Something I just shared with a friend of mine.

[Hogg]

I emailed a friend of mine regarding my resentment toward the market in recent days and I thought some of you might find it interesting



The market is really pissing me off right now. A number of my holdings are down substantially and I will need a solid year of dividends to cover my immediate losses(I'm still far ahead but have given up a portion of my 2004 gains)....but then again, I believe that these interest rate fears will pass once the financial stocks post 2nd quarter earnings. Though mortgage lending has cooled down a bit, I'm banking on a surge in business as a result of this (forthcoming) 25 basis point shift. Hell, I'm even sitting on a corporate bank (USB) who should be insensitive to an interest rate hike due to their fee-based business structure and their stock has been whacked since mid april. Market sentiment is crazy. I cant begin to imagine how much money the online brokerage houses are earning with all of these little twits trading in and out of their holdings every week. From finance to blue chip, from blue chip to consumer goods, then to REITs, then to information technology, then out of tech.....its just nuts.

The beginning of the year surge had to be attributed to people hiding money in IRAs or and end of 2003 dump into 401K. If you shoved a bunch of money into your 401k year end, it would not post until the first week of Jan which causes me to believe that this is cyclical and can be exploited. Between Jan 1 and Apr 15, there should be an infusion of money into the market. Around Apr15, the prior year end tax bill is due and 1st quarter of the current year is due earlier in the month....so there would be some selling to cover cap gains as well as a lack of new money since some had to cash out their tax debt. It makes sense because between 01 Apr and 15 Apr, the market surged up 6% and back down .....late IRA deductions coming in, other selling off a portion of their holdings to cover their bill on the 15th. It doesnt suprise me that the market is sucking the bottom of the barrel right now.....perhaps I should increase my holdings.... i think this present malaise will subside within a few weeks.

 

[crewboss]

yeah it's a strange time right now, great financials coming through, interest rate fears are dampening things. Hogg, interested to hear what you think about the short run housing market, since we've been through "recession" (although not a classic one) and back, without so much as a flinch from the housing market. you think the bubble will burst?

 

[tcso1506]

yeah it's a strange time right now, great financials coming through, interest rate fears are dampening things. Hogg, interested to hear what you think about the short run housing market, since we've been through "recession" (although not a classic one) and back, without so much as a flinch from the housing market. you think the bubble will burst?

Short everything

 

[Hogg]

yeah it's a strange time right now, great financials coming through, interest rate fears are dampening things. Hogg, interested to hear what you think about the short run housing market, since we've been through "recession" (although not a classic one) and back, without so much as a flinch from the housing market. you think the bubble will burst?

Housing pricing was fairly stable through 2000. The market started to sell off in 2001 and the economy took a huge dump while interests rates were concurrently reduced. There was a shift to real estate starting in 2000/2001 and where we are at now 4 years later is sort of difficult to understand. Now, housing demand is still very high but supply is low, thus causing these huge over-valuations of property in certain areas - at least out here - yet as the real estate market began to slow down - which was evident by disclosures by notable mortgage lenders such as Countrywide and Washington Mutual last summer, the market began to perk up. Mar 03 was the bottom, literally, the bottom of the market and we saw explosive increases through much of the year. Now, we're back in the shitter in the market, real estate valuations have not subsided, and the whole world is selling off because the fed will likely move 25 basis points in June....will it break the real estate valuations ? I doubt it, 25 basis points is not a lot but it is expected that we will see a full point increase by year end. Perhaps the world fears that the fed, much like it contributed to our last recession, will start hiking the fed funds rate without bound again and ultimately put our (now somewhat robust) economy back in to a tail spin.

To kill real estate valuations, it will take quite a bit more than a 25 basis point shift. We would need to see all the ARM holders who are strapped with debt in a panic and to start selling off without bound, consequently, some loan defaults might be good, but this will kill the finance stocks on wall street, and last, we would need a soft labor market. Under those three conditions, it is possible that the real estate market will be broken but if those three conditions occur, we will all be standing in soup lines. Believe me, I am praying that real estate takes a major hit so that I can buy a nice home at a decent price but I have my doubts as to whether or not it will happen.


That is the Hogg viewpoint on the real estate market.

The markets opened today and stacked up some further losses ...it was inevitable since the japs and other markets were stacking up losses on rate hike fears. When it will end I dont know. I usually make my buys during conditions like these but this run has been going on since mid april and I'm actually leaning toward sitting on cash until I see a stable reversal. The dow broke 10K and the S&P dropped down into the 1080 range which, at least per Paul Cherney at S&P, suggests that the market is open to further downside risk.