman is making huge profits.

No, it isn't a real resurgence by any means but the signs are there that it has turned, and "it" will include NYC incomes.

Posted by: daveinbedstuy at July 1, 2009 11:57 AM

DAVE you don't think that another round of delevering is coming... We are either going to get high inflation or another collapse.... My opinion...

Posted by: HOBOKENROCKS at July 1, 2009 12:02 PM

I don't think we are going to get "high inflation." I think rates are going up and you can make money on that but they are not going to anything close to double digit.

There has to be a catalyst for another collapse. i don't see it in the economic numbers. The market will go through fits and starts but no reason for a collapse.

If the nutjobs in N. Korea lob a nuclear warhead or the crazy man in Iran does the same, all bets are off. Respnses to either of those should be swift and harsh.

Posted by: daveinbedstuy at July 1, 2009 12:06 PM

What about earnings? I heard earnings on the SP 500 are around 42 dollars a share.. If that is true than we currently overvalued.. Doesn't mean we won't go higher but it won't be much higher...

Posted by: HOBOKENROCKS at July 1, 2009 12:14 PM

joe....do you have any idea how many new hedge funds have opened up in NYC over the past three monts?

damn right I do. I'm trying to get jobs at them. It is thin. Total hedge fund jobs are way way down. (by the way, most of them are in CT, which is a nasty commute from brooklyn)

add in bankers, lawyers and consultants, and the 1-2MM dollar apartment crowd is still pretty hosed for a while.

Posted by: joe_the_bummer at July 1, 2009 12:27 PM

Running of the Jackasses...

The What

Someday this war is gonna end...

Posted by: Return of The What at July 1, 2009 12:28 PM

hooray! welcome back, What!

Posted by: joe_the_bummer at July 1, 2009 12:31 PM

This from the WSJ the other day about the Deutsche Bank report:

"How much further could home prices tumble in the New York City metro area? Deutsche Bank predicts a decline of 40.6% from the first quarter of 2009.

That’s a slight improvement over the 47.4% decline that the bank’s analysts had forecast in March, and it reflects in part the fact that prices have dropped since then. Still, prices would have to drop another 32% from the first quarter of 2009 to return the New York market to levels of affordability not seen since 1998...."

http://blogs.wsj.com/developments/2009/06/16/deutsche-bank-predicts-40-drop-in-new-york-home-prices/

Now don't flip out on me dibs! I understand the report excludes condo and co-op data, but here's my question: Unless there's some mindblowing inflation just around the bend, how can home prices return, at least nominally, to their previous highs, while unemployment rises? At my firm, the partners are preparing for a 30% cut IN THEIR OWN SALARIES. They are not alone. So even if inflation pushes asset prices up, what use is that if wages stagnate, even among the upper income?

Posted by: bridges at July 1, 2009 12:39 PM

bridges, lechecal, maybe we can do it this way:

Is there anyone else besides dibs left on team bull? There was a defection to "team moderate" a while back, which I took as more of a re-branding exercise, akin to philip morris's change to "altria" (think: altruism), or anderson consulting to "accenture" (think: not fraud)

anyone? or can I find something else to do with my afternoon.

Posted by: joe_the_bummer at July 1, 2009 12:46 PM

okay, i can only handle so much BS from dibs... you are a day trader at best. any person at any respectable HF doesn't have even a fraction of the time you do to post incessant crap. second, anyone with a pulse and a pair of balls could've owned in the past bubble. third, anyone at a respectable HF wouldn't waste their time in real estate due to illiquidity, significant trx costs and marginal returns. and finally, if the market is such a great leading indicator, then what happened to it prior to Spring 2008? OH, it was pricing in growth in 2050 right?

Posted by: goodoleboy at July 1, 2009 12:47 PM

BTW - I don't think there is anything wrong with being a day trader. But using status as a HFer to claim superiority in financial/market knowledge is just plain lame. I know a lot of dumbass HFers and some super sharp day traders.

Posted by: goodoleboy at July 1, 2009 12:51 PM

" you are a day trader at best. any person at any respectable HF doesn't have even a fraction of the time you do to post incessant crap."

Ding ding ding!!!!!!

The What

Someday this war is gonna end...

Posted by: Return of The What at July 1, 2009 12:51 PM

LOL Joe. Maybe we should have a Team Bear pubcrawl [j/k]

Posted by: bridges at July 1, 2009 12:52 PM

Think what you want. I'm the one with four residences and 6 cars!! ROTFLMMFAO.

Posted by: daveinbedstuy at July 1, 2009 12:58 PM

Hey What, you still livin with your mother in Lodi, NJ?? When did you leave Bed Stuy?? When Spike made the movie?? Did you get driven out by some guy with a Celtics jersey and a $600 bike??? Did he ride over your Jordans???

Posted by: daveinbedstuy at July 1, 2009 1:01 PM

Joe just look at what's going and not the "Prop-Agenda" crap!

Pride before the fall...

The What

Someday this war is gonna end...

Posted by: Return of The What at July 1, 2009 1:03 PM

Dibs do you own all that outright? Do you have tenants?

Posted by: bridges at July 1, 2009 1:10 PM

bridges, I have a tenant here in bed Stuy, the others are all in other places, no tenants, more or less second/vacation homes, two mortgages that add up to $3,400 monthly. I bought all the others between 1992 and 2000.

