1. that FRE and FNM will beat earnings.
1b. FRE and FNM will say house price decline is less negative and may bottom out in 6 to 12 months.
2. that it won't matter because I tell you right here and now, mortgage losses ACCELERATE AFTER housing flattened.
3. A fact nobody mentioned, is that in years past unemployment caused house price declines. Now we have a house price increases, which reduced unemployment, and then house price declined significantly while unemployment LAGGED and APPEARED to HAVE STAYED STRONG. Now the cracks show on employment, finally. When the CLASSIC tale of unemployment driving house price declines show up, I know you will be ready, won't you?
With all the above under consideration, I am very close to declaring an all out jihad to i) GROWTH stocks and ii) FINANCIALS (regionals, IB, GSE, and commercial REITs) and iii) END/LEISURE CONSUMER stocks.
As an added bonus, we may get an excellent entry price, our patience will finally pay off in spade, because of the added "technicals" such as hedgefunds liquidating financials short in the next few days as their commodity bet went sour ( which is exactly what would happen in a deflationary economy, as I recalled mentioning several weeks back, no actually last week, see the last article in this page. Very timely, I'd say. ).
Stay strong, this is like 8 pm on Jun 5, 1944. Pack the parachutes, bring extra ammos and grenades cuz we're hunting those Nazi sonofbitzes down like the swine they are. Or like the GS employees they are. Heheheh.
The right enemy
11 years ago
9 comments:
Nice blog. I will keep buying puts on mon and pot at every opportunity. I raised these pigs and now I will take them to barbeque, come join if you like meat, lots of meat. Will you or Lanty post here when it's time to short wacko bank again? thanks.
Jihad, MTG? As in strap yourself with PUTS grenades..
Lanty's stock sale is public.
He might also know better than I about timing of certain events (such as to maximize the value of put options in WB, for example).
MTG,
Is it still good time to get on the commodities bandwagon? Missed the entry point last week as I was out of the country. Or will there be a rebound before the tankage continues?
MTG,
Check out MS ... it is doing the great indian rope trick. Hope it goes to $45
I think so. Ur reference price is how much MON can drop from here. That's a $4 earnings company that is now stable (no longer accelerating) growth at 12%. That is 20 multiple. If MON drop 20% from here we get 40% increase in SMN, give or take?
MTG,
How did you arrive at 12% growth? My calculations based on estimates show 27%? Unless of course the estimates are way off in the first place.
It was a big mistake to think stationary objects like houses, gold bars, and a hunk of fertilizers can be left on their own and produce money like interest bearing deposit. They cannot. Historically, it was not a mistake to have mid single digit PE on agricultural products because they simply exist to provide basic necessities. They cannot go bankrupt, but they are not rocketship to wealth either. Recently, some tried to corner these markets as a means of escaping "gravity", that of the mortgage debt blackhole imploding a year ago. Some experts called the inflation in the "rear view" mirror, and that's exactly what happened.
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