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Jim,
I find myself hearing from many different sources that this is a great time to buy real estate.
Safe they say.
Oooh boy. Sound like topping talk to me. The folks I know in the apartment business haven't been buying anything for a couple of years, it doesn't pencil.
I feel another reversion to the mean in the air.
There will be a great time to buy real estate, in the future.
scott
Tim..
Oh yeah, it was a decent quake, but it could have been a whole lot worse. It pointed out several bridges that need to be replaced soon, because there will be a quake here at some point that will take them down...
There are still some buildings in the old town area that are still undergoing repairs.
scott
Equities taking a big dive, and metals surging seems like a good bet to me.
Cash is still flowing into constuction here in Seattle, talked to a buddy in commercial real estate and he says that deals are starting to come back. Strange times.
Dilfer is truly excellent, but he needs help around him. Seahawks are actually playing pretty decent ball these days, but that is not cutting it in this league.
And now the Mariners have to replace Pinella...
I think you should change you SI Moniker to Plug-the-Dyke.
The view from the NW...
Wednesday, October 16, 2002
State jobless rate hits 7.4 percent
September levels may be highest in nation; little growth expected
By PAUL NYHAN AND DAIKHA DRIDI
SEATTLE POST-INTELLIGENCER REPORTERS
The Washington economy took another hit in September, as the jobless rate jumped to 7.4 percent,
offering fresh evidence that the state has yet to shake off its nearly two-year recession.
Last month, the aerospace sector continued to shed workers, local government scaled back and the
service sector struggled, possibly pushing the state's jobless rate to the highest level in the nation.
Now, economists expect little growth for the rest of the year and
only modest economic improvement next year.
"It appears that our recession is still not clearly behind us," said
Roberta Pauer, a Seattle-based economist for the Employment
Security Department. "Rather, very, very sluggish emergence from
the recession appears likely."
Jimbob, did you catch Monday Night Football? It was a beautiful night for football....gorgeous weather we are having out this way. I know you love the Seahawks new uni's.
We are definitely in a secular Bear, in my opinion.
But bear in mind that secular bears usually have one or more cyclical bull runs of sizeable proportion. I think we are still too over valued to see anything like that soon, but that opportunity may arise over the next several months..
Hey Buffy,
That BMI formula is ridiculous, that gives me a 26.4. I'm not close to overweight...wonder how they came up with that one?
See the dollar today?
http://media.ino.com/oasis/oasisc.php?s=4&w=120&h=600&cb=80719
You could see that Cal win coming for a long time. Cal is good, Washington has had to mount huge comebacks to beat them the last 3 years. Cal was due.
Washington is an undisiplined team under Neuheisel, too many mental mistakes. They are poorly prepared. They fall behind in virtually every game. To their credit the are great at making adjustments at half time, but that is a bad precident to live by. Lousy DB's and no running game.
College football is great.
I think you could invite favored posters here. 18 posts a day is plenty, maybe people will edit what they have to say and make it not such an experiment in wading through the fluff. I'll take quality over quantity any day. This place seems refreshing to me. A nice addition to SI.
Rosebud...is it any more work to get to this thread than any on SI? It's one bookmark or another..
Goodbye Yankers.....I hope the Twins it all and Bud Selig has to hand them the trophy and eat about a ton of crow.
scott
the thread will suffer focus until I exit doghouse
why not keep this as your local address, seems to be developing quite nicely.
scott
Low rates are encouraging folks to take on more and more debt...this is going to really come back and bite when the rates begin to rise again...
Saturday, October 5, 2002
Area housing market is white hot
Rock-bottom interest rates ignite home sales, up 30% in September in
King County
By TODD BISHOP
SEATTLE POST-INTELLIGENCER REPORTER
Elizabeth Oreck intended to pay no more than $270,000 when she began looking for a home last
spring.
This past week, however, Oreck was in the process of closing on a house in West Seattle at a price
of $290,000. She was able to afford more thanks to a decline of half a percentage point on a 30-year
mortgage between the time she started searching and the point she locked in a rate.