I'll never argue with anyone that home prices haven't gone up significantly and things were a hell of a lot cheaper back in the late 90s. I do feel for people that prices now are largely unaffordable. I sold off some rental properties in 2005.

Posted by: daveinbedstuy at July 1, 2009 1:16 PM

I've seen interest rates all over between 4.5% and close to 8%. That never deterred me from buying anything. I have rarely used any ARMs. I used two when I was doing some spec rehab in Chicago but they were 3-year...never the really short stuff. You always want to minimize your risk of getting in trouble with rate adjustments.

Team Bear and the other downers on here are right. The problems were all caused by people "affording" mortgages that they couldn't because the ARM rate was ridiculously low. No one should ever put themselves at risk in that type of situation. It's nothing different from margin debt to play the stock market.

Posted by: daveinbedstuy at July 1, 2009 1:20 PM

DIBS, a comment like that opens you up to a line of attack. Which is, no real HF person brags about how many cars they have; they'd consider it ghetto. And no real HF person lives in Bed Stuy. My HF friends have houses in Pacific Heights and the W Village and Sonoma and Rhinebeck and London and etc etc. This website gets what, a million hits a month? There are surely many visitors who know something about money, and I can safely speak for them, and say, they smell you from a mile away, for the mid market poseur you are.

Posted by: Whuh at July 1, 2009 1:22 PM

I'll just consider the source on that one, Whuh. When you get to the point that you manage your own money and that of a few others as a career, feel free to comment. Everybody as well has seen the kind of low life shit that you spew on here.

Posted by: daveinbedstuy at July 1, 2009 1:28 PM

"There are surely many visitors who know something about money, and I can safely speak for them, and say, they smell you from a mile away, for the mid market poseur you are."

OMFG Day Trader In Bed Stuy just got PWNED! LMMFAO Oh man!!!

The What (I'm not worthy Whuh, I'm not worthy)

Someday this war is gonna end...

Posted by: Return of The What at July 1, 2009 1:29 PM

I think the definition of PWNED would be living in Lodi, NJ.

Posted by: daveinbedstuy at July 1, 2009 1:32 PM

Are there anymore Hedge Fund Managers living in the Ghetto?

Yo Son buy SUX, BS, AIG, LEH and BOA! Those things are popping!

The What ("they smell you from a mile away, for the mid market poseur you are" LMMFAO)

Someday this Poseur is gonna end..

Posted by: Return of The What at July 1, 2009 1:33 PM

I never could have imagined that a thread on Case Schiller could turn out to be so amusing for me today!!!! And I haven't seen the usual suspect lunatic fringe here except What (who just lurks) and his half sister, Whuh.

Posted by: daveinbedstuy at July 1, 2009 1:35 PM

Sure, Dave --I know I don't have the right to comment on your endless posturing and bragging on here; esp because I don't manage money for a career. But one last sad try on my part: You've never met a real hedge fund manager; and you've never even been in the office of a real fund. And by real, I mean, in operation for more than five/six years, assets under management of more than a billion. I'd bet my future house, to which you are not and will never be invited, on it.

Posted by: Whuh at July 1, 2009 1:37 PM

Lets take a poll- How many Hedge Fund Managers are considering buying in Bed Stuy????

***Crickets*****

The What

Someday this war is gonna end...

Posted by: Return of The What at July 1, 2009 1:39 PM

Keep working on trying to get that house, Whuh.

Our L/S fund here has a record going back to 1993. No, we don't have more than a billion but we also only have 4 people here.

Posted by: daveinbedstuy at July 1, 2009 1:40 PM

What, you probably couldn't afford the furniture I have in that place in the ghetto.

Glad to see you're back to your old self though. I missed the old What.

Posted by: daveinbedstuy at July 1, 2009 1:45 PM

This how you kick someone's ass! Hardcore PWNING Ghetto Style!

Whuh: "You've never met a real hedge fund manager; and you've never even been in the office of a real fund. And by real, I mean, in operation for more than five/six years, assets under management of more than a billion."

GHetto Day Trader: "Our L/S fund here has a record going back to 1993. No, we don't have more than a billion but we also only have 4 people here."

"We have 4 people here"????????!!!! This Hedge Fund is operating out of Starbucks!!! Oh Whuh I want to thank you so much for exposing this Jackass! This has made my day, Thanks!

The What (4 people ROTFLMMFAO!)

Someday this war is gonna end..

Posted by: Return of The What at July 1, 2009 1:47 PM

Whuh,
I work for a different firm on the same floor as DIBS, which would fit your description, although I am not the manager.
Whatever you think of his views on the housing market his firm has a strong track record.

Posted by: etson at July 1, 2009 1:47 PM

has anyone actually met dibs at one of these drink gatherings?

Posted by: joe_the_bummer at July 1, 2009 1:48 PM

What do you do What?????

Posted by: daveinbedstuy at July 1, 2009 1:49 PM

Thank you etson. I'll have to buy you a coffee in the free coffee room. Our firm though is very small and I wouldn't be able to afford one from outside.

Speaking of which, have you ever gone into that nice looking Italian coffee bar on 44th between Lex & 3rd??? Its a really nice looking spot but I'm way too busy diring the day to pop over there what with managing the pittance we have here and posting all day on brownstoner like these other losers.

Posted by: daveinbedstuy at July 1, 2009 1:52 PM

What do you do What???

Posted by: daveinbedstuy at July 1, 2009 1:52 PM

"has anyone actually met dibs at one of these drink gatherings?"

