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UtopianRanger -> RE: Global Market Meltdown? Make Your Year-End Predictions Here: (1/22/2008 1:45:04 AM)
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quote:
Global Market Meltdown? Make Your Year-End Predictions Here:
It's good bet this thread won't see many posts/much action --- Most folks are affraid to be proven wrong [:D]
My forecast /predictions for both the market and general real-estate picture over the next twenty-four to thirty-six months :
The Dow and some of the more broad-based indexes:
The long term trend is down….way down – Based on vastly over-inflated values.{and I posted about this on collarme back in mid 2005} Even with vastly deflated dollars needed to chase these stocks, it’s my bet that indexes like the Dow will eventually drop below 9000, and maybe to 8000. And I only say that because I know there's growth in certain aspects of the international markets, and these corporations now market themselves and conduct business on a more Trans-global level.
If you look at a long term graph of the Dow dating back to the crash of 1929 and then imagine a straight line across up to the current date, you’ll notice that its real average is right around 6500. Everything that’s spiked above that, are over-inflated values because/based on a massive bubble.
Now….I base my assessment not by analyzing the crash of 1929, but instead by looking at both bubbles that caused the 1929 crash and more recently the Japanese deflationary cycle/real-estate bubble and the massive bubble that caused the Nikkei to surge all the way up to 39k. It’s fair to note that when it finally crashed {and trust me… all bubbles eventually pop}, it went all the way down below 7k!!! It’s currently hovering around 12.5k {prolly right where it should be}
Real-Estate – Commercial and Residential:
Le me first say that in another thread a couple of weeks back, a poster on the west coast mentioned that the ‘’bubble’’ had already ''popped'' in his /their area. That’s absolutely one-hundred percent false.
Right now most of the population is in complete self-denial. And in these vastly over-inflated, mania-inspired, mega-bubble area’s, like your beach-boom-towns for retiree’s in Florida, your poofy, quaint, euro-themed villages up and down the Atlantic seaboard, and of course the biggest bubble area’s of them all----the west coast…..and more specifically, California : Sure…the prices have dropped and it may seem like things have even stabilized a bit but, nothing is moving!!!
So, what I see happening : The Fed will cut the inter-bank lending rate at the end of the month by a half point... this in turn will cause the mortgage and real-estate sales industries to spread both false-rumors and false-hope that another surge /buying spree will come by mid summer. That will cause many sellers to hold firm on their prices, and then after the election in November and more specifically after a new president succeeds Bush in January, the band-aid fixes will then become exposed and folks will really start to come down to reality.
I see valuations in most parts of the bubble area’s mentioned, declining by as much as fifty percent, but prolly more like thirty to forty percent. And I see commercial real-estate valuations dropping even ten-fifteen percent below that of residential. I think it’s fair to note that much of the commercial real-estate during both the crash of 1929 and the more recent Japanese crisis lost as much as ninety percent of its value.
I know this sounds very negative /gloomy, but hey…I don’t pull any punches and this it what I see happening. I call em’ as see them.
I’ll close this by saying a couple of positive things :
1} All of this could change if the wizards come up with some kind of new bubble {before this one completely pops}A Sky car boom, alternative energy or maybe some kind of revelation from within the nanotechnology sector.
2} The folks in the Midwest / Heartland /Non-metro, Lower South east / Mid Atlantic regions: You folks are going to be alright. Sure you’re going to fall prey to the same down turn {inflation, higher unemployment, general tightening of the wallet}, but most of your real-estate appreciation has come more by demographics instead of ''mania'' and irrational exuberance.
I mean, lets face it….if you live in suburb of Pittsburg or say Columbus Ohio, and you purchased a home in the bubble for 140k and now it’s only worth 110k --- You’re going to eventually recover, and probably rather easily. But if you’re someone from Cali and you paid 670k for home and it eventually goes down to 510k or 480k {or lower} ---You’re done…really. And unless something truly miraculous happens, it will take you much longer to recover.
Goodluck, goodnight and I hope the wizards invent another twenty-five year bubble [;)]
- R
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