Nigel Swaby, the Axe-Man, takes a break from cutting deals with Casey Serin, building new businesses (on free blog sites), partying with bobsled teams. The blogcation has really paid off and Nigel is ready to dive into some deep economic commentary... uh, bolsterd by a syndicated horoscope column.
Master of the obvious, who brought us such great insight as "My point is this is mostly algae caused by the sun," is at it again this time trying to tackle Haterz, housing bears and people with some actual insight on economics.
I believe Wall Street is beginning to wise up to the screamingly negative headlines too. Yesterday was a great example. Early in the morning, March GDP numbers were released. While there was growth, the numbers didn't hit estimates. After reaching a new record Thursday, the stock market had barely budged.
Dow 13k certainly is a pretty number, but while it's a nice psychological barrier you need to keep in mind that increasingly what is good on Wall Street isn't good for Main Street. The weak dollar affects both worlds very differently. A weaker dollar helps companies be more competitive in the global marketplace, I read somewhere that most companies that have reported earnings recently (something like 70-80%) said that the current currency situation has been beneficial to the bottom line. Good for them. But in other deeper analysis we also learn that there is some serious inflation going on in parts of our economy. Gas, milk isn't getting cheaper. What someone could buy for $1500 in 2000 is costs over $1700 now.
Finally, as the Dow continues to grow, keep in mind the percentage growth to cross these psychological growth gets to be less as it grows.
Full disclosure, unlike Nigel, I know i'm an idiot. So if any of this is off, post it in a comment, maybe i'm totally off mark here as well. I am not a doom and gloomer, I don't have a closet full of gold anywhere, I have a nice 401k and hope it doesn't disappear. I don't want another Great Depression. I am indeed a (temporary?) housing bear, I wanted to buy a house this year but when I started researching on what that really involves (yeah I know, it's silly to educate yourself before diving headfirst into something, right Casey?). I was a bit stunned how "values" in an already expensive area had grown almost 100% in about 5 years. I make a nice living and should be able to buy something decent, but what is now in my range historically are what I consider dumps. Thankfully my rental house costs me about 1/2 to almost a 1/3 of what houses in my neighborhood would cost via mortgages. So I will continue to wait.
What I know is the past few years of "wealth growth" in this country was nothing more than what is a part of Casey's story, borrowing in order to get what you want today. Through sketchy mortgages and HELOCS, I think the consumer has shot it's credit wad for the foreseeable future.
From a BusinessWeek article, via MSNBC:
What worries you the most?
I think the consumer will get stung by the real estate market as it continues to devolve. I think that the consumer is already getting stung by higher energy prices. The U.S. savings rate is negative.
With $1 trillion in ARMs [adjustable-rate mortgages] adjusting this year, and people spending more to heat and cool their homes and to drive and on groceries, these people are going to get pinched. The consumer is two-thirds of the economy, and it's tough to see the economy going ahead with two-thirds of it stalled. I think that the housing correction will extend and move lower than people think. This kind of trend always goes longer and deeper than anyone expects.
6 comments:
I don't understand people like Nigel. What does he care if the Dow is 13000? He doesn't have tons of money to invest and frankly people his age would benefit more from violent upswings and downswings in a tight trading range as means to build wealth than a stock market that grows to bubble levels for an extended period of time, then bursts and stays collapsed for even longer.
Since when are rising prices (houses, cars, stocks, etc) the sign of a strong economy? For that matter, since when are low prices a sign of a bad economy?
well, i think it's a couple things with Nigel.
Many people have questioned why someone who clearly has invested time in trying to build some online credibility has gotten into the thick of this whole Casey train wreck. Someone who takes out a press release for himself claiming it's the "STORY OF THE YEAR" isn't really grounded himself. This guy is trying to fake credibility and knowledge by the relentless PARAPHRASE PARAPHRASE PARAPHRASE mantra. I might be just as dumb as him, but at least I can honestly attempt to draw some real conclusions to something, Nigel just doesn't in my opinion.
Secondly, I can't really blame someone for trying to pump up their own industry.
The guy needs to step back from his smarminess and really try to learn something. In my world a handful of years in a given industry really doesn't give you any deep insight on much. I've been in my field now for (JESUS) almost 20 years and there's not a day I realize I still have endless things to learn and try.
correction above ...there's not a day where I don't realize there's still stuff to learn... more coffee please.
I also want to tell Nigel, "Unlike you, I'm stupid when it comes to these terribly complex issues."
I think I once was a perma-bull. I was new to investing and there was a massive equity bubble. I believed trees grow to the sky. But I learned. Can't make it much simpler than that. I learned well.
And if he puts any money where his big mouth is, or even if he just pays attention, he'll learn, too. Maybe it will take time.
He repeats a handful of factual errors, but ultimately he's making predictive statments, which cannot be proved incorrect now, by definition. It is very annoying... but also somewhat harder to confront.
When I was a perma-bull, I kept an open mind, read a lot (but now i read ten times more), and certainly wouldn't poke bears with sticks. That level of hubris blows my mind. He thinks this is a place for playground taunts. Again, if he puts money behind this big mouth, that money's going down. And I find that detail very funny.
I've often said that he really wishes to take a pursuasive writing course at the community college. I think he'd do well at it... but only once he recognizes what's real and what cannot be substantiated by the facts.
As moderator of an investment forum, I see a whole lot of crazy thinking. And I think it's acceptable, because many people come to the internet to discuss and genuinely learn the complex art/science of investment. The field thrives on atypical thinking. If you can find a contrarian pattern, you're especially rewarded. But not like this. Nothing like this. Nigel is a worse form of rhetoric than Casey, because Nigel claims he's got great judgement. At least Casey has accepted that he's got some "issues" that prevent successful investing.
Nigel is a funny little guy, he seems to have tried dipping his toes into the "legit" bear/bubble blogs only to get spanked on his economics.
I guess that's why he ended up at Casey's, thought he could be the big, smart fish in a shallower pond maybe?
He's just a less-daring version of Casey who's not really found himself.
It is terribly interesting to look at things a little more substantially, I suspect many people wouldn't be in the troubles they're in now with mortgages and HELOCs if they took a few hours a week to at least look into what they were signing and what it meant.
Nothing goes up forever and mostly algae is caused by the sun.
13000?
Answer: Where does 40% of realty's customer base (specuvestors) put their money after they leave real estate.
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