"When the interest rates dropped, it made a significant difference,"
said Oreck, a sales manager for an online training company.
She's not alone in her experience. Rock-bottom mortgage rates
continue to fuel the regional housing market -- turning renters into
buyers, luring existing homeowners into pricier houses, and
attracting investors who would ordinarily put their money into
stocks and bonds.
"Usually the interest rates are just a kicker, but when they come
down this low, it creates an economic stimulus," said J. Lennox
Scott, chairman and CEO of John L. Scott Real Estate.
Numbers released yesterday by the Northwest Multiple Listing
Service demonstrated the market's continued strength. Pending
sales of single-family homes and condominiums increased more
than 30 percent in King County in September, compared with the
same month last year.
The percentage increase was skewed sharply upward as a result of
the depressed state of the real estate market following the Sept. 11,
2001, terrorist attacks. But last month's pending sales in King
County were also more than 6 percent higher than in September
2000, according to the multiple listing service.
Pending sales last month also increased substantially in other parts
of the region, compared with each of the past two Septembers.
Compared with the results two years ago, pending sales were up
27 percent in Snohomish County, 33 percent in Pierce County, and 45 percent in Kitsap County,
according to the statistics from the multiple listing service.
Despite the jump in pending sales, it is taking more time to sell a home, on average. In King County,
single-family homes sold in September were on the market for an average of 49 days, up from 42
days last September. The average also climbed in Snohomish County, from 52 days to 53 days, and
in Pierce County, from 59 days to 63 days.
Even so, prices continued to rise throughout the region. The median price for single-family homes
sold last month in King County was $279,950, up from $265,000 last September. The median price
rose from $210,000 to $217,800 in Snohomish County, and from $157,950 to $174,600 in Pierce.
Real estate experts attribute the market's ongoing resilience primarily to declining mortgage rates.
Nationally, the average rate on a 30-year fixed-rate mortgage was 6.01 percent this past week, up
from the previous week but still near its historic low, according to mortgage company Freddie Mac.
"Interest rates have kept the housing market strong in our area," said Donn Costa, executive vice
president of mortgage banking with Mountlake Terrace-based Golf Savings Bank. Any future
increase in rates could reduce home prices in the short run, although they would continue to rise over
the long term, he said.
"There's every incentive for somebody who is comfortable with their personal economic situation to
make the leap to home ownership or refinance their home to take advantage of these lower rates,"
said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State
University.
People hoping to make that leap to home ownership include Parks and Jennifer Dempsey, a married
couple currently renting an apartment near Alki Beach in West Seattle. They are searching for a
house to buy, spurred in part by mortgage rates.
"I don't think it was the major motivation for us, but it certainly was one of the things we took under
consideration," said Parks Dempsey, an magnetic resonance imaging technologist at Harborview
Medical Center. Jennifer Dempsey is a medical researcher at Swedish Hospital. The tax advantages
of home ownership also were a factor in their decision to stop renting.
The Dempseys aren't alone. The drop in rates is creating "a surge in first-time homebuyers," said
their agent, Sekou Wiggs, an associate broker with John L. Scott.
Lower rates are "bringing out some buyers that wouldn't have been there before," agreed John
Guthrie, an agent in Windermere Real Estate's West Seattle office.
The trend toward home ownership is one of the factors contributing to rising vacancies in the
region's apartment buildings. "We're seeing the rental market suffer," said Denny Bullock, vice
president of sales at Prudential MacPherson's Real Estate.
In the Mill Creek area, Brent and Dulcy Hixson bought a home for about $260,000 two years ago,
assuming that they would be there for years to come. But when mortgage rates kept dropping, they
realized they had a unique opportunity.
They have found a buyer for their existing home at a price of about $320,000, and they are looking
for a new home in the mid-$400,000s, said Brent Hixson, a senior buyer for a medical equipment
company. Dulcy Hixson owns her own business, working as a representative for wireless
companies.
