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Feb 27, 2007 4:54 pm
Feb 27, 2007 4:59 pm

Comments regarding a highly notable day in the financial markets from a Financial Advisor's perspective...

Feb 27, 2007 5:09 pm

I still think the Dow will hit 13,000 by the end of 2007. I don't assume that when investing money, it's just a guess.

Feb 27, 2007 5:18 pm

If Nikos talked to Zorba today, he'd probably say, this has just been a Last Temptation kind of day, but don't panic.

Feb 27, 2007 5:26 pm

It was overdue. We havent had a correction of over 2% in one day of trading since 2003. In recent years, we have become accustomed to low volatility and an upward trend in the indexes (with exception May 2006-June).


One hopeful sign is that about an hour left in trading with the indexes down over 4%, some long money came in and helped the indexes bounce off the lows and recover somewhat. (Or maybe it was the shorts who were getting murdered who had to cover their positions...)...


The next 2-3 days will tell whether this is a knee-jerk reaction to some unexpected news... Or whether we are at the beginning of a 10-20% correction.... Either way, there is opportunity in this market.

Feb 27, 2007 5:31 pm
blarmston:

It was overdue. We havent had a correction of over 2% in one day of trading since 2003. In recent years, we have become accustomed to low volatility and an upward trend in the indexes (with exception May 2006-June).


One hopeful sign is that about an hour left in trading with the indexes down over 4%, some long money came in and helped the indexes bounce off the lows and recover somewhat. (Or maybe it was the shorts who were getting murdered who had to cover their positions...)...


The next 2-3 days will tell whether this is a knee-jerk reaction to some unexpected news... Or whether we are at the beginning of a 10-20% correction.... Either way, there is opportunity in this market.




Maybe it was the fact that the indexes took a beating but I don't think the Shorts had to cover anything today

Feb 27, 2007 5:34 pm

Sorry, I should proof read but have had a busy day, should read that something tells me that the Shorts didn't have to cover anything today.


I would bet that most of them are going to bed with a pretty big smile

Feb 27, 2007 5:39 pm

I would bet that most of them are going to bed with a pretty big smile


Like you say, we'll see. Maybe we'll get our 10% solution to the euphoria.

Feb 27, 2007 5:40 pm

It recovered from -500 before close, so tomorrow should be o.k.

Feb 27, 2007 5:46 pm

(Or maybe it was the shorts who were getting murdered who had to cover their positions...)...


I deserve to be reamed for a comment like that one...Yup... That's what happens when you place little thought into a post... I am gonna take a power nap under my desk because I am exhausted and can't think straight...

Feb 27, 2007 6:12 pm

All I can say is QID rocks, and I'm glad I have some!

Feb 27, 2007 8:31 pm
joedabrkr:

All I can say is QID rocks, and I'm glad I have some!





SRS was AllREIT.



More seriously, trash investments got hammered. Compare SDY to SPY.

Feb 27, 2007 8:40 pm

Thanks for the comments.  With respect to client contact - any thoughts/stories?

Feb 27, 2007 9:13 pm
Hollywood:

Thanks for the comments.  With respect to client contact - any thoughts/stories?





Hello Mr Jones, this is AllREIT at Falling Knife Capital, I just wanted
to touch base with you today about the stock market and answer any
questions you might have...



BTW Thanks for buying those BRIC fund A-shares last week,
your purchase put me over the top for this month, so I'll be driving to
our next meeting in my new Cadillac. If there is anything else I can do
for you don't hesitate to call.

Feb 27, 2007 9:35 pm

I'm willing to bet the market is up over 150 points tomorrow. The

domestic market is not overvalued enough to warrent an extended

pullback. There will be a lot of institutional longs jumping in - especially

fund managers with cash to spend.



However, the international markets (primarily developing markets) may be

in for an extended slump.

Feb 27, 2007 10:36 pm

Regardless of what happens tomorrow, the mortgage debt bubble is not going to go away. Type in "mortgage debt bubble" on google news and read some of the stories. The dot com bubble was traded for a real estate bubble when Greenspan lowered rates to 1 %. Dumb americans bid up houses and pulled out equity from their houses and this is going to be a mess.ONE trillion in arm mortgages reset this year. this is the problem , not china. take a look at NEW and the other subprime lenders, They have been getting crushed. Who is holding these securities, that is what I want to know. If the fed lowers rates, they kill the dollar. if they raise rates, they kill Real estate.. I don't know the answers. I  look at big name stocks and see PE's of 14, 15 and 16. and that is not bad. Again, which financial stocks, individuals, hedge funds are holding the pile of future defaults on mortgages.  Commercial Real estate collapsed in the late 1980's , this is going to be the residential collapse.

Feb 27, 2007 11:01 pm

It's not too late to short the regional bank ETF (RKH), the DJ Real Estate Index (IYR), and the retail holders trust (RTH).  I recently covered up my New Century Financial (NEW) and Accredited Home Lenders (LEND), but continue to remain short H&R Block (HRB).  That mess has a long way to go in my view.  Cover when they fire the current management team. 

Feb 28, 2007 4:24 am
Soothsayer:

It's not too late to short the regional bank ETF
(RKH), the DJ Real Estate Index (IYR), and the retail holders trust
(RTH).  I recently covered up my New Century Financial (NEW) and
Accredited Home Lenders (LEND), but continue to remain short H&R
Block (HRB).  That mess has a long way to go in my view. 
Cover when they fire the current management team. 





RKH, is one the idiotic HOLDR's ETFs, if you want regional bank exposure look at KRE the KBW Regional bank ETF.



Personally, I'm bullish on regional banks x-Florida and Upper Midwest.
Florida is a hellhole of bad loans of all sorts, and the bottom is
falling out of the rusty dusty midwest.



I'm bullish on HRB, and wish they would not sell Option One at the bottom of the market.
IMHO  Basicly, they need to put it on ice for a little while. Use
the cash flow from the tax business to buy up some prime mortgage
origination capacity during this period of market distress. When the
housing crisis blows over in 2-3 years, boom Option One can hit the
ground running.



IMHO there is good value in the mortgage finance sector right now,
especially in commercial mortgages. There is an awful lot of
unwarranted doom and gloom out there.

Feb 28, 2007 12:01 pm
AllREIT:

BTW Thanks for buying those BRIC fund A-shares last week...


The interesting thing is...I use a couple of BRIC funds and my net client loss from yesterday on 33 mil...less than $100K.  You stay with those TIPs funds and in ten years, let's see who's clients did better...deal?


Feb 28, 2007 12:21 pm
Indyone:
AllREIT:

BTW Thanks for buying those BRIC fund A-shares last week...


The interesting thing is...I use a couple of BRIC funds and my net
client loss from yesterday on 33 mil...less than $100K.  You stay
with those TIPs funds and in ten years, let's see who's clients did
better...deal?






Someone made a similar bet with me back in 2000, wrt to TIPS @ %3.75 real vs QQQ @ 5000.