Yeah he was sucking off the bartender in the bathroom...

The What

Someday this war is gonna end...

Posted by: Return of The What at July 1, 2009 1:52 PM

Yes, joe, I've been to every one of them.

Posted by: daveinbedstuy at July 1, 2009 1:52 PM

What do you do, What??

Posted by: daveinbedstuy at July 1, 2009 1:53 PM

"...when you get to the point that you manage your own money and that of a few others as a career"

dibs you are day-trading your trust fund, aren't you? Grandpa would want you to get a real job, you know.

Posted by: joe_the_bummer at July 1, 2009 1:54 PM

Hey guys lets open up a.. Hedge Fund, Yeah!!! We can get dumbasses to give you their money and we send then statements every month. 21% annual growth and have trading accounts in the Cayman Islands (Just in case we have to flee).

The What (Chairman and Strip club organizer)

Whuh (CEO)

BHO (CFO)

Bridges (Chief Trading Officer)

The What (The FBI is coming! Where's the shredder at???!!!!)

Someday this war is gonna end...

Posted by: Return of The What at July 1, 2009 1:59 PM

At least I'm getting some, What. I think you haven't had any since they used your ass when you were in lock up!!!!

joe my grandfather blew all his money that his family made running liquor between Canada and Glens Falls, NY during Prohibition.

That said, my mother's cousin's daughter is our new Congresswoman, Kirsten Gillibrand.

Posted by: daveinbedstuy at July 1, 2009 2:00 PM

If anyone is still interested in whatever substance has been discussed in this thread, here is an interesting take on the current state of the market in historical perspective.

http://www.ritholtz.com/blog/2009/06/monthly-sp500-inflation-adjusted/

The post argues that we are in the midst of a secular (meaning long-term) market downturn that started in 2000. Admittedly, the chart only goes through 3/30 and so misses the recent rally, but it's intriguing, no?

Posted by: Back40 at July 1, 2009 2:00 PM

I'm up for the strip club trips, What. I want to see you get a lap dance and then ask someone else for the tip money.

Posted by: daveinbedstuy at July 1, 2009 2:02 PM

LOL What that was mad nasty.

OK dibs so you exist, but you're a day-trading trust-bunny.

I would go myself but I'm afraid that brownstoner is slowly turning into a gay intro service. Am I alone on that one?

Posted by: joe_the_bummer at July 1, 2009 2:03 PM

I would go myself but I'm afraid that brownstoner is slowly turning into a gay intro service. Am I alone on that one?

Posted by: joe_the_bummer at July 1, 2009 2:03 PM

The What tosses Joe a month supply of Skittles. It's Mo Mo land around here...

The What

Someday this war is gonna end...

Posted by: Return of The What at July 1, 2009 2:06 PM

No, not at all, Joe. You should show up. No one is actually like this in real life. There's only one other gay that shows up, and one lesbo. Everyone has a great time & lots of alcohol is consumed.

Posted by: daveinbedstuy at July 1, 2009 2:06 PM

Can you really have a "Hedge Fund" with 4 people?????!!!!!!

WTF is that???!!! Please someone please explain that!

The What (Ghetto Hedge Fund LLC.)

Someday this war is gonna end...

Posted by: Return of The What at July 1, 2009 2:08 PM

I came to the party too late to know what the skittles thing means... is that good?

Posted by: joe_the_bummer at July 1, 2009 2:08 PM

Back40...THAT CHART IS INCREDIBLE. It shows a 65% decline from the recent peak and would indicate that given the amount of decline for the last 3 selloffs depicted that we are setting ourselves up for a rally, WHICH IS EXACTLY WHAT HAPPENED IN MARCH. The chart would indicate that the market will probably shoot past the horizontal point at 1,900 or so and go to 3,000.

A better bullish chart for the market is hard to come by!!!! Stay long.

Posted by: daveinbedstuy at July 1, 2009 2:09 PM

Skittles come out of the Unicorn's ass. Pay no attention to the rants of the What. he hasn't been relevant in quite some time and his schtick is really getting old. He's missed the whole market rally because he's obsessed with thinking the world is going to hell in October. Ask him why October???

Posted by: daveinbedstuy at July 1, 2009 2:11 PM

I came to the party too late to know what the skittles thing means... is that good?

Posted by: joe_the_bummer at July 1, 2009 2:08 PM

It's OK Joe you're good!

"OK dibs so you exist, but you're a day-trading trust-bunny."

A Day Trading Trust Bunny, ROTFLMMFAO!

The What

Someday this war is gonna end...

Posted by: Return of The What at July 1, 2009 2:12 PM

HEY WHAT....Is "Mo Mo" a slur???? Are you tossing those out again????

How would you like it if I referred to you as something that sounds similar to "Mo Mo"

I bet you'd go off on another two day tirade. NOW APOLOGIZE.

Posted by: daveinbedstuy at July 1, 2009 2:14 PM

quote:

has anyone actually met dibs at one of these drink gatherings?"

yeah three times. this thread was funny, but most of it was over my head.

*rob*

Posted by: PitbullNYC at July 1, 2009 2:18 PM

"I have two theories about dibs: either he has a major personality disorder, a meth addiction, or he just doesn't exist, and b-stoner made him up to bait us all day."

A) Narcissistic Personality Disorder

***Bid half off peak comps***

Posted by: Brownstones Half Off at July 1, 2009 2:21 PM

LOL.

