drbubb

Posted on HPC - slightly tongue-in-cheek / Gold-talk on this too... This guy warned you BEFORE the market peaked in mid-June Podcast: http://commoditywatch.podbean.com/2009/06/...-tide-changing/ FTSE Just thought I should set the record straight (haha) Personally, I started taking some profits Tuesday on my Puts, in case market fails to break that support == == == Although I didnt say it on HPC, Yesterday I started nibbling on Gold etfs. I bought back some of the short side of my "Bull Spread" on GLD: + GLD $ 90 Calls : OQAAL / $11.80 - $12.20 - GLD $100 Calls : OQAAV / $ 8.50 - $ 8.80 (originally Bought the Bull spread at over $3.00, to have a position that would make money if Gold suddenly ran up.) I also have buy orders in place on lower strike Calls for March 2010

In the Inland Empire of California, near Los Angeles, Joylette Lynch, 70, is challenging the assessed value of her home as she tries to scrape together $1,158 a month to pay her mortgage, taxes and other bills. Her two-bedroom house in a community for older residents was worth as much as $280,000 three years ago, but houses on her block are now selling for less than $100,000. The state is depopulating! Prices are still too high for that Where are they going? Houston, Denver ... Energy places California has "shot its wad", betting on cheap oil, and Suburbs forever ! Its soooo over!

Interesting. Many expat foreigners live far better than locals, here in Hong Kong. But they are not hated. They are an important part of the economic landscape - valued customers. (I dont feel I am one of them completely, since I have no housing allowance to buy luxury accomodation. Having said that, I am satisfied with the way I live, and think it is fine for me. The gf mostly agrees.)

Enrieb published an excerpt. Gold owners did brilliantly. Land owners did okay. Apartment house owners did badly. Read why here: Post#97: http://www.housepricecrash.co.uk/forum/ind...90&start=90

(From HPC's "Inflation Question"): That's exactly right. You need higher income, or the debt burden is unchanged for the borrower. It only "erodes" in relation to rising income. In fact, you will be worse off than a low inflation situation, if you have no income rise, because lenders will put up their interest rates to try to recover what they lost to inflation. This is the problem some stupid home buyers are making. They think their debts will somehow magically erode away. The reality is, the home value will not keep pace with inflation when rates are rising, unless rents rise as fast/or faster than interest rates. If you gave a quiz on the impact of inflation and hyperinflation on home prices to estate agents, 90-95% of them would fail it. Mainly because they believe their own flawed soundbites.

I think people's understanding of the Weimar episode is greatly distorted by the Easy Credit period that we are living in, It was never easy to get high LTV mortgage debt in early 20th century Germany, and once inflation took off, it was all but impossible. I read somewhere that a few privileged industrialists were the only ones with true access to credit. They used it to their advantage and bought up assets (that others could not afford), thanks to their access to credit. Some on HPC are saying "now is the time to buy property", thinking that if they borrow 70-80% and fixed the interest rate for 5-10 years they will somehow glide through the next few years, and watch inflation erode away their debts. I think it is highly likely that the UK would first go through a wrenching period like Iceland. There, CPI prices are up 12-20% over the last year, and property prices are still falling. From what I am reading, it is very tough holding onto jobs there, and still harder to find good tenants. So a property buyer using high leverage may have trouble holding onto the property while they await the arrival of inflation. And then once it does arrive. they had better have a job, and one where wages get pushed up with inflation, or they will have trouble holding onto the property while they await a time to repay the debt. If the property is the main asset, and rents lag far behind inflation, there will be trouble. Tenants may default, or strip the property, while maintenance costs and property-related taxes are rising. Many will find owning the property is a nightmare, even if they have a job, since they may find they are in an unsafe neighborhood with crime and violence. Those areas that gentrified during the long property boom, are likely de-gentrify as the job losses and economic hard times settle in.

Well, okay. You can use YOUR scientific method. Here's mine: Does it make money (consistently) or not? That is my test. And the experiment is being conducted every day, using my own money. So far, after over 10 years with no other source of income, the experiment has been successful. That PROVES all that needs to be proven, as far as I am concerned. Some things that I experiment with, I drop. Others, I embrace, after they have proven themselves by making money. Many of the patterns that I use here, have worked well over many years. Others I am still testing. The beauty of my system is that I make a good living, while "running experiments", and learning from the markets, and my own research. I share it freely here, because it costs me little (just some time) to do that, and - so far - I do not need to charge, to make a livelihood, since my trading (normally) provides that. I also learn from others here, and get many good trading ideas and information in return. And, frankly, I feel better when I share something with others. Else, this can be a very solitary occupation.

I looks like: Break ! Gold is down almost $10, with Oil and stocks also under pressure

Great find, Enrieb, on the "Goods during hyperinflation" thread So what will happen to all those UK BTL speculators if the UK heads into hyperinflation?