Lower mortgage rates will allow them to "get a lot more home for a little more money" in mortgage
payments, Brent Hixson said.
In other cases, agents say, people who normally would renovate their existing homes are deciding
instead to buy better, larger homes -- a decision that, in the past, would have been much more
expensive than remodeling.
"It's almost a new phenomenon," said Jill Jacobi Wood, co-owner and president of Windermere
Real Estate.
From Puplava's Thursday wrap:
Gearing Distorts Markets
This whole artificial process of paper market distortion of the commodity markets has allowed prices to deteriorate at the same time that
demand has risen and supply has contracted. Prices have been kept low; while demand for products has expanded. This runs contrary to
general economic laws of supply and demand. Demand increases, supplies contract and the price of a commodity falls. The fact that nobody
questions this is even more astounding. While demand has risen, the supply of particular commodities have fallen off due to disinvestments,
divestiture and the general contraction of most commodity-like businesses. Supplies and reserves accumulated over decades have been
drawn down in order to meet supply deficits. The gasoline in your car probably came from an oil well that was discovered 25 years ago in the
US and over 40 years ago in the Middle East. The silver that is used in your camera is coming from the sale of scrap silver and the depletion
of above-ground inventories. Gold deficits are made up from central bank sales and gold leasing. This consumption of above-ground
stockpiles of commodities accumulated over decades cannot last forever.
As inventory levels from natural gas, oil, silver, gold and other commodities are drawn down, a supply train wreck or price shock is slowly
building momentum. Already we are facing our second oil price shock in three years. Oil prices have been distorted by a combination of
political convolutions and derivatives. Once supply stockpiles are depleted, prices will reverse and head higher as demand fundamentals and
a loss of confidence in paper overwhelm commodity markets. One day soon Americans and the West in general are going to wake up to find
the financial world and the commodity markets aren’t as they seem. Supply shortages of key commodities, energy outages and other supply
disruptions should become more commonplace. In the case of silver, gold, oil and natural gas, we will see prices rise to their true fundamental
value, which by the way is much higher than what is now reflected in the markets.
Short Positions Distort Bullion & Share Prices
A good example of this is the silver markets were short positions on the COMEX and short positions in key silver stocks have acted to suppress
the price of the metal and key silver stocks far below their intrinsic value. The following table below shows the growth in short positions in silver
stocks that have doubled, tripled, and in some cases quadrupled since May of this year. These short positions have been the key, along with
short positions on the COMEX in silver, to keeping the price of silver and silver stock prices suppressed. Yet, nothing has changed
fundamentally in the business. According to CPM Group, the silver deficit will be larger this year than last year. And despite a recession and
weakening economies across the globe, silver deficits last year were close to 80 million.
Short Changing The Silver Market: Short Interest on Settlement Date
Silver Mining Stock
12-14-01
3-15-02
6-14-02
9-13-02
Apex Silver (SIL)
280,036
268,367
614,131
791,665
Hecla Mining (HL)
103,500
105,500
1,130,654
2,405,148
Pan American Silver (PAAS)
11,672
4,509
519,723
1,002,105
Silver Standard Resources, Inc. (SSRI)
37,843
5,060
461,810
874,062
I recently met with the head CEO of a silver mining company who has been able to increase the reserves of his company significantly over the
last four months adding real value for his shareholders. And yet his stock has been sold short and driven down in half as a result of a huge short
position. I know most of the key owners of this company and very strong hands hold it. The float is narrow and the short position would take at
least 3-4 days to cover at present volume. Nothing has changed fundamentally that would warrant such a short position.
There are very few large silver mines in the world in comparison to gold. And silver
stockpiles are running out. At the present rate of deficit, there is approximately 1-2
years left in above-ground stockpiles (not counting silver coins). Pure silver mines
are rare since most silver is mined as a by-product of other metals. About 80
percent of the supply of silver comes to the market as a by-product of other base
metals. Pure silver companies can be counted on two hands. Silver, as a
commodity, is getting rarer even as demand and use for silver increases. Why do
you thing Buffett bought silver back in 1997 and still holds on to it? Why have
Gates, Soros, Tish, and others bought silver? There is a reason. They think the price
of silver is going up. It is becoming a rare commodity in that it is harder to find;
while supplies dwindle. Its price is kept down artificially by huge short positions.
