Tuesday, April 29, 2008

Booyah Moment.

I have been examining several facts over the weekend till now and would like to write it down just so I remember where I last stopped for thinking. This part of the blog may not relate at all to investing much more so than a rant.

I read that the properties sinking in value used to be 100 miles off the coast of California in late 2005. Then as 2006 and 2007 progressed, the the "blight" moved to 70, 50, 30, and now in early 2008, about 15 miles off the coast. Coincidentally, those are the areas that have been highest in value for a long time or at least since I can remember looking at data. It is true in general for east coast area like DC and Boston, as well. And the blight is still marching on to the coast.

Why is this important?

I think it underscores the constancy of wealth and how wealth will over time concentrates over a few select individual.


a. TIMING: The right time and the right place: Two identically skilled workers, depending on when they enter the work force in my field (2002 - the start of the housing bubble or 2006 - the end of the housing bubble) : one will earn $250-350k and the other $50-70k. This thing is a time-frozen fixture and unlikely to change because now the economy is deflating and hope is fleeting and money is gone. BOOYAH.

b. CHANCE: Back to the blight creepage to the coastal area: Ten people invests $1 each, one of them bought puts and scored 10 bagger while every body else loses their $1. Then the $10 guy buys everything the 9 others owned, houses, yacht, mistresses and moved to the higher priced areas. This is a very likely explanation. Investment, I should caution, is not limited to stocks, before you are skeptically closed to this idea, think about currency, fancy Real estate, bonds, and other things to invest and see whether this concept is possible. BOOYAH.

c. SYSTEMIC: There seems to me, that the current US system is like a car with massive oil leaks. Fluid (money) circulates well but keeps leaking. How? example: Money circulates to fund profitable business. BUT: What's a business if it's not profitable, so you shouldn't be proud of just satisfying the "requirement", that's the CNBC clowns saying "Look but GOOG make money" crowds. Also, everytime money flows it passes to the banks and thus friction because everytime it passes wealth is leeched out of the flow to feed the three or four trolls pushing papers in your friendly neighborhood bank, investment bank GS, or some generic assholes in wealth management unit of UBS, who the f*** knows. The point is in my opinion when the system works it a) satisfies the MINIMUM requirement to keep functioning, but b) most of the time it NO LONGER does and chooses to feed TROLLS instead. BOOYAH.

All these imbalances would over time leave 299,999,999 with nothing and 1 guy with everything. While I think over time the best scheme is "free market" and capitalistic, I look forward to some Good old Bolshevik, Tzar-executing, BOOYAH moment in USA.


D said...

Your best post yet...

talk about alternative investment strategies and vehicles though.

Son of a!


MTGSPY said...

yeah, i know. I was just pissed off all day long today for no reason. I consider FRE an alternative investment cuz it no longer correlates with economic reality as we soon shall see or I'll be losing my left nutsack (it might get taped to my forehead as a reminder tho). Hope my spy is right about this.

D said...

I don't doubt your contact, how confident are you on the 2009 roll-out time line for the FRE/FNM recap?

I am of the opinion that the .gov would want to leave that up to the next administration to handle...so it makes sense.

I spoke with my short sale contact that represents the party in default and was told that the banks have been dragging heels on deals now...makes me wonder what they've got planned.

Another funny tidbit, this person also said they decided to short-sell their revolving debt down from $55k to $15k and the banks took it! The revolving debt CDOs are going to go bust no doubt about it after I heard they are getting involved on that end too...


MTGSPY said...

I am very confident about the Ultimate Handout, but let me caution you that decision is conditional on things, generally speaking, going real bad on or around Q4.

The next admin is Democrats. You know what that means right, if you ever want to time your timing for panhandling the govt for GSE?