I have looked for such figures previously, and never found them. This is why I was so interested in that "0.26%" figure when I heard it on a weekend podcast. This leaves me wondering if property in Zimbabwe might be a good cheap buy, if they are now coming out of hyperinflation. Ah, but what huge security and political risk!

Mean Guess on the HPC Poll - Current Tally -- // Housing as % Household spending 50% : x 10 = 500 42% : x 05 = 210 30% : x 04 = 120 20% : x 02 = 040 10% : x 08 = 080 05% : x 07 = 035 02% : x 08 = 016 01% : x 11 = 011 / === : x 55= 1012 / average: 18.4% , that's 71x the actual figure !! WHY SUCH A HUGE MISS ? They were right about one thing: Housing-related spending fell during hyperinflation. But it fell far more than people forecast. It fell to about 1/100th of the original percentage. The mean HPC estimate of 18.4%, when compared with the pre-war level of 25.6%, implies a fall of only 28%, not the actual 99% drop. Have HPC people been brainwashed by Estate Agents, to think that property is a great investment in hyper-inflationary times ??

I see your point, but let me qualify that: + Having debt in itself, is not a great thing, especially if interest rates rise, (Remember, deposit-holders and lenders too will want to keep up with inflation.) + Having FIXED rate debt (fixed at low rates) is better than floating rate debt + The key thing s to USE THE DEBT to buy an asset that rises with inflation, and as my historical Weimar example illustrates, property* woefully under-performed the German average inflation - by rising only 1/100 what the average price did (!) + Maybe owning a warehouse would have been a smart property investment. You could have filled it with non-perishable food, and then some months later, the food would have been worth many times what you paid for the warehouse. You could sell the food, and buy many nice houses == *That is: "Property", as represented by the Housing related spending

I do have a stake. But I keep it separate from GEI, as an activity I think it can compliment GEI, by focussing on Gold related etfs, Dynamic charts, and with Links that will be useful to GEI posters

If the Seasonal pattern is followed (can we be so lucky?)... Then the ideal buying window would be late July or late August

(From the New Libran Strategy thread): I think we can have both, but not at the same time. Maybe even, the market will become "disturbed and bipolar" and swing back and forth between a focus on each, in turns. Until prices finally breakout in one direction. This chop, chop, chop can "erode a portfolio down" towards nothing, if you aren't careful. I want a big enough strategy that can allow both extremes, until the breakout is clear. My present thinking is we will see a serious "whiff of deflation", which will cause the UK government to panic, and then go into full-blown QE, pushing it into "the foothills of hyperinflation". This seems to be happening already. But a bigger deflation scare is need first. The US may get there first (into the deflation scare that is), or the UK may take off towards high inflation, from whence it is. In case you havent noticed, I am preparing to get serious about gold investing (at last) I hope to develop Goldstock.co.uk, as a valuable resource for Gold and Gold etf investors, and I am already starting to put my research on Gold etfs onto the sister thread here, which is: Goldstock.co.uk - Charts & links : Gold related, Developing the website Please have a look, and post any ideas. Should I talk about Bond etfs there too??

Sure, but you make it seem easier to do than it is. I suppose that is the trick in getting paid for it.

A good piece, and very well read. I wish I could have done as well with my reading about Harrison's 18 year cycles. (When I listen to it now, it just puts me to sleep within 2-3 minutes.) I may try to redo it someday. Your piece Is a good mix of : facts, opinions, and historical quotes. I think you should send a link to Financial Sense and Goldseek Radio. Maybe they will use and excerpt or three, and link back "Follow the Yellow Brick road!" - yes, indeed. Hey, didnt the writer of The Wizard of Oz have an interest in Sound Money?

(HPC-ers do not seem to get it yet): Mean Guess - Current Tally 50% : x 10 = 500 42% : x 05 = 210 30% : x 04 = 120 20% : x 02 = 040 10% : x 08 = 080 05% : x 07 = 035 02% : x 08 = 016 01% : x 11 = 011 / === : x 07= 107 / average: 15.3% If that were correct, and Housing-related spending fell from the current 42% to 15%, what sort of investment do you think housing would be?