Note the chart to the right which graphically depicts the total short position noted
in the table above.
Investment Philosophy Determines Position
There are two ways in which to look at this situation: one negative and one positive.
It all depends on your investment philosophy. If you’re a short-term trader, you can
skip this part because it will be of no use to you. You can trade into the stocks or metal when it explodes at much higher prices. If you are a
value investor and think long-term, you have an opportunity that has been handed to you. You have the chance to accumulate shares of only
a handful of pure silver companies in the world at bargain prices. The shorts in effect are subsidizing your investment purchases. I have always
used these kinds of opportunities to buy at someone else's expense. As prices head lower, as short positions increase, I can use the opportunity
to buy key mining companies, in my case just two, at much lower prices. The shorts will have to cover, and when they do, the very narrowness
of the market in pure silver companies will explode. You can see this in the price of the shares back in May, June, and July. As other buyers
came into the market, the price of silver mining shares exploded before forming a double top and heading down as short interest increased.
If you are a believer in this metal, based on strong long-term fundamentals, then you are now afforded the opportunity to accumulate shares at
much lower prices. Or if you own them, you can acquire additional shares at much lower prices and significantly add to your position. Of
course this philosophy only applies to believers in silver’s fundamentals and investors who think strategically and outside the box.
Investment success doesn’t come easy. If it did, we would all be millionaires. Success comes from hard work, a right attitude and the
development of an investment philosophy. Going along with the crowd and the consensus will lead you down the path to mediocrity and
below-average returns. Just think of what you been have told by Wall Street and most analysts and economists. You have been told to buy and
hold even as they trade, short, and sell. Think of what their advice has brought you. Look at long-term charts of silver, gold, oil, and natural
gas. Look at how these markets have performed, then look at your S&P Index fund or your mutual fund and draw your own conclusions. One of
these markets is emerging as the new bull on the Street and the other is dissipating in a protracted bear market. Which side of the fence are
you on? Isn’t it time to cross over to the other side of the street?
You have been afforded another opportunity to buy, buy when prices are cheap. You have also been given another opportunity to sell. Don’t
listen to the media or Wall Street analysts or economists. They have steered you wrong for the last three years. How many more years do you
want to experience the pains of a bear market before most of your hard earned savings are eaten away? Do your own homework, look at the
charts and get wisdom and understanding. If you don’t have the time, then find someone who does. More importantly, take responsibility for
your own finances. This is not the time to play ostrich and bury your head in the sand. Storms are swirling all around you and it is time to get
prepared.
RE: The 5th Element Shows Signs of Emergence
From: Jim Sinclair
Date: Friday, October 4, 2002
As you know from my various postings, I have been focused in on the US dollar and the US Treasury Bond Market,
looking for any sign that non-US holders of US Treasury Securities were becoming concerned over their profits being
eroded by lower dollar levels.
Well, today was the first sign of that possibility as the stock market declined significantly in the first five hours of
trading. Surprisingly, when the market was off considerably and showing no sign of recovery, the long-term US Treasury
Bond Market was also in a decline. This is the first break in the multi-year profile of this market, which has been rising in
tandem with every significant stock market sell-off. Today, US Treasury bonds, rather than rising, were falling as the
stock market marched towards a Dow at minus 300.
What makes me focus on this phenomena was that there are rumors that the Exchange Stabilization Fund entered into
the US dollar Forex cash markets to support the dollar as the Dow went minus 200. I am therefore of the mind that this
reaction from Washington was a reaction to the beginning of a liquidation of US Treasury Bonds by non-US holders. We
shall see?
However, all efforts to stop a dollar decline here, except in the shortest-term, are a waste of time & money because of
the concomitant events of US Budget Deficit - US Trade Deficit - US Current Account Deficit and the dollar reaction. The
bonds did rally on the rally in the US dollar as did the stock market.
