Wall Street Research

Interesting bit from TheDeal.com blog...

The blogs are taking over investment research! [shivers]

-AvgJoe

New NAR Data

The much maligned National Association of Realtors (NAR) just came out with its fourth quarter report on home sales and home prices. The title of the release was, well, true NAR style: "Metro Areas Show Greatly Mixed Home Price Performance; Half Show Gains."

It was the first paragraph, though, that really jumped out at me:

Roughly half of metropolitan areas continued to show rising home prices in the fourth quarter of 2007, according to the latest quarterly survey by the National Association of Realtors®.

Now of course I appreciate why they want to emphasize that some housing markets are still going up in price. And I'm sure the news has warmed the hearts of many a homeowner in these areas, but it still seems kind of funny to me that they're emphasizing rising prices. I guess it all goes back to the fact that so many Americans think of their home as an investment good rather than a consumption good, but still...

I already bought a house. I didn't get the deal because I didn't wait long enough (woe is me, I know), but I got a deal because I bought after the declines had already started. But the fact that home prices are falling in so many areas seems like good news for home shoppers. Or maybe my head's just screwed on backwards.

-AvgJoe

Fear and Loathing in the Markets

If you haven't seen it already, Paul Kedrosky today highlighted the recent survey of money managers from Merrill Lynch. In short, the survey said that managers are extremely bearish and expecting further declines in the equity markets. Cash is very popular right now -- Merrill mentioned that 41% of managers are overweight cash, the highest percentage since the terrorist attacks in 2001. In case it doesn't sink in right away, that means there's a lot of cash on the sidelines that needs to get invested at some point.

If you're keen on investing against prevailing sentiment, this is a pretty darn interesting data point.

It comes at an interesting point for me too. Just yesterday I was mulling over the risks that were out there and thinking about how very real the risks are. As I've previously stated, I don't think we're headed for financial disaster. However, I can't deny that the pieces are in place that could make that possible. So the risks are real.

Money managers aren't stupid. If the risks weren't real nobody would be worried and nobody would be selling. If it was obvious that this was all going to end well, or at least without fire and brimstone, then those 41% of managers would still be in equities. If only I could transport myself in time, I could head back to 2002, 1974, 1990, 1987, etc. and I'd likely see that the risks were just as real in all of those situations. Yet I'd jump at the opportunity to invest in any of those periods.

I'm not stupid either (at least I don't like to think of myself as such...), I can see why the problems are considered so dire. But as I take the range of potential outcomes and weight probabilities, I like the chances and the risk/reward that's out there right now.

-AvgJoe

For Whom the Bell Tolls

Now if this doesn't sum up the housing market mess in one fell swoop, then I don't know what does!

-AvgJoe