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: Smiling Bob who wrote (96843)	12/10/2007 1:28:06 PM
From: SouthFloridaGuy	Read Replies (2) of 306849

When did you switch to the darkside? Actually big market rallies are now very doubtful unless volatility contracts soon. The great profit margin contraction has begun with the financials, just like it did in 1997/1998. This time profit margins are 30% higher than those elevated levels. My analyst did a study showing profits are currently 70% higher than as would otherwise be predicted by GDP growth. That is insane. The profits chart looks a lot like those housing price charts where you see the line go verticial after 2003 compared to trend. The only question was catalyst, which seemed like it would never come. If the current credit crapout isn't a catalyst, then I have no idea what is. If the Fed can re-engineer a debt bubble comeback like it did in 1998-2000, we have may have a 2 year stay of execution. But this time the losses in the banking sector are real unlike in 1998 when they were perceived. This could be nasty.

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