Regardless, today, Friday, October 4th, should be noted as the first time the bond market fell out of its inverse
relationship with the stock market since March of 2000. That would be right on time, if I am to be correct in my
assumption that the 5th Element necessary for the fundamental conclusion that we are in a long-term gold bull market
was to fall into the equation, which is a top in the bond market before the end of November 2002. Of course, I put out an
exploratory short again on the 30-year bond with a 32/32 stop loss.
In Washington State, unemployment is about to go up above 8%. In the Bellevue/Redmond area, home of Microsoft....commercial real estate vacancies are just a hair under 30%. MSFT is still building new campuses for themselves, though.
If the current port closures persist for any length of time, it could get very rough around here.
Rosita...
So you're back in the saddle again? Just like new?
Cool.
Did you let anyone know? Or are keeping your boys in the dark til they get some more work done for ya?
quack.
From Harry Newton this morning:
8:30 AM Thursday, October 3, 2002: You can smell it coming: a huge drop in equity markets this
month. Yesterday's significant drop (Dow down 2.31%; Nasdaq down 2.18%; S&P down 2.36%)
was a precursor. What was significant about yesterday:
+ It came so quickly after the short covering rally of the day before. That strong Tuesday rally
didn't even last two days.
+ The losses were broad and deep, with the market suggesting that the economy is tanking in
many key sectors -- bad loans for the Bank of New York, earnings misses for Dow Chemical, lousy
earnings estimates for Cisco (which at one stage yesterday fell below $10 -- for the first time since
January, 1998).
+ Wall Street's history of lying, cheating, stealing and gross incompetence reached new heights
yesterday. The VIX is up. Keep reading.
Wall Street has its own peculiar (i.e. strange) explanation for yesterday: The Wall Street Journal
reported that "Wall Street traders blamed part of a sudden, late decline in major stocks on "sell
program" that was incorrectly executed -- a snafu that caused billions in dollars in unintended sell orders
to cascade on the New York Stock Exchange. Bear Stearns Cos., erroneously executed the
computer-guided trade at 3:40 p.m. EDT. In such trades, long lists of stocks are bought or sold in one
move. The NYSE said a trader at Bear's midtown office made a "clerical error" to sell $4 billion of
stocks that are in the Standard & Poor's 500-stock index; the order should have been entered as $4
million, the exchange said. All but $622 million of the orders were canceled before execution, it
said. Bear Stearns told the exchange that the error would have little impact on the securities firm
because the erroneous trades had been "substantially hedged." A spokeswoman declined to provide
further details."
A "clerk" can make a $4 billion "mistake!" Wall Street is incredible. If you believe Bear Stearns is
hedged against idiocy and incompetence to the tune of $3.3 billion, you'll believe anything,
including flying pigs and a great bridge I have in Brooklyn for sale.
A reader writes: Short Amazon. This company has over $2.2 billion in debt, has a negative
shareholders' equity of $1.4 billion, has never turned a profit (except a tiny one in one quarter);
its growth rate is dropping every quarter going forward, etc, etc. What's amazing is Amazon has
been rising -- it's $17. Amazon has a market cap of $6.5 billion, higher than Apple, Adobe, EDS,
KLA-Tencor and even Dow Jones (owner of the Wall Street Journal). This makes zero sense.
Stocks going lower include IBM, Cisco, Intel, Microsoft, Applied Materials, Amazon, Expedia,
Marriott and a whole lot financials etc.
If investors haven't lost complete confidence in Wall Street by now, today's news will seal it:
+ The $4 billion clerical error at Bear Stearns. No one checks anything any longer?
