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To: reaper who wrote (156049)	3/17/2002 5:12:02 PM
From: LLCF	Respond to of 436258

<This is why I think LIQUIDITY is paramount; those who have CASH at the bottom will be able to scoop up some excellent bargains across most asset markets, especially stocks and real estate. > This is what people always forget when they get comfortable that their stocks will be "OK".... what does that really mean, only down 30%??? Meanwhile they may be a major sell to scoop up the REALLY cheap stuf.. DAK

To: reaper who wrote (156049)	3/18/2002 1:36:23 AM
From: Simba	Read Replies (2) \| Respond to of 436258

Reaper: I had forecast some time (in mid 2000) back on SI that 30 yr mortgage rates could reach 6 to 6.5 %, which was a 30 year low. It did and I refinanced my house. At that time I stated that the mortgage rates could be at 5 % only if there was a near depression in the US. It remains to be seen if we get such a blow off. The NASDAQ blow off has gotten rates to these low levels. Greenspan and the govt. have adeptly run the prinnting presses and kept the DOW under check in a wide trading range. It remains to be seen how fast the air is let off the DOW bubble. It could happen slowly in time that it may not have the effect on the economy that the NASDAQ blow off did. My hunch is stocks will crater but may happen slowly as the range drifts lower. On real estate, I don't think it will crater except in bubble areas such as some areas of CA, Boston and New York. I think this is what Schiller of Irrational Exuberance fame also thinks. I did a study of real estate price increases from the OFHEO median price tables. It clearly shows that areas like CA, NY, Hawaii have long periods of low or no-growth nominal prices and then a huge spurt for a similar period of above average growth in nominal prices. OTOH there are states/cities where the nominal prices grow pretty much on a linear trend regardless of what happens to the economy, example, WA state, Chicago etc. Here are some statistics: State Compound Annual Return (last 21 year period) MA 7.97% NY 6.82% NJ 5.87% NH 5.80% CA 5.70% CT 5.57% CO 5.49% DC 5.45% WA 5.38% OR 4.94% PA 4.85% VA 4.84% USA 4.81% HI 4.69% ALK 2.35% OK 2.28% State Compound Annual Return (last 5 year period) DC 10.43% MA 10.39% NH 9.71% CA 9.69% MN 8.72% CO 8.69% NY 7.53% NJ 7.15% FL 6.76% CT 6.72% GA 6.63% USA 6.36% WA 6.15% VA 5.83% ALK 3.29% HI 1.40% Assuming these numbers are representative the 21 year average of 4.8 % for the USA is not too much higher than the 21 year average inflation rate ( even the govt. reported one). Simba