Good for Stocks, Bad for Real Estate

October 17, 2008 by Mark T. Rafter

As I was noting the possibility of in my previous post, I think we hit the double bottom and can expect the stock market to trend upwards for awhile. Could only be a few months, could be the better part of the next 12 months. Who knows.

Thank God … whereas I am only down (as of today) just over 10% in 2008, that’s a big enough number for me to be pissed off about it. I have bet heavily on physical precious metals and the ETFs that hold them. Yesterday’s brutal ~$50 drop in gold and a commensurate % drop in Silver has been killing me (and it continues today). Goes back to hedge funds deleveraging and other conspiracy theories which I think will settle out and result in a huge run in gold and silver.

I am indeed holding my breathe … this is not for sissies. Turning blue that is …

Real Estate on the other hand I think is even more screwed than it was even yesterday. The construction starts on new homes fell to a 17-1/2 year low (for last month’s numbers) is not a welcome statistic. And what is going on with mortgages? 30 year FIXED mortgages are GOING UP?!?! What the hell is that all about? The banks still don’t trust each other and they dont trust anyone to really pay back a mortgage so they are not letting any but a trickle of $$ out the door. That and maybe they know money is going to be a lot more expensive in the foreseeable future … might as well screw the consumer while you still can!

The real issue is that this is where the mess started. It’s what we supposed to be fixing! Why is the USG handing out $Ts and the clowns (banks) benefiting from this largess are not helping out on the other end? Two words: No Leadership. AAARRRGGGGGHHHHHH!!

The other nasty little secret being floated around now is that Fannie and Freddie and everyone else holding crap paper on these deflating house assets are pushing back on taking short sale and auction offers on their REO properties HOPING THE GOVERNMENT IS GOING TO MAKE THEM A BETTER OFFER once the details of the bailout and $$ reach main street.

This is a mess of biblical proportions. I do feel a little more confident going into stocks for the near term. That is a good thing - dont feel like I am trying to catch the falling knife anymore.

Time for a cocktail … it’s 5 o’clock somewhere.