+ Goldman Sachs, one of the most prestigious Wall Street firms, turns out to be just as slimy as
the rest of them. To wit, from the Journal: "Prominent executives at 21 U.S. companies personally
received hot IPO shares from Goldman Sachs Group Inc., which pocketed lucrative investment-banking
fees from those companies during the stock market's extraordinary rise in the late 1990s, according to
congressional investigators. Two executives of major Goldman clients -- eBay Inc. Chief Executive
Margaret Whitman and Yahoo Inc. co-founder Jerry Yang -- each received shares in more than 100 initial
public offerings of stock managed by Goldman since 1996, and quickly resold many of the shares at a
profit. Among others, executives or directors of WorldCom Inc., Enron Corp. eToys Inc., and Global
Crossing Ltd. also received IPO shares."
+ Martha Stewart, a great icon of American culture, turns out to be a simple liar, who's greedy.
She will probably be convicted of insider trading, perjury and obstruction of justice. The assistant
to Martha Stewart's stockbroker (the one who worked at Merrill Lynch) plead guilty yesterday,
according to The New York Times, of concealing the reason behind the sale of Ms. Stewart's shares
of ImClone Systems.
He said he had done so in exchange for money, an extra week of vacation and a free plane
ticket from the stockbroker. Douglas Faneuil, 27, who entered his plea in a Manhattan federal
court, now says that Ms. Stewart sold her stock after learning that ImClone's founder, Samuel D.
Waksal, was trying to sell thousands of his shares. At the same time, Dr. Waksal's daughter sold
more than 39,000 shares. The source of Ms. Stewart's information, according to documents filed
as part of Mr. Faneuil's plea, was the stockbroker, Peter E. Bacanovic of Merrill Lynch." After this
information came out yesterday, Merrill Lynch fired both Faneuil and Baconovic. Previously they
had been on a paid leave of absence.
There are 370,000 intersections in New York City that have traffic lights. If you visit New York and
think about it, you'll be amazed how many work. When I first researched new York's traffic lights, I
was intrigued by how they keep the lights working. I found they never fixed blown lights. They
simply relamped the entire city. They used to relamp every year. But then GE came out with a
longer-lasting incandescent bulb and the city could do it every two years. Big productivity
improvement! But, guess what? They're now changing all the incandescent bulbs to LED bulbs. And
these ones will will last 25 years. BIG productivity improvement. You can still sell technology -- but
you got to deliver BIG immediate cash benefits.
One of my private equity funds (down 75%) has an investment in a small security company that
is (but shouldn't be) publicly traded. I won't mention the name of the company. It's not relevant
and the stock is virtually valueless. But as I sat and listened to the president drone on, trying to
convince the audience to give him $1 million to extend his company's miserable life, I realized
this company was a "sandbox."
When you get pitched to invest, listen for sandbox tendencies. Here's my definition of a sandbox
company: "Many inventors look for outside financing from angels or venture capitalists. Some
people look for the money to grow their company, by selling product or service and ultimately
making a profit. Some people look for the money so they can continue having fun writing
software, creating hardware, and doing whatever cool neat new things amuse them. These are
"sandbox" companies. They will never produce a real product for their customers or a profit for
their stockholders. To be a successful investor, you need to identify sandbox companies and
avoid them like the plague."
Last night I emailed the president of the private equity fund, who owns shares in the security
company: "Real depressing listening to that presentation yesterday.
It needs serious marketing help.
+ Which market?
+ Which business model?
Then focus, focus, focus.
This company is solving everybody's security problem. All with 22 people. Not possible. Unless you
fix this company this week, kiss your entire investment good bye."
The point of this story? You need to check out at least 100 opportunities before you stick your
money into anything. A friend of mine and myself were approached yesterday about funding a gas
mask company. (Everyone is trying to get in on bio-terrorism.) My friend, who's very sharp, wrote
back "This is a one product company. Can't see any exit strategy for a start-up these days and therefore
the equity has no appeal."
My advice remains: Stay away from all equities. Short only with monies you can afford to
completely blow. Keep a tight 15% stop loss on your shorts. Stay in cash. Our time will come.
How could you possibly not know who the Waterboy is? How many effing clues does it take?
quack.
You can run, but you can't hide, Jailbird.
Quack.