Posted by: bridges at July 1, 2009 2:24 PM

Wowwwwwwwwwwwww! What a thread!

"throw out econo-babble in the hopes of confusing people enough so that they throw in the towel and agree with you"

"An elaborate argument is the surest sign of a weak thesis."

What more can I say? JTB nailed it.

corner's gonna OD on this thread.

"(Chairman and Strip club organizer)"

LOL!

Damn, dibs (used to be capital). You got ratpacked today! There's nothing left for me!

***Bid half off peak comps***

Posted by: Brownstones Half Off at July 1, 2009 2:28 PM

"I have two theories about dibs: either he has a major personality disorder, a meth addiction, or he just doesn't exist, and b-stoner made him up to bait us all day."

A. I'm a Scorpio. Nuff said.

B. Addicted to sex, good wine and beer better than the stuff What drinks.

Posted by: daveinbedstuy at July 1, 2009 2:29 PM

D. Doesn't take Brownstoner as seriously as others and writes whatever he feels like it because he's basically trying to have a conversation with people who clearly rode and continue to ride the short bus (What, BHO, brickoven, cornholedbodega and others).

Posted by: 11217 at July 1, 2009 2:30 PM

joe, I have met both DIBS and etson and both are really good guys and very knowledgeable. When I started posting here, I said that I am in the team undecided (middle). Even though I own a place and would love to root for team Bull but leaning more with team Bear. I never really got into heated discussions about indicators of Real Estate for NYC but enjoy reading both sides' reasoning and forming my own opinions.

Posted by: Kensingtonian at July 1, 2009 2:33 PM

Good afternoon, 1121[chapter 7]! Hurry up! Vaseline is selling out!

***Bid half off peak comps***

Posted by: Brownstones Half Off at July 1, 2009 2:34 PM

BHO What's happening Bruh! Hey we starting Hedge Fund, you want in?

"You got ratpacked today! There's nothing left for me!"

He got PWNED HARD! Like D-Block style!

What, BHO, brickoven, cornerbodega that's the Ghetto Hedge Fund LLC!

The What

Someday this war is gonna end...

Posted by: Return of The What at July 1, 2009 2:38 PM

BHO comes in to give his uncle, the What, a reach around when What couldn't hold up his end anymore!!! ROTFLMMFAO.

cornerbodega will be here as soon as he can change his login.

Posted by: daveinbedstuy at July 1, 2009 2:39 PM

Yes I have met dibs at one of the Brownstoner events. I have not, on the other hand, met any of the individuals who have asked whether or not dibs exists.

Is the predictable degradation of this thread an example of the Nash Equilibrium? Discuss.

Posted by: lechacal at July 1, 2009 2:41 PM

BHO What's happening Bruh! Hey we starting Hedge Fund, you want in?

"You got ratpacked today! There's nothing left for me!"

He got PWNED HARD! Like D-Block style!

The What

Someday this war is gonna end...

Posted by: Return of The What at July 1, 2009 2:38 PM

ROTFLMMFAO...such ghetto talk. And Whuh think's I'm ghetto??????????

Posted by: daveinbedstuy at July 1, 2009 2:41 PM

"Good afternoon, 1121[chapter 7]! Hurry up! Vaseline is selling out!"

11217 love chicken grease..

The What (4 people LMMFAO)

Someday this war is gonna end...

Posted by: Return of The What at July 1, 2009 2:42 PM

lechacal...all the others are now busily googling "Nash Equilibrium." ROTFLMMFAO.

Posted by: daveinbedstuy at July 1, 2009 2:42 PM

Here Joe, this is from a few months ago, charlie the unicorn:

http://www.youtube.com/watch?v=Q5im0Ssyyus

Posted by: bridges at July 1, 2009 2:44 PM

Joe, you should seriously make it to one of our gatherings. Some are gay, some are straight, some are none (married with kids - Biff comes to mind).

These gatherings are a lot of fun.

Posted by: Kensingtonian at July 1, 2009 2:46 PM

So the OT is here today?

Posted by: more4less at July 1, 2009 2:49 PM

"A beautiful mind" sucked. there's my contribution to your discussion.

Posted by: joe_the_bummer at July 1, 2009 2:50 PM

OK, I totally googled Nash Equilibrium and still can't figure out what exactly it is and how it pertains to this thread. Anyone care to explain in laments terms?

Posted by: Kensingtonian at July 1, 2009 2:50 PM

charlie the unicorn reminds me of Team Retard!

The What

Someday this war is gonna end...

Posted by: Return of The What at July 1, 2009 2:51 PM

M4L you missed out on such juicy fights in the past week, you have no idea. You have like a month worth of lunch reading to do.

Posted by: Kensingtonian at July 1, 2009 2:51 PM

OK next one I'm there!

Posted by: joe_the_bummer at July 1, 2009 2:53 PM

Bummer, I can introduce you to DIBS and hope you guys start a heated exchange so I can enjoy it while drinking some beer

Posted by: more4less at July 1, 2009 2:59 PM

"BHO What's happening Bruh!"

Getting last dibs on dibs, fam. ("4 people" - that shit was funny.)

"some are none (married with kids - Biff comes to mind)" - that was funny too, ken.

***Bid half off peak comps***

Posted by: Brownstones Half Off at July 1, 2009 2:59 PM

Sorry, been busy...got an incredible new stock idea...

