Someone has been eating?my economy.

Check out this commentary from Tom Graff:

I’ve argued that home prices are sticky on the downside, because people are very reluctant to put their home up for sale at a loss. In many cases, people just can’t put their home up for sale at a loss. Let’s say I buy a $200,000 house with 10% down. The house declines in value by 5%. Now I’ve invested $20,000 and have a $10,000 loss. I want to buy a bigger home for $300,000. I have to pay off a $180,000 loan with sale proceeds of $190,000. In order for me to put 10% down again, I’ve got to come up with $20,000 in cash. If I’m like most Americans, I haven’t saved very much, so coming up with the cash would be difficult.

So what do I do? I just stay in my current house. Ride out the housing downturn.

If people delay their decision to trade up in houses, the effect is to lower supply. I think this creates a floor to how far home prices can fall in general. Maybe not so much in a given area, particularly those where investor speculation was rampant, but nationwide. This is why I’m not terribly bearish on housing, and why I don’t think housing will compel the Fed to cut rates early in 2007.

That is an interesting perspective.? As someone who has gone through the process of selling a home, I know that is exactly how I felt.? A loss wasn’t acceptable and I certainly couldn’t afford to make up any shortfalls.? What makes something like +4% a year, normally a modest number, attractive is the leverage provided by house values.? But that’s not so good when it turns negative.? But the one thing that makes it different from a stock or other investment is that you can live in it.? As long as you can afford it, you don’t have to sell it.? But the one thing this thesis leaves out is the affordability factor.? What if you can’t afford it?? It becomes like a margin call.? Still, I like the common sense of this point of view.

I assume?Nicholas M. Maounis named his fund Amaranth after the flowers of the same name that represent immortality in several literary and cultural traditions.? Pride goes before the fall.? Isn’t it ironic? Don’t you think?? It’s like Amaranth on your wedding day…ohhh, crap.? I hate getting caught singing cheesy songs while I blog.? So embarassing.

Anyway, I looked up the plant on Wikipedia and found out that he might have wanted to check a few more associations before picking this name.? For example (more…)

In light of Jason’s commentary on gold’s technical picture, I set out to understand exactly why gold has reached this position in an attempt to shed some possible light on how it might act going forward.? My adventure has taken me down so interesting back alleys to say the least.? I began by pulling out the Commitment of Traders reports from the CFTC.? I’ve been studying these reports more and more lately and now I had an excuse to do a more concentrated study on one market. (more…)

It’s actually not uncommon for Nijonjin to breakout spontaneously and wordlessly into Rock/Paper/Scissors when reaching for the same cab door or the last piece of ebi-zushi.? Who knew that it went all the way to the top?? Do companies need to disclose this kind of decisionmaking to the shareholders?? Is that really what all those traders on the floor of the CBOT are doing with their hands?

By popular demand, I’d like to post an update of the real-money Uberman’s Portfolio to date.? As you may recall, armed with the?power of Grayskull?and some ring with crazy writing on it that I got from a giant eyeball on a mountaintop (something about “forged from the fires of Doom blah blah blah”), I took the plunge with my own cash at the start of August.? Since then, I’ve risen at 8am each Monday to perform my dark magic (hit F9 in Excel) and slay the dragons of the market (spend 5 minutes typing in some orders then crawl into the shower).? I spend the rest of the week slavishly watching my assets fluctuate wildly (watching girl’s assets fluctuate wildly), hoping against hope that I’ll come out ahead in the end (umm…).? Then, the ugly cycle repeats… (more…)

I love coming across interesting charts that just make you go, “Hmm…”, like the one I posted about median income.? Here is another “Hmm…” chart that seemed to fit the vibe of recent posts:

fomosp500.png (more…)

I add a link to the blogroll for Bill Cara’s site.? I think you will find it an interesting addition to the “static”.? He has a uniquely insider view of things and often links you to the reports coming out of big financial institutions (the big money) that only clients normally see.? He also does an extensive weekly review of sectors and interesting stocks.

It was the best of times and the worst of times as commodities fell of the charts (almost literally).? Why is this troubling because I certainly don’t dread filling my tank us nearly as much lately?? Because such a rapid decrease in commodities prices could spell rapid deflation.? I know that is hard to swallow with so much concern recently on the inflation front.? But when assets decrease in value, the money supply shrinks, which is deflationary. (more…)

Today’s move in stocks is pretty bullish in terms of density theory.? A quick whip from one side of the bell curve to the other or a fast rejection of the last major value level, all followd by a breakout seems to be something you see ahead of major moves to new levels.? This certainly lends support to the more bullish signals given in models like those at CXO Advisory.? There isn’t any major stopping point to the north other than the year’s high so a retest is looking mighty likely.? Stay tuned…

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