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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Jurgis Bekepuris who wrote (30491)	4/1/2008 2:35:31 AM
From: Tapcon	Read Replies (2) \| Respond to of 78609

I'm fascinated by Whitman's commitment to the monolines. As if he's willing to put his storied reputation on the line over his doubling down on the monolines! I'll go with him for a small position -- Not about to double down! Last year most of the value gurus like Buffett were lamenting there were few opportunities out there. Now, it's a tough call to know what inning we're in. A case can be made for both sides. Regardless of whether Tilson looked at both sides, those are some unnerving facts he's laid out with respect to how far off long term trend we are with ratio of house prices/income and that the average homeowner now holds less than a 50% equity stake. This leveraging/credit abuse on the part of individuals, hedgies, investment banks, Fannie and Freddie has been building for many years. People on the Epic American Credit and Bond Bubble Laboratory Thread here on SI have been in a constant state of anxiety for years. Do we really think the cycle can turn around within 6 months, now that is has finally started to unwind? Personally, I don't think so. But there are several stats out there to indicate room for a bounce, as mentioned in the Barrons' articles. When you look at the duration and depth of past bear markets, however, peak to trough prices don't usually get much beyond 25% -- UNLESS we're talking about THE BIG ONE. (Sorry, wish I had that table I saw in the past month showing depth and duration). So if we've already fallen close to 20% as of last month on major indices, then if you've got a couple years time horizon, some things are looking OK on a risk/reward basis, for cautiously wading back in. As for the banks, you're right -- there are some good bets out there. I'm wondering which ones will survive. You can do worse than following Buffett, as you indicate. I followed his call in pharmas with SNY and did a moonshot all the way back down again. But last week I picked up some PFE and will be content to wait. Gee this is a tough game when nobody knows the future!