Now there's a curious strategy. Gold is the textbook inflation hedge, buy it and watch it go up (or rather, watch the dollar fall against it). But against deflation?? Isn't the standard hedge against deflation to have lots of cash that essentially increases in value every day?
TGreg - Interesting Point ! Lets see what everyone else has to say about it ! It seems that we do have inflation - but the Fed won't call it that ! As I understand it ( perhaps wrongly so, ) CPI = minus food , minus energy - huh ? If those aren't an indication of inflation - then what is ...... What am I missing ?
PPT running out of cash...how many times can they hold the levee. Consumer Confidence # should have this market down big-time, will they come to the rescue again?
If this were really true, that the PPT was dumping billions trying to keep the markets afloat, then found out they couldn't - that'd be the short opportunity of a lifetime.
You can also look at it this way: they have the choice between losing it all or just half of it. Besides that it's my belief that in the end the bill is paid by Joe Public and not the ones, who keep this market afloat.
The simple fact is that the system is too complicated for anyone to predict what will happen next. Ive been a confirmed pessimist for 50 years and the only thing it has done has kept me from making a lot of money. Somehow we muddle through from one crisis to the next.
the housing market here in socal is smoking, particularly apartments. but i can tell you 1st hand that i mostly recognize the sellers names, not the buyers. also, the arguments given that there is no land, its expensive to build, etc, were all just as valid a year or two ago. people are buying apartments because they have seen others make alot of money in the past 3 years and they are desperate for yield. when the baitball is buying, all the indicators are maxed-out... when they get burned and turn, you'll see expense and vacancy projections jump, rents will soften, etc and cap rates will climb. if the risk is to the downside, buyers should be commanding higher yields, not lower yields that are indicated by (in some cases) sub-6% cap rates. we are now seeing C-grade apts trade with very strong demand. they are usually the last to go, as they should be. renters will move when they lose their jobs, and i strongly suspect/predict that many will relocate to other states. and what would rent control would do to apartment values in areas such as san diego county! could happen. in the housing market in the late 1980's, i saw people camp-out here so that they could offer like $389,000 on 3,000 SF houses on 5,000 SF lots in the central portion of san diego county. that was a lot of dough then. grannie provided the down payment, lived in the downstairs bedroom and was the day-care provider while mom and dad worked. then mom got here hours cut = recession. then she got laid off = depression. no more 2nd income. then dad's job looked shakey = turd storm/no spending beyond essentials - time to sell this big house! BTW, entry-level 1,600 SF homes are now approaching $400,000 in blue collar/middle-class burbs. do people stop and think that they are paying $250/SF for a modest quality home on a 4,000 SF to 5,000 SF lot? and that it might be 1-2 hours from their place of employment? we have not really been hit by the recession yet. when it happens it could have a very negative impact on real estate values. people have no savings. as reported in a recent active trader mag article, the average mortgage payment is at a 40% ratio - what were they not long ago - 25% to 30% max? average downpayment is 7% - yeah, i'd loan 1/2 million to a guy that can come up with only $35,000 down payment... that equity will disappear in a correction so fast from these levels it wont be funny! and people will be very hesitant to service debt beyond the value of the house, if they can in fact service it. seen it before! california has massive budget problems - watch what the tax rates do (up). also watch and see what happens if the poor majority decide to repeal proposition 13. calif is less business friendly than most nearby alternatives in terms of the EDD, EPA, you name it. watch new mexico, nevada and oregon come courting businesses again - would you pay salaries high enough for goobers to buy 1/2 million $$$ shacks, or $150,000 to $200,000 houses in other states. we continue to be overrun by illegal immigration, thus impacting the infrastructure. if times get tough, they'll have to cram a 3rd family into that 1Br/1Bth apartment unit. yeah, everything is rosy?