Some of us actually have stuff to do and can't post incessantly.

Posted by: daveinbedstuy at July 1, 2009 3:02 PM

Can easily run a HF with 4 people.
Ever hear of a prime broker?

Posted by: etson at July 1, 2009 3:04 PM

etson, don't confuse their heads with details.

Posted by: daveinbedstuy at July 1, 2009 3:06 PM

Lots of married with kids types among us at this point. Probably more than the singles? Don't know. What's up everybody?

Posted by: wasder at July 1, 2009 3:06 PM

this is definitely the OT - even team moderate / reasonable co-founder is here to chit chat

Posted by: more4less at July 1, 2009 3:09 PM

"Getting last dibs on dibs, fam. ("4 people" - that sh*t was funny.)"

Life is stranger than fiction! This proves my point that most of the Retards on Brownstoner are posers, not poseur! Fake-ass Neighborhood hijacking Broke sleep 5 in a one bedroom apartment Jackasses!

Today makes you up for Ghetto Day Trader's Racial Slur! Thank guys for making it possible!

The What

Someday this war is gonna end..

Posted by: Return of The What at July 1, 2009 3:11 PM

Truly M4L I thought I was in the OT. I got nothing on the topic at hand in this thread. Makes me head spin.

Posted by: wasder at July 1, 2009 3:11 PM

What is the total average staff number at a hedge fund for us non-financial types?

Posted by: wasder at July 1, 2009 3:13 PM

Hey what. Did you grow up "sleep 5 in a one bedroom apartment?" I really want to find out what made you the way you are.

Posted by: daveinbedstuy at July 1, 2009 3:14 PM

What is the total average staff number at a hedge fund for us non-financial types?

Not four people..

The What (A Hedge Fund, ROTFLMMFAO!!!!)

Someday day this war is gonna end..

Posted by: Return of The What at July 1, 2009 3:16 PM

Good question, wasder. I don't know. I do know that in the late nineties and into 2006 that there were thousands of new hedge funds that were essentially one-man shops running their own personal money. it doesn't take a lot of money to get one up and running...lawyers and accountants fees, etc.

Posted by: daveinbedstuy at July 1, 2009 3:17 PM

"What is the total average staff number at a hedge fund for us non-financial types?"

I have no idea, anywhere from 1 to a few hundred. It depends how much of the non-investment stuff they do in-house as opposed to outsourcing.

Posted by: etson at July 1, 2009 3:17 PM

etson...fresh coffee on the floor.

Posted by: daveinbedstuy at July 1, 2009 3:18 PM

"Yo Son buy SUX, BS, AIG, LEH and BOA! Those things are popping!"

Hey What, waddup son? BOA has popped for me big-time! Yes, you coulda made big bux shorting the others, but you're not in the game!

But What, I'm loving your comments today! Rolling on the floor!

But I'll tell you why I'm w DIBS of Team Bull. It pays to be contrarian, always has, always will. Except for Lechacal (with equities), most of this blog thinks the depression is a day away. That makes DIBS and the Team Bull the way to the money. All bears, all wrong.

Rob, maybe save the money from a coupla forties, buy a copy of Barron's on Saturday. Read it, try again next Saturday. Repeat. Then you can not only understand the thread, maybe you can pay your taxes next year! You ain't a kid anymore.

Posted by: denton at July 1, 2009 3:19 PM

How do you become a "manager" in a Hedge Fund that only has 4 people in it????

Someone pulled straws or something???

The What (A Hedge Fund???)

Someday this war is gonna end....

Posted by: Return of The What at July 1, 2009 3:19 PM

Ok getting away from NYC for a moment...what happens to California now they've declared bankruptcy? Is an outside agency created to administer its finances? That happened to NY in the 70s, right? Big Mac or something?

Posted by: bridges at July 1, 2009 3:22 PM

Questioning if Dave is real is like the ultimate rookie mistake on this blog.

Posted by: infinitejester at July 1, 2009 3:24 PM

Actually a friend of mine works for a private hedge fund and she is one of 3 people there (1 hedge fund manager and 2 analysts). They manage well over a billion dollars for some very rich family and a couple of their friends (all old money).

Posted by: Kensingtonian at July 1, 2009 3:25 PM

Denton the crack had ran out! See me in a 119 days and lets have the same discussion. Do you know Goldman Sachs account for 47% of daily trading volume now??? Trading volume is very low right now because all of the Specuvestors are nursing sore asses!

The Government and The Fed is printing money to prop this crap up! It has nothing to do with FUNDAMENTALS!!!!!!!!!!!!

UNEMPLOYMENT, CONSUMER SPENDING and HOME PRICES are DEAD!

The What

Someday this war is gonna end...

Posted by: Return of The What at July 1, 2009 3:26 PM

"Actually a friend of mine works for a private hedge fund and she is one of 3 people there (1 hedge fund manager and 2 analysts). They manage well over a billion dollars for some very rich family and a couple of their friends (all old money)."

RRRRRRRRRRRRRRRIIIIIIIIIIIIIGGGGGGGGHHHHHHHHHHHHHTTTTTTTTTTT!!!!!!!!!!!!!

The What

Someday this war is gonna end..

Posted by: Return of The What at July 1, 2009 3:28 PM

We have one onshore HF, one offshore HF and 12 individual client accounts where many of the clients are non-US. We outsource our trading and all backoffice functions. We get tech support from our prime broker. There are three of us who come up with the ideas and one support person.

