deeno, you are correct,sir. Another assumption I did not disclose earlier, which you accurately analyzed, is that I fully EXPECT that RE market prices will decline 25% +/- when interest rates climb, just as they did in CA during the 1980 and 1990 recessions.
This 'financial engineering' by the Fed has only forstalled the inevitable correction in RE prices, IMHO.
For personal reasons, e.g. we enjoy where we live, and financial considerations, e.g. we have lived here 25 years and enjoy a very low tax rate; we will accept the expected decline as part of the overall investment and lifestyle choice.
As far as protecting from the downside, as you say, what about any suggestions for a 'put' on the expected decline in home prices. The header on this thread includes a list of stocks that were expected to be most impacted by a declining housing market.
So what say the board, are puts/short positions on homebuilders still the answer to hedge the downside in housing prices, or what about interest rate plays, the new funds that are inverse to climbing interest rates, or short Fanny/Freddie.
For me, commodity/energy investment seems as good a hedge as any, with my read on the supply/demand equation, admitting that an economic crash would depress even this sector, should it be severe enough.
James |
