The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: Les H who wrote (11322)	6/21/2003 7:59:15 PM
From: James F. Hopkins	Read Replies (1) of 306849

Hi Les; I did a lot of writing about indexing and momentum back in 98 and 99..and about how none of the indexes reflect a true picture of the market..but nobody wanted to hear it . :-) The indexes are mindless and they extend market momentum both up and down due to the funds tracking them. There is so much that they don't show. -- Just keeping up with how often they kick some dog out and bring in another runner, takes more time than I have. ---- Take the simple fact that when a stock gets de-listed , this happens in a void.. and the weights are adjusted to show the same index amount even with the new stock brought in, like magic they got the money to buy that new stock even though it cost a lot more than they got for the dog they dumped. In effect on paper they sell some of every thing else to make up for it..but they don't write off the losses like the real world has to. There is little wonder that 85% of all mutual funds can't keep up with an index. -- This new RSP index is a bunch of crap too.. I looked at the slight of hand they used to show it did better than the marketcap weighted one..( in a down market ) If a Bull really does come back it will get creamed. The only way RSP can out run the Marketcap one is to have the tail wagging the dog. ----- The sum total of indexing to spread risk, is that good companies take hits on their stock because of shit like Enron and WCOM.. It's almost a waste of time to be a stock picker in this new economy, unless you can stay outside of the marjor indexes and hunt up something the funds haven't already found. --- Chances of beating an index is next to nothing so I play them ( when I play ) but I might be short in the morning and long in the afternoon or the other way around. There is no long term buy and hold in my bones. ( for the stock market ) But I do buy some real-estate, distressed stuff ( out right for cash.).that I hold and will pass on to my kids I get a special developers discount on the taxes. And I buy it cheap..really cheap. At about 10 to 15% of appraised value. Jim

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