The Official Dow 7000 thread

[Zoomie1980]

man stocks are virtually flat.

now they are moving in more of a downward trend atm.

And getting to be a better buy every week. I basically invest in my 401k at the maximum rate allowed by law. When the DOW was at it's peak, I was putting only about 15% into stocks, the rest was going mostly to cash and precious metal investments. Today, I am pumping 85% into stocks. If it goes under 6000 I will be at or very near 100%....

 

[editec]

Sooner or later the banks are going to have to accept, as we are learning to accept, that the value of real estate has fallen.

Hence the value of their bonds has fallen.

What they ought to be doing now is writing down the principals on those mortgages to reflect the real market value of the real estate.

 

[wimpy77]

Sooner or later the banks are going to have to accept, as we are learning to accept, that the value of real estate has fallen.

Hence the value of their bonds has fallen.

What they ought to be doing now is writing down the principals on those mortgages to reflect the real market value of the real estate.

actually watching a special with shelia bair on cnbc a couple of weeks ago, jim cramer brought that very thing up. and shelia bair said at this point the law doesn't law for principles to be lowered.

 

[wimpy77]

man stocks are virtually flat.

now they are moving in more of a downward trend atm.

And getting to be a better buy every week. I basically invest in my 401k at the maximum rate allowed by law. When the DOW was at it's peak, I was putting only about 15% into stocks, the rest was going mostly to cash and precious metal investments. Today, I am pumping 85% into stocks. If it goes under 6000 I will be at or very near 100%....

they were talking to doug kass on cnbc's fast money and he said he thought the was coming ( meaning the market rebound). that's the only show i watch on that channel now.

 

[DavidS]

Futures are up 120. Interesting. Up, down, up, down... no market bottom, yet. We need a good 2-day drop of 10% of more to form a market bottom. Every day we go up, we delay the inevitable. I wish we'd get it over with already so we can really start to recover.

 

[editec]

Sooner or later the banks are going to have to accept, as we are learning to accept, that the value of real estate has fallen.

Hence the value of their bonds has fallen.

What they ought to be doing now is writing down the principals on those mortgages to reflect the real market value of the real estate.

actually watching a special with shelia bair on cnbc a couple of weeks ago, jim cramer brought that very thing up. and shelia bair said at this point the law doesn't law for principles to be lowered.

You know in bankrupsty courts every kind of debt except mortgage debts can be written down.

given the fact that reality is causing the price of real estate to seek that magic relationship to what people are ACTUALLY making for a living now, I expect that sooner or later, if we are really hoping to save the banking system, we are going to have to accept that:

1. Those houses is not worth those astronomical sums that people paid for them;

2. Ergo the mortgages are not going to be the income streams the banks were expecting from them;

3. Ergo those bonds are not worth, what Moodys and Standard and Poor said they were worth;

4. Therefore the banks holding those bonds made of those real estate morgages are basically insolvent.

Either we allow the banks to write down the principles owed by the mortgage holders, and reconstitute the banks capitalizations based on these new amounts

OR...

We allow those buyers to go bankrupt.

Then, the banks holding bonds based on those mortgages all go bankrupt, and the USA taxpayer is totally on the hook for FDIC repayments as thousands and thousands and thousands of banks go belly up.

And you want to know what is at the very heart of this problem?

We ENCOURAGED (though goofy financing instruments) the prices of real estate to climb in price much higher than the average salaries of the working class could pay back for them.

Barrring any intervention, I suspect that median home price, which I think even now is probably in the $200,000 range nationally (about 4 times the median salary), is going to find a bottom at whatever the median income for a family in the USA will be.

If the median income is about $57,000?

Then the median home price will be not much higher than 125% of that median income.

And if THAT happens, then every bank and every bond based on the price of real estate is going to crash.

I heard yesterday that ALREADY, because of the dropping market values of real estate, nearly ONE IN FOUR current morgages are technically "under water". People can still afford to pay their motgages, but the equity they THOUGHT they had in their homes is evaporating.

Sooner or later, the people whose homes are deeply under water, are going to decide that paying too much for a home they don't own any equity is foolish.

Even people who thought they had a LOT of equity, are going to wake up and realize that they're NOT putting anything away for their futures by paying off their homes.

And for MOST people in the USA, the ONLY real asset they ever had was the equity they were building up in their homes.

When the declining market value of RE takes that away from them, and when the decline means that there is no sense continuing to pay mortgages based on values that no longer exist, people are going to seek other places to live.

