January 28 , 2008
Perspective on Real Estate
Denial is the most popular brain-freeze of sophistication. It is most often incorrect in its perception of the truth. It simply is out of touch with reality. It’s thinking is very poor. It insists on remaining positive about the markets and the economy when there is little reason to believe that possibility! Some examples:
1) The rewarding of failures in Wall Street-driven organizations. It’s almost as if bankruptcy is the modern measurement of success; if you cost the company, you’ve been leading a monstrous amount of loss, you are given a gold-laden gift package of retirement mother lode as stockholders either remain asleep, or get a lawyer, who is honest and aggressive enough to stop this thievery.
2) A sub prime strategy implodes but some of its captains are just fine. Two examples are the co-president of Citigroup and the co-president of Merrill Lynch; also the co-president of Morgan Stanley. Hmm, this co-president makes the writers of our Constitution prescient, when they made one chief executive instead of two co-presidents!
3) Saving Sears doesn’t look easy anymore. Comparing Sears with its natural rivals makes the once great name look shabby.
4) Analysts, who gain reputations it seems, seldom picking shares correctly, now profess that the stock market constipation has reached bottom—an opinion often projected when the world desperately wishes for one.
5) The same for housing, which searches for a bottom when the depth of a bottoming thickens with mystery and inaccurate estimates. It seems true that a lot of people are estimating when they should get back in the market, as interest rates look good and the drop in starts and sales might make guesswork correct for a change. Many traders love to sell into fear, for they know how fear manipulates the stock market. It isn’t value. It is fear!
Now that lower rates are a factor, the question becomes at what point will buyers be compelled to act, thinking that they are getting a price they can live with and a rate they do not want to miss? This is consumer rationalization at its best. It has little insight, but guesswork has always passed for insight on Wall Street!
Turbulence is never to be desired. Unpredictability is well known as fortune telling come true. But there is something especially painful about it as we travel the road of volatility, day-by-day, event-by-event.
The election seems interminable. The two parties are as different as their philosophies. The only guesswork is whether the Mayor of New York City will decide to enter the beehive as an Independent. The Republican mean-spiritedness carries over against each other. The Democrats had been different, except for the last two weeks when President Clinton decided to attack Obama and introduced race into the fray. The press loved it because it gave their gossipy ways some legitimacy. The South Carolina evidence was shortchanged because it had such a large Afro-American demographic.
It was expected that Obama would sweep the results, but the talking heads and the press couldn’t wait to heap blame on Bill Clinton. Now we have to wait the big primary day, Feb 5, to produce any real evidence that Obama will transcend race and come away the big winner.
To me, the media has stolen the process away from the people. In addition to the talking heads and their anything-but-objective opinions, the press controls the process with their daily (hourly?) polls, which pretend to be the coming truth!
The State of Nation presidential speech will tell us whether the president has learned anything from his years in office and from his many serious mistakes, which are still trusted by 70% of the Republicans. Why should he learn when these people give him their trust and confidence, which stress this Republic into two violently opposite poles?
BUSINESS WEEK COVER (FEB. 4) "Market Reckoning: The Message in the Turbulence" — The analysis we will have to draw will be based on what induced the era of prosperity. Was it real of just that so much credit was available. Also, was increased productivity real or induced also by cheap credit?
So how deep will this bear market prove to be? Certainly the “experts” are again proving that they have no special insights. I am the pioneer of real estate/housing research and motivation and I use every experience and insight I can summon to figure the future. If I allow it, the more opinions I read, the more confused I will be. What will the stock market be today and why should I care? I have used a real expert on stocks as my advisor for many years, have made plenty of happy returns and haven’t broadcast a word of it. Each person to his own risk taking is my professional motto!
srg
