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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: GraceZ who wrote (225335)	10/18/2009 3:29:15 PM
From: bentway	Read Replies (2) \| Respond to of 306849

What's tough is the market NOW. What's the direction? I can't call it.

To: GraceZ who wrote (225335)	10/18/2009 4:27:31 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 306849

I made money on the boom. that was a good way to play it. i think a lot more people made money on the boom than made money on the bust. i think very few people made money on the bust when everything is tallied, including cost of capital. that would include all the b*rish posters on this thread (all of them, not just the ones left standing today as that is survivorship bias). this is pretty similar to the tech bubble: many more people made money on the boom than the bust. many people who made money in the boom didn't sell in time so lost their gains. many people tried shorting the tech bubble and lost money. made me wary enough to cash out close to the top on one property but cash out too soon on several others* i think being "not too late" was probably even more important for the RE bubble, since if you're too late the liquidity is gone and it's impossible to unload. with the tech bubble, at least there were violent countertrend rallies that allowed one to abandon ship on several occasions in 2000 after the initial March crsh. Holding short through a killer [b*r] rally is a difficult thing to do as is repeatedly shorting only to get stopped out. that was the biggest problem of the housing bubble: the asymmetrical risk profile. you risk getting wiped out if you short directly, or risk losing all your money by a thousand cuts due expensive put premia if you want defined risk. the best vehicle was the credit default swaps, because they had the best of both worlds: defined risk (when you are shorting a bond which matures at par, especially if you were able to short it at or even above par) and leverage like poots; long-term positioning and low cost of carry like shorts. the only problem was this vehicle was it was not available directly to retail investors so you had to go through a HF and give them 2 and 20. oh, there was another problem: counterparties. some, like Lehman, went BK and didn't pay up. so bets had to be spread around, or novated, or you had to take out CDSs on your counterparties with yet other counterparties...