The fees are as follows 1.5% management fee on assets per year and we keep 20% of the upside that the portfolios gain. We were down 14% last year and we have to get back up to that "high water mark" this year before we start earning any of that 20%. We reached that point in early June. We were up 14.4% at the end of May.

When you think about it, even with only $100MM in assets, it's a really great business model!!!!

Posted by: daveinbedstuy at July 1, 2009 3:28 PM

Don't worry people, the What also can't believe people in this city are getting laid when he's home alone at night.

Posted by: infinitejester at July 1, 2009 3:30 PM

"See me in a 119 days and lets have the same discussion."

It's a deal, bro. Maybe another Stoner meeting.

Posted by: denton at July 1, 2009 3:32 PM

bridges...there are big problems with muni bonds all over the country. A lot of old folks survive on those interest payments.

Posted by: daveinbedstuy at July 1, 2009 3:33 PM

Check this out people (Pay attention). Whuh made a point that real HF Managers don't brag about what they have because it's "Ghetto". Whuh smacked it out of the park. I personally don't have anything to prove because ya'll can suck my balls! Day Trader had something to prove and in my book that's a SUCKER!

Today was one of the best days ever on Brownstoner!

The What

Someday this war is gonna end...

Posted by: Return of The What at July 1, 2009 3:34 PM

joe...the next one is for sometime in October but I bet we'll do an impromtu bar night before then. Biff manages all of these things.

Posted by: daveinbedstuy at July 1, 2009 3:36 PM

You don't need to believe me WHAT. I am frankly jealous of her job. She is 26 and makes between 100K and 200K a year (depending on their performance) and works with 2 other people without the family ever bothering them.

Posted by: Kensingtonian at July 1, 2009 3:36 PM

What, you should get out of the city more often like you did last weekend. Find a few other HF guys with country homes.

Posted by: daveinbedstuy at July 1, 2009 3:39 PM

"Today was one of the best days ever on Brownstoner!

The What"

Ah, bless his little cotton socks, he's all excited.

Posted by: dittoburg at July 1, 2009 3:40 PM

It was a pretty good day here on Brownstoner. Even without Biff (I know he will read this anyway!)...

Posted by: wasder at July 1, 2009 3:42 PM

"2 more month guys, 2 more month!!!"

Till we get an "ignore" button.

Posted by: Kensingtonian at July 1, 2009 3:43 PM

ditto...did you see What called me a "Mo Mo" above???

Do you think I would get away with calling him something that sounds similar?????

Posted by: daveinbedstuy at July 1, 2009 3:46 PM

Got my hands on my ears DIBS

Posted by: dittoburg at July 1, 2009 3:49 PM

My concern with the economy(esp NYC/NYS) is that we have lost a lot of jobs and will continue to see more job loss coupled with a state and local government that is peeling away.

I have been team bull since someone made the distinction on this board, but something we can't ignore is the fact that many jobs have been cut within the past 6 months and will continue to be cut especially in NYC. So with these folks now coming off of severance and having used up their savings, what do they do now? sell their homes, stop renting high priced rentals and so on.
I hate being a doom/gloom person, but I do think we will see more price cuts across the board in local real estate
(sorry if many of you have said this before)

Posted by: gemini10 at July 1, 2009 3:51 PM

gemini10 wrote:
I hate being a doom/gloom person...

I understand, but, optimist/pessimist doesn't apply, that's immaterial...what's important is basing your decisions on where you think we're headed. Short term rally, yes, but long term? Exactly.

Posted by: bridges at July 1, 2009 4:02 PM

"ditto...did you see What called me a "Mo Mo" above???"

I'm sure he was just accusing you of being a momentum investor.

Posted by: etson at July 1, 2009 4:05 PM

I don't see anything wrong with stock prices, since they're already 40% below peak. If that means 40% less corporate earnings are being priced in, I don't think it's fundamentally off, given where we are in the recession.

Like a few others here, I'm long stocks now, and still short RE. I wish RE was 40% below peak, but as everyone knows, it's downward-sticky, and will take much longer to bottom.

Posted by: joe_the_bummer at July 1, 2009 4:10 PM

well - and I respect Dibs' knowledge and many others here as they know far more than I do and I hope he's right,
but if I was to go gutteral and not cerebral, My gut tells me we are heading into an economic mess here locally. Am really concerned about our state and city being run by a bunch of knucklheads. I am concerned about my own plight not to mention some of my friends and neighbors.
But real talk:
I still will have a job a year from now if I plan to stay at this place - however my hours were cut ($600 loss a month) and my husband can't work OT ($200 loss) a month. the chances of us getting raises in the next year are slim to none.
2 of my friends have been out of work for 3 months now. 2 family members, just graduated from college and grad school can't find jobs. I hear more about people losing their jobs, or having their jobs scaled back then being hired by some fresh new company.

Posted by: gemini10 at July 1, 2009 4:13 PM

All depends on who you know I guess Gemini. A couple months ago, I feel like every day I was hearing about another friend who had lost their job and it was really quite scary (although personally I feel secure). Then about a month ago, nearly everyone I can think of (but one person) has landed a new job, and in a few cases, MUCH better and better paying jobs than the ones they were laid off from.

Clearly things are going to be bumpy for a while still, but all of the terrifying predictions of 25% unemployment and the next Great Depression seem more and more far fetched than they did even at the height of the panic.

