Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: TobagoJack who wrote (7800)	8/27/2001 6:38:13 AM
From: ig	Read Replies (2) of 74559

Bubble, schmubble "Those For Sale signs your neighbors are putting up could be just big spenders wanting to cash in on the wild appreciation homeowners have enjoyed in the past six years--40% in Atlanta, 54% in New York City, 68% in Boston, 71% in Denver and 100% in San Francisco, says research firm Case Shiller Weiss in Cambridge, Mass." Let's take the 100% figure and compare it with the NASDAQ return for six years leading up to the its bubble break in March of 2000. The Naz was trading under 800 in March of 1994. In that six years, the Naz "appreciated" over 600%. Now THAT"S a bubble! Furthermore, compared with the speculative activity on the Naz in that time -- "speculative activity" defined, in this case, as buying high with the idea of selling higher to a greater fool -- the speculative activity in the RE market was hardly speculative at all. There was very little buying just to flip to a greater fool. Will housing prices soon slump? Maybe. Probably. Big Deal. If they do, they will NOT be crashing from manic altitudes. "In Dallas, where housing values soared 73% in the last five years...." yawn ig

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