• Welcome to AppraisersForum.com, the premier online community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Housing Bubble Bursting?

Status
Not open for further replies.
The next hedge fund to go illiquid - panic will follow

Goldman hedge fund hit

SAN FRANCISCO (MarketWatch) -- Goldman Sachs Group's $8 billion Global Alpha hedge fund has fallen 26% so far this year, a retreat that could lead skittish investors to cash out, according to a Friday report citing unnamed sources.

Goldman's biggest hedge fund has shed almost 40% since July 31, 2006 while the Standard & Poor's 500 Index has risen 16%, Bloomberg reported.

The poor performance could prompt redemptions. Withdrawals for the fund's $6.2 billion offshore version came to $394 million in June, an unidentified investor told Bloomberg. That was almost triple the $142 million that flowed into the fund.

There is an August 15 deadline for Global Alpha investors who want to cash out, according to the report.

This is the latest evidence of a near $2-trillion industry in turmoil.
Click to expand...
 
I am admittedly young, naive and paranoid. I'm curious to hear how people feel this is playing or will play out
Click to expand...
I don't think anyone should panic. First off, unless you can sell for a profit, i wouldn't consider selling your house. If you are happy there and can make the payments, at your age (apparently) you'll just grow out of it. It doesn't matter that in the interim you might see your neighbors property values drop. So, I'd refi asap with as low a rate as possible if you are in an ARM that can balloon soon - fixed rates baby. I can live with 6-6.5%. The fed might drop interest rates which stand at 5.25%, but intraday trading between banks reached 6%, that's why they injected cash in the system to make what the markets were doing match their target 5.25%. If the banks continue to drive rates above the fed rates, then the fed will have to drop but I wouldn't count on it.

This stuff is just fluff for the time being. If your job is secure, you are not over-indebted in a potential forced sale, ride it out. I don't see foreign stocks doing better than market, because the global economy is just that. Europe, Hong Kong, everywhere, the markets are bouncing because of subprime exposure in the US.

Marcia is right about investing. Most investment counselors are looking at whats hot today, not a real analysis and /or they want to churn your account. When I bought Halliburton in my self-directed IRA, my advisor had a hissy fit..."bad bad" oil down every day, etc. I said, yes, oil prices are low (2000) but they have only one direction to go UP!. I bought Global Marine, Halliburton, Pason.. and I changed investment counselors. The stocks all made money. GM and Hall. brought multiples what they were selling for. Pason is one i wish i'd kept and it is and has turned a steady growth and profit as well as benefited from the exchange rate between US and Canadian companies. Trust your own research. Nothing is more slanted than the research of companies who intend to sell you something on commission.
The best advise I can give is energy mutuals have done well for me, mixed growth/income funds, etc. Financials are not doing well, commodity based investments are. That too will change with time. An index fund might be nice after the market does its downturn thing - which after peaking, I am expecting it to at least fall back 10-20% (that is just a guess btw)
 
Here is the problem as exhibited by Countrywide

foreclosures.gif


10,687 Homes Offered For Sale on Countrywide Financial's Website

These are homes that are REO by Countrywide. The number has doubled since February 2007. It represents $2,169,408,435 of mortgages that are not paying interest. Someone or some fund that holds these mortgages or instruments that bundles these mortgages is not getting paid. At some point, the loss will be recognized or realized. Hopefully not all at once.
 
Terrel L. Shields said:
I don't think anyone should panic. First off, unless you can sell for a profit, i wouldn't consider selling your house. If you are happy there and can make the payments, at your age (apparently) you'll just grow out of it. It doesn't matter that in the interim you might see your neighbors property values drop. So, I'd refi asap with as low a rate as possible if you are in an ARM that can balloon soon - fixed rates baby. I can live with 6-6.5%. The fed might drop interest rates which stand at 5.25%, but intraday trading between banks reached 6%, that's why they injected cash in the system to make what the markets were doing match their target 5.25%. If the banks continue to drive rates above the fed rates, then the fed will have to drop but I wouldn't count on it.

This stuff is just fluff for the time being. If your job is secure, you are not over-indebted in a potential forced sale, ride it out. I don't see foreign stocks doing better than market, because the global economy is just that. Europe, Hong Kong, everywhere, the markets are bouncing because of subprime exposure in the US.

