Wednesday, October 05, 2005

Calling the Top

Primer on my investment outlook

Here is an excerpt from a Newsweek article :-

Reality Check On the Bubble
The housing streak rests on solid fundamentals: plentiful jobs, new immigrants and rising incomes among the well-to-do and older boomers.

By Jane Bryant Quinn

Oct. 10, 2005 issue - It ain't over 'til it's over. Home buyers keep hitting real estate out of the park. The prices of existing homes rose in August at the fastest pace in a quarter century. New construction, sales of newly built homes and applications for new mortgage loans are running, routinely, at stratospheric levels. The Gulf Coast's horrific hurricane losses will scramble the numbers for a few months, but the national passion for real estate hasn't cooled. In fact, prices could jump in Dallas, Baton Rouge, Memphis, Birmingham and other cities where displaced families decide to settle.

Its excellent as a contrary indicator. Meanwhile 100Ks of people are without jobs and their houses have been destroyed.
A new bankruptcy bill will force people to declare bankruptcy now instead of waiting to get off on more lenient terms.
Interest rates are still going and Greenspan may not rest until he sees an inverted yield curve.
Now, every single investment sector except cash can be called a bubble or temporarily overpriced..
Stock - overpriced
Bonds - Overpriced
Commodities - Has anyone noticed that Chinese demand is not growing so fast anymore ???
Precious Metals - Just look at the number of new IPOs of Gold Exploration companies..

4Q 2005 or 1Q 2006 I would expect the beginning of a slowdown or a recession..


Blogger Jack Miller said...

I take the other side. The market is setting up for a major move to the upside. While I do not expect REIT's or commodities to do well, the S&P 500 is about ready to fly.

The negativity of prognosticators is running over. The slow down in demand for commodities in China is a sign that the short rate increases by Greenspan are about over. The market move will start near the next to last increase by the FOMC.

Google is not done yet either.

4:43 AM  
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8:02 PM  
Blogger anmol said...

Welll... I dont see negativity in any sentiment indicators. The VIX is touching lows never seen before..
If the GDP is stripped of hedonics and adjustments growth is more around 2%. Jobs are NOT being created..

12:39 PM  

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