Maybe I should look into this in more detail... Soup Kitchen International was a well-known soup restaurant at 259-A West 55th Street, near 8th Avenue, in Manhattan, New York City, run by Al Yeganeh. As of April 2006, the 55th Street location was closed, with the windows soaped over. A statement on Soup Kitchen International's website states that the 55th Street location and the entire building wall next to it are available "for sale or lease" until December of 2019.[1] Yeganeh was born in Iran [2], and had lived in Khorramshahr, Iran, prior to moving to the US. Ali "Al" Yeganeh was the inspiration for the "Soup Nazi" character in the similarly-named episode of the NBC television sitcom Seinfeld. Yeganeh has stated on numerous occasions that he is very offended by the "Soup Nazi" moniker [3]. It is in this episode where Yeganeh is fictionally portrayed as the tyrannical purveyor of his soups, making all of his customers follow a strict set of rules if they wish to successfully procure a bowl of one of his coveted liquid masterpieces. The real Yeganeh has stated that his rules are simply an attempt to keep the line moving and serve the largest number of people. In order to provide the most efficient service to his customers, Yeganeh established a set of "rules" for ordering his soup: + Pick the soup you want. + Have your money ready. + Move to the extreme left after ordering. [4] + Another added rule, created after the Seinfeld episode, states not to mention "The N Word (Nazi)." Supposedly, if these rules are not followed, the offending patron is denied service and usually sent to the back of the line. However, at the first franchise of Yeganeh's "The Original Soup Man" restaurants (in Princeton, New Jersey), the rules are posted but not enforced in such an extreme manner Co's Website : http://www.originalsoupman.com/c_rules.aspx Al's Website : http://www.therealsoupman.com/ (I like the ego-istic @'ole, Jerry Seinfeld, even less after reading about how he treated Al Yeganeh.)

(Following is from the Poll thread on HPC): You nailed it, Phil. Actually, I like the taste of German Rye bread, and can imagine with soup, it provides a reasonably nutritious diet. I suppose it was subsidised by the government. I wonder how the diet in the UK is changing as a result of the current crisis? I read somewhere that more Americans are going to McDonalds and other fast food restaurants, and avoiding the more expensive restaurants Here's a business idea: The NEW SOUP KITCHEN restaurant, serving nutritious rye bread and soup, with decent coffee and tea priced at reasonable prices

the point is - that spending on housing (rents and mortgages) got squeezed and squeezed, as people downsized their housing-related spending in order to feed and clothe themselves. Landlords had ZERO pricing power, and had no ability to raise rents to keep pace with inflation. And that was even when the German industrial production was relatively well maintained. It only crashed down in the 1928-32 period Anyone who buys property "as a hedge for hyper-inflation" must be a fool, who has done no historical research at all !

I decided to have some fun with this (amazing?) statistic. And so I have started a little Weimar Poll over on HPC. Poll: Housing As A Hedge For Hyperinflation - A Poll Do you suppose it will work? / As % Household spend http://www.housepricecrash.co.uk/forum/ind...howtopic=119091 (I'd love to do the same on SingingPig (Is it down again?), and then see the faces of those smug BTL speculators over there. But my account was cancelled again.)

Found it ! Are you ready for this ??? . . Okay ... Housing/Rents as a Percentage of Household spending WEIMAR - Living Costs, Family of Four Weekly Cost : Total in Marks : - - - - Percentages - - - - ========== . . . . . . . . . . . : Food / Housing / Clothing 1914 (prewar) : ............ 21.5 : 46.5%/. 25.6% / .. 27.9% January 1920 : .............. 164 : 52.4%/. 04.9% / .. 42.7% January 1921 : .............. 218 : 63.8%/. 04.1% / .. 32.1% January 1922 : .............. 396 : 64.8%/. 02.8% / .. 32.3% July...... 1922 : ............ 1232 : 56.8%/. 01.1% / .. 42.0% January 1923 : ......... 25,123 : 52.1%/. 01.2% / .. 46.7% July...... 1923 : ........ 654,608 : 59.8%/. 00.4% / .. 39.8% Nov. ..... 1923 : ... 14.408 Bn. : 64.9%/ 00.26% / .. 34.8% source: Hyperinflation handout Here it is : 0.26%, in Nov.1923, down from 25.6% in 1914. That's 1/100th of its original percentage - an enormous collapse !! . . . So, you want to BUY PROPERTY as a hedge against hyper-inflation, Do you ?

20 Nov 2008 - Present USA: Housing is the largest component of household spending, with a 42 percent share /see: link What do you suppose the percentage was for Weimar, Germany in the early '20's ?

Housing/Rents as a Percentage of Household spending What do you think it was in Weimar Germany ? WHEN INFLATION goes like this... Do you think it is good for homeowners and property landlords? To answer that, we need to consider: What happened to Housing/Rents as a Percentage of Household spending I heard the figure in a podcast (was it on Financial Sense?) and I could hardly believe it. The actual figure may be a shocker for some here. (Note: Those who are thinking of buying a house as hedge for high inflation should make a special note of the result of a Poll I ran on HPC, and then see the actual answer) This thread was started here first, but I later started a similar thread on HPC, to ask people what they thought happened to Housing-related spending in Weimar Germany/ The poll results showed that people were WILDLY WRONG about the impact of inflation. Have they all been brainwashed by the media and idiot EA's who know nothing of history? Weimar Housing (Below is a summary of poll results - Check below for the real historical figures, they are shocking!): Many thought that Housing's share was stable, or even went up ! /see Weimar Hyperinflation Poll: http://www.housepricecrash.co.uk/forum/ind...howtopic=119091