Oct 15, 2011
Let's talk... real estate.
Harry Schultz once forecast that this whole "crisis show" goes to about 2030-2035, but bottoms out at around 2015-2025. By the 2030 timeframe, we're only back to where we were in 2000-2005, for most major mkts.
Jim Sinclair has "opened the door of possibility" to the idea that the USA standard of living doesn't return to 2005 levels for 100 years.
Martin Armstrong predicts that US real estate is headed for a 1929 style wipeout, and the current decline is only part the valley dip from the head to the valley of the right shoulder. Following a rally from around 2012-2015, there's a total wipeout that doesn't see price stop declining until after 2030.
Sir "Johnny" Templeton suggested RE investors focus on beachfront property, and other real estate should not be bought until it declines 90% from the highest point reached.
Elmer Fudd Public Investor Micro Mind knows low rates are here to stay, and houses on a credit card will start a new superboom 25 seconds from now.
If you look carefully at the statements made by Ben Bernanke about the bond market, and factor that against the background of a public that has "accepted" low rates literally as "here to stay", a very ugly picture begins to take shape.
Forecasts of future pain are never quite "real". Think back to the stock mkt bull of the 1990s. Some investors would consider the possibility of a decline in the market, but in the end, most react to price after it happens, rather than attempting to pre-empt it.
The PGEN is unique, [buy weakness, sell strength] because you don't try to pre-empt price, but react to it the opposite way that the price chaser reacts.
The idea of a bond bear seems very possible to the gold community, but the actual picture when it happens, is very hard to grasp. Things that seem important now, such as whether the daily chart MACD has a sell signal or not for gold juniors, will not have any meaning if a papa bear bond market begins.
If you are dealing with an across the board 90% wipeout in real estate, and a bear there that continues until after 2030, you have to wonder how long a recovery out of that hole could really take. Jim Sinclair's 100yr number suddenly doesn't seem all that stupid.
A number of you are in positions where you want to buy a home, and one thing to consider is purchasing power. If real estate declines 90% but the purchasing power of the dollar declines by more than 90%, you could actually be in the driver's seat by carrying a mortgage.
In the beginning of a debt crisis, the borrower gets into trouble. In the reflation stage, it can be the creditor who is the loser, as the borrower repays debt with horribly devalued dollars.
As you watch street protests spreading around the world, keep in mind that the average protestor wants more govt, not less. This is the aftermath of a grand price chase gone all wrong.
The heroin addict doesn't want less heroin. He wants it for free, and he wants more and more.
The bottom line is that you need to give serious thought to the real factors at play in real estate, because when the bond implodes, so the R/E mkt is likely to implode, but the dollar could implode [inflate?] even more.
Most important is....time. Time and value are the two least respected market factors, and the two most important. To believe you are not going to be afraid in the real estate market at many points of time going forward, if you buy know, is arguably childish.
However, if you need a house, understand that while the R/E mkt could make you very afraid, holding dollars could make you even more afraid.
What's coming in this crisis is not a "gold juniors buy mania", or a real estate superbull. Nothing "here to stay" is coming, other than fear, no matter what asset you hold. Those who can endure the fear will survive the crisis.
What's coming is a "battle of fears" in all assets, even gold, as volatility goes exponentially off the charts and institutions flow waves of liquidity into an out of assets as the crisis makes one asset appear finished and then a superbuy, and then finished again, over and over again.
My concern for the real estate investor lies not with price, [but] with those holding short term mortgages, who do not understand that [after their 'good' mortgage ends,] their payments [on their new 'bad' mortgage] could double or triple or quadruple, if rates really begin to soar.
Markets fall a lot faster than they rise. Greed is a funny thing. A low rate mortgage is never low enough for the greedy. What's the difference between paying 4% for 30 yrs and 2% for 30yrs on a regular home.....when the RISK is that you could be paying 2% for 5 yrs and then 15% for 25 yrs ?! The greedy know it can't happen but the real question is....Do you?
Click this Martin Armstrong REAL ESTATE FORECAST CHART now to give yourself some fear training now, so you don't stand there with your mouth open when it really happens, just when you are sure it can't happen.
I've focusing you on simplicity going forwards. I want to cover more markets, and focus on the bigger action points in these markets. You're going to need this simplicity to manage the growing volatility. Click THIS GDX CHART now to view the profit booking tweak points at hand. Don't sell much, but these are the areas to sell at.
Report Card Day. Those who bought into the gold stock lows around GDX $50 have been selling bits via PGEN and/or HSR-tweaked pgen, as GDX has marched towards $58. We can't know if we're going lower or higher. On the original touch of GDX $67, who know we'd retrace as we did? While those around us got burned like flies in a bankster blast furnace, the PGEN sells keep you booking profits and in a winning mindset, so that if $50 fails, you can manage that event professionally, just as you can manage a surge thru $67. Don't be too worried about accumulating positions with speed, but instead let the pgen CYCLE you into your assets over multiple intermediate corrections.
Thanks!
Cheers
St out