Sunday, February 22, 2009

Dow 7366 and falling

I continue to expect further declines. However, with the market dip this last week I decided to buy some stock. I did this in the spirit of dollar-cost averaging. I only added about two percent of my net worth. This was not enough to offset the decline of my portfolio over the last few months. At this point I have about 11% of my money in the stock market. I will slowly increase that as this bear market continues.

8 Comments:

At February 22, 2009 9:51 PM, Anonymous Anonymous said...

What are you buying?

I added to my BAC @ $2.66 bringing my average down to $5.80 but I am very nervous about the potential for the government to wipe out the common.

 
At February 23, 2009 10:58 PM, Blogger zephyr said...

I am buying the market with the SPY. I did add a little BAC and XLF. But, I got overweighted on the financials too early, so that is not my focus now. With the Dow about to cross 7,000 I will slowly buy the broad market.

 
At March 03, 2009 3:23 PM, Anonymous Citizen DH said...

Hello Zephyr,

During the nineties, the stock market was really hot. People did not care about Real estate b/c they were chasing stocks. Lots of
new homes are recently built on remote sites
and not suitable for immediate
accupancy. Did you do an analysis
to find the number of excess housing units that are not zombie homes ( i.e. suitable for immediate occupancy).

With less competition for real estate from the Stock market, and
much of the existing housing units
too remote for habitability, I think home prices will rebound-stabilize quicker than the nineties. What do you say?

 
At March 08, 2009 10:04 PM, Blogger zephyr said...

I think the slow recovery during the 1990s was mostly a function of the Resolution Trust Corp influence on the market. First the RTC absorbed a lot of excess inventory and held it off the market for while. This mitigated the severity of the decline. Then as they later released that inventory, they mitigated the recovery.

This time we have had no such sequestering of excess inventory. So price declines are the only mechanism for market clearing. This results in a more rapid and severe decline. Since there is no RTC-like holder in the market, there will not be a large release of sequestered inventory to slow the recovery. So I would expect a quicker recovery this time. But quicker is relative - it will still be a slow recovery, and from a deeper hole.

 
At March 14, 2009 12:01 PM, Anonymous Anonymous said...

thanks zephyr,

It seems like that all the banks are in the business of sequestering of property right now.Just look at all the REO's
just sitting and sitting, and sitting.

The declines in my area( Los Angeles) are only halfway done.
Incomes are actually decreasing.

 
At March 14, 2009 12:10 PM, Anonymous DH said...

anon at 12:01 was me

DH

 
At March 18, 2009 10:37 AM, Anonymous DH said...

Hello Zephyr,
sorry to be a pest but I just got my RE broker license. Do you know
where I can read(seminars) about
various RE investment strategies?

My stocks investment strategies come from Hickey,CR and Fleckenstein.

many thanks

 
At March 22, 2009 11:53 PM, Blogger zephyr said...

DH,

While the banks do hold a lot of property, they are actively interested in selling it. Thus it is part of the supply for sale. The RTC held the property off the market (not for sale) for a while. This has a very different impact on the supply/demand balance.

I do not have any immediate suggestions for your reading. What kind of real estate investing do you have in mind?

I apologize for the late response to your recent posts. I was out of the country (on a beach) for a week, and made with no contact with the rest of the world. I am just now catching up.

 

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