They'll rent or they'll buy homes which are priced at the REAL MARKET VALUE of homes today.

And in those parts of the nation where the market prices of homes was wildly out of kilter with the local incomes, those areas will be completely devasted by this process.

That map which I and others have posted, the one that shows where homes are in foreclosure, could get much MUCH redder if we don't figure out what to do, and do it, STAT!

Maine is mostly in the blue, BTW, for those of you who care about what's happening to home values here.

Basically, the market prices of homes here has NOT been going up as quickly as it had in those places denoted on that map which are pink or red.

We're still safe...but for how long?

Nobody and believe I mean NOBODY really knows.

 

[DavidS]

My bottom of 6500 is holding. We're up 313. Wow. Big day on Wall St.

 

[Paulie]

I called 6500 bottom a couple weeks ago. Based on nothing but a technical support hunch, really. I won't be surprised in the least if we break it.

Barney Frank said today that he expects uptick rule to be back in about a month, so we may hold these lows for now, especially if something positive comes out of the M2M hearing.

I'm making a couple bucks on my UYG that I can't seem to quit playing with. It's become like crack to me lately. I also sold my DXD lat week when we touched 6500, for a beautiful profit that's going to pay my school for the year. Been holding it since 8600.

 

[wimpy77]

well citi came out and said that they actually made a profit in the first two months of the year. that's a good thing.

 

[editec]

I think nobody knows how low the stock market is going until the problem of real estate valuation is resolved.

But hey, I HOPE you guys are right and I am completely wrong.

 

[Ravi]

I called 6500 bottom a couple weeks ago. Based on nothing but a technical support hunch, really. I won't be surprised in the least if we break it.

Barney Frank said today that he expects uptick rule to be back in about a month, so we may hold these lows for now, especially if something positive comes out of the M2M hearing.

I'm making a couple bucks on my UYG that I can't seem to quit playing with. It's become like crack to me lately. I also sold my DXD lat week when we touched 6500, for a beautiful profit that's going to pay my school for the year. Been holding it since 8600.

Bernanke is against suspending mark to market.

 

[DavidS]

I called 6500 bottom a couple weeks ago. Based on nothing but a technical support hunch, really. I won't be surprised in the least if we break it.

Barney Frank said today that he expects uptick rule to be back in about a month, so we may hold these lows for now, especially if something positive comes out of the M2M hearing.

I'm making a couple bucks on my UYG that I can't seem to quit playing with. It's become like crack to me lately. I also sold my DXD lat week when we touched 6500, for a beautiful profit that's going to pay my school for the year. Been holding it since 8600.

If the uptick rule is put back in place AND M2M is suspended for 12 to 18 months, I wouldn't be the least bit surprised if we're somewhere in the 8000s to end the month.

My 6500 call was based upon a historical trend of presidents and how many presidents have watched the DOW double under their terms. When Reagan took office we were around 973 on the DOW. When he left office we were around 2000. When Clinton took office we were around 3250. So he should've left office with 6,500, but the market was overbought and rose too high, too fast. We tried to correct ourselves in 2001 and 2002, to no avail. We are where we should be and by 2016, we should be around 13,000.

 

[Paulie]

Bernanke is against suspending mark to market.

Luckily for us Bernanke has no say in it.

 

[DavidS]

I called 6500 bottom a couple weeks ago. Based on nothing but a technical support hunch, really. I won't be surprised in the least if we break it.

Barney Frank said today that he expects uptick rule to be back in about a month, so we may hold these lows for now, especially if something positive comes out of the M2M hearing.

I'm making a couple bucks on my UYG that I can't seem to quit playing with. It's become like crack to me lately. I also sold my DXD lat week when we touched 6500, for a beautiful profit that's going to pay my school for the year. Been holding it since 8600.

Bernanke is against suspending mark to market.

Is he the one who decides to suspend it?

 

[Paulie]

I called 6500 bottom a couple weeks ago. Based on nothing but a technical support hunch, really. I won't be surprised in the least if we break it.

Barney Frank said today that he expects uptick rule to be back in about a month, so we may hold these lows for now, especially if something positive comes out of the M2M hearing.

I'm making a couple bucks on my UYG that I can't seem to quit playing with. It's become like crack to me lately. I also sold my DXD lat week when we touched 6500, for a beautiful profit that's going to pay my school for the year. Been holding it since 8600.

Bernanke is against suspending mark to market.

Is he the one who decides to suspend it?

No, it's an accounting rule. It's the SEC's jurisdiction.