Marcia is right about investing. Most investment counselors are looking at whats hot today, not a real analysis and /or they want to churn your account. When I bought Halliburton in my self-directed IRA, my adviser had a hissy fit..."bad bad" oil down every day, etc. I said, yes, oil prices are low (2000) but they have only one direction to go UP!. I bought Global Marine, Halliburton, Pason.. and I changed investment counselors. The stocks all made money. GM and Hall. brought multiples what they were selling for. Pason is one i wish i'd kept and it is and has turned a steady growth and profit as well as benefited from the exchange rate between US and Canadian companies. Trust your own research. Nothing is more slanted than the research of companies who intend to sell you something on commission.
The best advise I can give is energy mutuals have done well for me, mixed growth/income funds, etc. Financials are not doing well, commodity based investments are. That too will change with time. An index fund might be nice after the market does its downturn thing - which after peaking, I am expecting it to at least fall back 10-20% (that is just a guess btw)
Click to expand...

This is the perfect time to panic.The ball game is over and there is no recovery until all the bogus debt is defaulted on.Most will tell you all is O.K. and the market will settle down and just few will lose their value , wrong , It's a total meltdown and I must agree with Donald Trump (God help me) that a recession is months away and if the fed does not lower rates fast a point at a time maybe we may in to deep and next will be the D Word.Read this post in six months and it will be spot on , Guaranteed just like Mortgages and Hedge Funds..:Eyecrazy:
 
You know the dollar is shot when someone says they have confidence in it

China central bank expresses confidence in the dollar: Reuters

TEL AVIV (MarketWatch) - China said on Sunday that dollar-denominated assets form an important part of its foreign-exchange reserves and that the dollar has a "major position" in the global monetary system, Reuters reported.

The remarks follow last Wednesday's suggestion by the U.K. newspaper Telegraph that China might sell its dollar holdings if the U.S. imposed trade sanctions against the country.


The comments also come after the effort Thursday and Friday by a number of central banks to inject liquidity into the markets and ease investors' fear that the losses from U.S. subprime mortgage investments could prompt a worldwide credit crunch.


The Chinese central-bank official said the country's priorities in managing its $1.33 trillion of foreign-currency reserves were safety, liquidity and investment returns, in that order, Reuters reported.
Click to expand...
 
Even the rich are suffering from mortgage shock

[FONT=times new roman,times, sans serif][SIZE=-1]In a Credit Crisis, Large Mortgages Grow Costly

[/SIZE][/FONT]
When an investment banker set out to buy a $1.5 million home on Long Island last month, his mortgage broker quoted an interest rate of 8 percent. Three days later, when the buyer said he would take the loan, the mortgage banker had bad news: the new rate was 13 percent.

The investment banker’s problem was that he was taking out a so-called jumbo mortgage — a loan greater than the $417,000 mortgage that can be sold to the federally chartered enterprises, Freddie Mac and Fannie Mae. The market for large mortgages has suddenly dried up.

“In the last 60 days, we’ve seen a substantial reduction in mortgage availability,” said Robert Barbera, the chief economist of ITG, a brokerage firm. “That in turn suggests that home purchases will fall further. Rising home prices were the oil that greased the wheel of this engine of growth, and falling home prices are the sand in the gears that are causing it to grind to a halt.”

At the heart of the contagion problem is the combination of complexity and leverage. The securities that financed the rapid expansion of mortgage lending were hard to understand, and some of those who owned them had borrowed so much that even a small drop in value put pressure on them to raise cash.

It appears that in this case, securities backed by subprime mortgages were owned by people who also owned securities backed by leveraged corporate loans. With the market for mortgage paper drying up, and a need to raise cash, they sold the corporate securities and that market began to suffer.

With the credit gears clogged, there has been a sudden lust for cash at many levels of the financial system. Last week banks in Europe and the United States tried to borrow so much money that central banks had to step in to keep interest rates from rising.
Click to expand...
No doubt about this turmoil in the market as a symptom, the demand for cash, the lack of liquidity for any debt instrument that is not deemed safe, it is demonstrating a future cause of home prices to decline. Credit availability has been removed from the mortgage market.

How quick will the Congress react? It is clear that the FED is responding and it may be forced to dramatically lower short term interest rates. But will that cause investors to come back into the mortgage market as before? Without guarantees of safety or backing the repayment of principle, I sincerely doubt that.

Greg - you have been too optimistic with your forecast.
 
Good catch, Randolph.
Too bad they didn't pay attention to the Appraiser's Petition when it could have made a difference.
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at AppraiserSites.com
Back
Top