no need to believe when it will play a major role.... IF IT played a roll in the economy the last 5 years it sure will play a huge roll in the next 3-5 years. $1,000,000,000,000..........remember that number!!!!
On the other hand a lot of smart people are out of RE by now and have CASH on a side line. Where are they going to put it? definetly not RE.
what's the point in trying to GUESS when a crash is coming. it's pointless. there's no informative points in any of the arguements by the people who say "this rally is bullshit", and "we are going straight down from here"... i don't know what's going to happen...how does anybody in this thread know. at least, throw out some decent facts to back up statements.
Its not about people putting money into the DOW components... Oil is going to come down further because there was not one hurricane this year. There have been no supply disruptions and there was a large find in the gulf. The OPEC nations have had a horrible history in regards to cutting production. In fact, Iran seems to be wavering on the issue back and forth. They are involving themselves in a very expensive atomic research program and they need the cash. Demand is going to drop as new technology around the globe comes on line. Lets take a look at vehicles, for example. Engines seem to be getting more efficient. The price of energy is a big expense on the balance sheets for the DJI components. The DJI components have responded to the energy price increases by passing it along to their customers. As energy prices come down, the components will continue to pass it along to their customers. They will charge the same even though they themselves are paying lower energy related costs. If the public accepted the current prices, then not one of the DJI components will respond with price cuts on their final products even if oil came down to $2 per barrel. The current P/E ratio of the lot is 14.71. This will ultimately expand in the next year or so. As a higher ratio is accepted by the market coupled with strong earnings as a result of energy saving expense and passing along inflated prices to customers, we will see DOW 14000 one year from today.
Oil at 58+ is still expensive. If the barrel of oil dropped to 35-40 I would say were doing good. I predict oil back above 65 in the next 1- 2 months. COuld easily come back to 70+.... I would say Dow 13,000 if there wasnt a problem in the housing industry. Using your house as an ATM will slowdown quite a bit, where people will borrow money from I have no clue since the savings rate in this nation is at -1.5%. I would be also be worried about the decline in mortgage equity withdrawals.
yes 1 trillion worth of arms resetting next year, some figures have put it upwards of $2 Trillion. This economy has been running on every dollar taken from homes in the last 5 years. After seeing 100% increases in the housing sector in the last 5 years I really think its okay to see at least a 5-15% decline over the next 2 years. I predict a 3-5% drop in housing prices between now and Dec 2006. By the end of 2007 another 8%-15% drop. Homebuilders like TOL, KBH, CTX, JOE, etc should see another 20-30% drop in stock prices.