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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: William H Huebl who wrote (41380)	7/5/1999 5:07:00 PM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 94695

The New Era - discounting not company future earnings but future capital gains in the stock market to buy a home. Inflation ?? What inflation if a home goes up 20% in 18 months it does not count!! Homebuyers using stock profits for down payments Copyright © 1999 Nando Media, Copyright © 1999 Associated Press By TESSIE BORDEN LOS ANGELES (July 5, 1999 1:43 p.m. EDT nandotimes.com) - It used to take decades of scrimping and saving to afford a dream house, but in the midst of Wall Street's bull market, investors are shaving years off that time and ditching their piggy banks. With stock prices climbing by double digits in each of the past four years, people in their 20s and 30s are using proceeds from profit-swollen stock portfolios for down payments for increasingly luxurious homes. "Is there another way to do it?" joked Dan Summers, a 35-year-old engineer at Silicon Valley-based laser maker Visx. He cashed in his company stock options for a four-bedroom home in Northern California. "The stock went up, so I had the money to buy." The stock market's advance, underpinned by the booming economy and the growth of high-tech and Internet companies, has given more Americans the means to buy bigger and better homes. But financial experts and mortgage brokers warn some homeowners might find they can't afford to keep those homes if the market heads south. An April spot survey by the California Association of Realtors showed about 15 percent of customers in the nation's most populous state bought their homes with money from stocks, stock options and 401(k) plans. No comparable figures exist for previous years. But census numbers show that a decade ago, only 4 percent of new home buyers nationwide used profits from investments or the sale of real estate to buy new homes. The trend may be most apparent in California, the home of many high-tech companies that have gone public and enriched their employees. But investors across the country who have poured money into stocks and mutual funds in recent years - sending the overall value of the stock market to $13 trillion from $1 trillion in 1982 - are also benefiting. Doug Anderson, president of Cornerstone Mortgage Corp. in Denver, and Pretam Fuqua, a real estate agent in Los Angeles' San Gabriel Valley, said they have seen doctors, nurses, attorneys, teachers, even a jockey cash in stocks from mutual funds and retirement plans to buy their houses. "Everybody is looking at an increase in stock ownership," said Fred Flick, a vice president of economic research at the National Association of Realtors in Washington. Betsey Twigg, a Virginia real estate agent, said so many of her customers use stocks for seed money that it has become part of her company's standard contract. "It's another store of wealth," she said. But some financial pros worry that these homebuyers, having seen the Dow Jones industrial average rise more than 7,000 points over the past five years despite several big downturns, may have a false sense of security. "I think people may be overbuying," Anderson said. He said customers sometimes overstate income, counting on as-yet-unrealized stock profits to get big mortgages. "Buyers see stocks as a source of quick cash if they need to act quickly in case interest rates go up," said Susan Ratliff, a real estate agent in Pasadena. But using stock market earnings to pay a mortgage can be a formula for disaster if Wall Street suffers a protracted decline. "People assume it'll just keep going," said Mark Cowan, a Visx regional service manager who used stocks for a down payment but can handle the mortgage with his salary. "The people that just got out of school are living in the million-dollar house and driving the Porsche around, these are people that could be broke at 30." The new money, a tight housing market and favorable interest rates have led to bidding wars for homes in some parts of the country, particularly where high-tech businesses are clustered. Glen Mendell, a San Francisco-area real estate agent with several clients in Silicon Valley, recently offered about $60,000 over the asking price for a $459,000 house. Six other offers beat his. In the 18 months since Summers bought his home for $298,000 - having sold half his stock holdings for the down payment - its value climbed $52,000 to $350,000. He gets letters from real estate agents every week asking him to consider selling.

To: William H Huebl who wrote (41380)	7/6/1999 6:31:00 AM
From: Skeet Shipman	Read Replies (1) \| Respond to of 94695

Hi Bill, NITW May I suggest you qualify your projections on your site beyond one week with letters: p - preliminary, cg - calculated guess, g - guess, wg - wildass guess. Or you could use the primary initials of the primary indicator you used: v - valuation, m - momentum, s - sentiment, etc. Of course there is htpsd - had to put something down. Most of the market letters should have NITW printed across the top of almost every page. I wish once I'd see some market Guru just say “Nothing important (worth reading) this week.” Projections Sketched In Sand Demographics paint with a wide brush in semi-log scale, a picture whose details change with time. Cohort economics is like an architect's ruff sketch rather than his blueprints. I would have more confidence in it if I could either reproduce it's results without fudge factoring or if it's projections hadn't shifted with time. Any marketing department will tell you it is an underling basis of their growth strategy. Ostriches Have Heads In Sand I don't know how long we ostriches will keep our heads in the sand or what we will see when we lift them up. Wildass guess - interest rates relatively unchanged and earnings not quite as good as touted (when compared to last quarter). My indicators (which are running a close second to the lava lamps) point to reserved optimism. Skeet