It's a bad recession. We will get through it though. Always have.

Posted by: 11217 at July 1, 2009 4:22 PM

Gemini. Ok. The noose has been tightening for consumer debt (I refuse to call it credit because it's not). Credit limits are also being slashed, which will worsen consumers' troubles, though I'm sure it works in the banks' favor. Some of this does depend on your perspective, if you're a bank guy, you might see it as a positive. If your severance package and unemployment are running out, then, uh, not so much, eh?

NYS will have no choice but to jack up taxes of all sorts and probably dream up more before they realize that people with no money to spare will sooner pack their bags than hand over what money they have to the state. The state's going to have to contract...Not that NYS ever spent money wisely...It could get ughly

Posted by: bridges at July 1, 2009 4:29 PM

P.S. When I say "pack their bags" I mean people may move to a lower tax state, that's part of what initially fueled the sunbelt anyway. Rob said somewhere today why pay $11 for Newports when they cost 4 somewhere else?

Posted by: bridges at July 1, 2009 4:44 PM

DIBS, that is one way to look at it. Another way is that the average time to reach inflation-adjusted peak after the bear market starts is about 25 years. Thus, all those many people who had accumulated assets for retirement or whatever prior to 2000 may as well kiss it goodbye. If you're young, maybe this is not such a big deal since you have more of your savings invested at a lower base and you can ride up the recovery curve. If you are, say, a babyboomer, you won't have the opportunity. Thus the prospects for a very weak and drawn-out recovery.

Posted by: Back40 at July 1, 2009 4:47 PM

And just what kind of wave are you getting that 25 year number from???? I've been through a number of stock market cycles since 1995...at least 3 and each time we went higher...inflation hasn't been high enough to materially ffect the returns

Posted by: daveinbedstuy at July 1, 2009 5:00 PM

11217 - I know there are bright spots for folks. unfortunately I am not one of them nor are people in my circle. You all know I am selling my house b/c we can't enjoy our life. sure the bills get paid..barely - but what happens if I DID lose my job OR the boiler blows up, you know? Talk about the noose tightening around me!
I think many people are like me, 1 disaster away from financial chaos. I don't blame anyone but me. I could have been more frugal. but I defintely don't regret buying my house 6 years ago as I am making a nice profit off of it even at 18% off my asking price :)
am taking this step in my life as a reset

Posted by: gemini10 at July 1, 2009 5:03 PM

I get it from the chart, which shows for each secular bear market (within which there were rallies) the months until the S&P regained its peak. Average is about 300 months. As of March, we are 111 months out from the peak.

Posted by: Back40 at July 1, 2009 5:04 PM

Bridges:

There are so many factors you need to take into account though in all of this besides taxes. Politically the U.S. is becoming more and more polarized with each passing day. As more stories like Mark Sanford show up, and every time Sarah Palin or Rush Limbaugh or whoever shows up on CNN, the more the "heartland" of the U.S. distances itself from the handful of liberal enclaves on the East and West Coasts. Lots of people come to NYC to escape what is a very narrow-minded view of the world which is prevalent in a big part of this country.

I don't think as many people as you think want to move to South Carolina because cigarettes are cheaper.

Posted by: 11217 at July 1, 2009 5:04 PM

So you sold, Gemini! That's great! Congrats.

18% off ain't too bad, and I'm glad to hear you still came out with a profit. You staying in the 'hood?

Posted by: 11217 at July 1, 2009 5:06 PM

Yeah I definetely don't think people will leave the state/city because of higher taxes. I just think people will scale back their lifestyles which of course affects other business and therein lies the cycle....

Posted by: gemini10 at July 1, 2009 5:09 PM

back40, that has no relevance. If you go back to 1989, we've been in a secular bull market up to 1999. Then there was a correction back to 1987 levels and then the market went up to peak at the same point as 1999 in 2007 and is now back.

The look and action of the stock market over 25, 50, 100 years is totally irrelevant. The cycles are a lot shorter and that's how money is made and lost. Saying people are 300 months from another high in the market is really "lunatic fringe."

Posted by: daveinbedstuy at July 1, 2009 5:12 PM

There was a story today that people left the state for FL and other places because of the real estate and now they are coming back.

U.S. ‘Migration Bubble’ Bursts, Benefiting New York, Chicago

July 1 (Bloomberg) -- New York, Los Angeles and Chicago, the three biggest U.S. cities, saw an increase in population as falling housing prices slowed growth in the Florida and California suburbs that were leaders earlier in the decade, the U.S. Census Bureau said today.
“The housing bubble caused a migration bubble and it has burst,” said William Frey, a Brookings Institution demographer in Washington. “Big cities survived the housing meltdown better than most of the rest of the country.”
The Census figures, covering the year through June 2008, show how the worst U.S. real-estate slump since the Great Depression, and the deepest recession in half a century, is changing the nation’s population trends. Among the worst hit are Florida’s cities: the state had three of the 10 fastest-growing urban centers five years ago, and none in the most recent year.

Posted by: daveinbedstuy at July 1, 2009 5:14 PM

Saw that one Dave...been saying it for a while now. Glad to see it wasn't just one of my baseless rants. :)

It only makes sense that the U.S. catches up to some of the old civilizations and becomes more urbanized. It's really the only way we can survive on this planet. If every single person had to have 3000 sf with a yard and 2 car garage in the burbs, we'd be in BIG trouble.

