stop loss on long term holdings? you're getting funny looks because they are well deserved. although you and I may agree buying Shanghai is not a great place to park $$ right now (understatement?), plenty of other markets are. its an asset of diversification that serves to at least meet inflationary benchmarks. If they're not betting the house, whats so wrong w/ putting some money in it. If they're buying hong kong shares, averaging down may not be such a bad idea. i'm salivating at what arbitrage between H and A shares is going to do to the HK market.
...and with it goes home improvement, second homes, business investment, ancillary purchases. Oh well.
LOL. That is so funny. In the first few months of 2000 I talked to my family members about stop losses. I talked to friends buying Cisco at 80+ about stop losses (that was after the split). I talked to a guy on a plane who was an investment manager for one of the three wealthiest families in NZ about the market risk for the HiTech's he was just buying for them .... and no one could hear me. Over the next two years I was very careful not to remind anyone of those conversations ... and to play down my enjoyment of the market conditions.
i'm going to assume rents go up, yes, since subprime will be forced to rent instead of buying. but your assumption, widely held, may not actually happen. Subprime poor who are priced out (and/or defaulting on existing loans) are not the ones who typically are buying 2nd homes, spending too much on home improvement (because they are already overextended) or ancillary purchases. For many, the real foundation of this economy, (the cash rich) this may be perceived as a great entry opportunity in real estate. seriously, i've been nothing but a housing bear this past 4 yrs (despite buying and selling throughtout 2002, 2003, and 2005 in overinflated markets) -- but my view is quickly changing. Once subprime buyers are out of the market, suddenly increasing rents and a weakening price environment for entry level forces cap rates (effective yields) up on investment properties. If it pencils out, there will be a resurgence of demand. Furthermore, 4.5% unemployment rate despite construction job losses in a 1 yr old housing bear is pretty incredible ...
Housing should be going through the roof with %6 fixed and 4.5% unemployment. The fact that it's not spells volumes about the potential of housing recovering anytime soon. It wasn't the low rates so much as the lending standards that drove the last boom. Some think rates are coming down which will get housing going again. Unless they return to loose lending standards then lower rates will not do any good with prices like they are. With normal lending standards prices will have to return to pre boom levels, around what they were in 2000. John
I think Rents go down rather then up. The reason being more houses on the market to rent. New houses use to cost more then the larger apartments to rent but not anymore. You can rent relatively new houses with 3, 4 bedrooms all day long now in the Atlanta area for $1500 a month. You have to go up north to get the good deals but they are there. The other thing driving rents down is with housing cooling off a lot of Mexicans will be going back to Mexico because they can't find as much work as before. In SoCal I would guess that close to 500k to 1 million housing units are rented by Illegals. That's another reason why the housing slowdown has not affected unemployement so much because for the most part our houses are built my Illegals. Ghost workers. They don't show up in any of the numbers. John