I'm very happy to see this trend reversing, and it sounds like it is expected to continue. I can't tell you how many people I know are hearing stories about NYC being cheaper now and friends from out of state contemplating moving here. Now granted, we are talking about mostly younger, mostly single and occasionally gay (all a good recipe for a move to NYC) but there are also families and empty nesters on that list as well.

Posted by: 11217 at July 1, 2009 5:20 PM

11217 - shhhh not yet! ha - we are at contract stage
omg of course we will stay in PS or maybe like WT(ish)
we plan to rent for a year and watch the market. We do like owning for obvious reasons so plan to jump in just not in over our heads this go around :)

Posted by: gemini10 at July 1, 2009 5:21 PM

Well my fingers and toes are crossed for you with regard to closing. I'm sure it will go through without a hitch!

Posted by: 11217 at July 1, 2009 5:24 PM

DIBS, the chart (http://www.ritholtz.com/blog/2009/06/monthly-sp500-inflation-adjusted/) is in inflation-adjusted terms. Your rather incoherent rendition of relatively recent market trends appears to refer to the nominal trend.

As to your belief that history has no relevance, I will just let that go without comment.

Posted by: Back40 at July 1, 2009 5:28 PM

11217 - thanks here's hoping

Posted by: gemini10 at July 1, 2009 5:29 PM

It's pretty obvious to anyone with a brain that a hedge fund manager specializing in equities, of any standing, would not be hung up on the future price action of ghetto real estate. Two questions: Why would someone claiming to be a HF guy be so hung up? (Answer: The bulk of his net worth is tied up in a ghetto RE.) And b.) No one with an even moderately consequential job in equities could possibly spend hours a day fighting with anonymous posters about the price direction of equities and ghetto RE.

If you examine his posts at all, you come across howling contradictions in Dave's own logic: When the stock market collapsed, it was nothing more than a panic driven measure of mob emotion. Now that it's rallied tentatively off its lows, it's a perfectly rational leading indicator of recovery. Literally everything DIBS says is a verbatim repeat of something he's heard on CNBC, from Larry Kudlow.

Dave does not manage money; he doesn't work for a hedge fund. He is an internet troll. I am willing to wager a case of Haut Brion. All DIBS needs to do to prove otherwise is show us some documentation of his employment and some legit evidence of his returns. Until then he is an irritant and a sock puppet.

Posted by: Whuh at July 1, 2009 7:31 PM

Whuh,
This is pointless but I can vouch absolutely for the facts that Dave is a real person and that he manages money for a hedge fund.

If you come to the next Brownstoner drinks, you will probably meet both of us and you can buy both of us a drink. Until then you will remain an irritant and a sock puppet.

Fwiw I disagree with several of his opinions on both the stock market and the housing market. But each of us will manage according to his own view and that's fine.

Posted by: etson at July 1, 2009 8:01 PM

"ave does not manage money; he doesn't work for a hedge fund. He is an internet troll. I am willing to wager a case of Haut Brion. All DIBS needs to do to prove otherwise is show us some documentation of his employment and some legit evidence of his returns. Until then he is an irritant and a sock puppet."

AAAAAAAAAAAAAAWWWWWWWWWWWWWWWWWWWWWWWWWWWW!!!!!!

This is the best PWNING ever on Brownstoner!!!!!!!!!!!!

Whuh The What blows before you! Job well done and guess what?!

Day Trader In Bed Stuy had no answer... Today Dave got his ass kicked!

The What

Someday this war is gonna end...

Posted by: Return of The What at July 1, 2009 8:11 PM

I'm guessing I'm too late for this thread but here goes anyway: Has anyone mentioned yet how much nyc real estate (not to mention the nyc economy) relies on the banking sector? I would think that the banks won't be pulling in nearly as much in the coming years because the government will be regulating them up the ying yang. It will probably be a while before everyone forgets about Depression 2 and lets the banks get back to doing what they do best - coming up with complex schemes to make gobs of money while contributing almost nothing to society.

Posted by: nycdelisauce at July 1, 2009 9:26 PM

> Whuh The What blows before you!

This is the best self-PWNING ever on Brownstoner.

Posted by: DitmasSnark at July 1, 2009 9:37 PM

I don't have a job but I will insult others who do.

Does being unemployed mean I work for a firm with 1 person?

I used to be a truck driver and actaully had the nerve to tell a lawyer that the best way to get a job in this market was to pound the pavement.

I love slinging insults. It is the best way to deflect others from my reality, which isn't very pretty.

I will jump up and down when others use a slur, but I use slurs all day long.

Do you think I obsess about Dave because I am in love with him?

If I inherited my house from the mother who beat me with a 2 x 4, should I be thankful that she left me the house or angry that I had to take a beating to get it?

I won't tell you anything about me or let you meet me because meeting the wizzard behind the curtain destroys the image of a street-wise tough guy I am trying to create.

Marry me, Dave. It will be just like it was when I was a maytag in prison.

Posted by: ghettoazzpnkbtch at July 1, 2009 9:53 PM

Whuh The What blows before you!

This is the best self-PWNING ever on Brownstoner.

Posted by: DitmasSnark at July 1, 2009 9:37 PM

ROTFLMMFAO

Yes, that an admission to living in Lodi, NJ

Posted by: daveinbedstuy at July 2, 2009 8:06 AM