Comments on: Where risk lies

By: jerry

jerry — Sat, 27 Dec 2008 03:20:51 +0000

Garth,
I am wondering, judging from the current ongoing real estate devaluations wether it wouldn’t be wise to hold on to, or buy land considered reasonably self sufficient in cottage country, say on water, or simply off the water with a good well and with at least a few years of wood available?
In past downturns these were the first to fall but they held there own in 2008 despite the fact that many properties had doubled in the last four years.

Maybe this time being so unprecedented, the old theory that the toys are the first to go may go itself!

By: Makeorbreak

Makeorbreak — Fri, 19 Dec 2008 18:07:24 +0000

Polaroid bankrupt:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aQdphguZPJ8I&refer=home

By: crashing yuppy

crashing yuppy — Fri, 19 Dec 2008 11:25:59 +0000

Great Post Garth.

It is very very simple why stocks will do better than real estate. It is because the people making the decisions on the economy own stocks and usually have their houses paid off.

They have a vested interest in the market and care less about leveraged Joe in Calgary underwater on his $400,000 mortgage.

Come on people, all the stimulus is for the markets, not for the idiots who bought into the sky high real estate market.

By: Bottoms_Up

Bottoms_Up — Fri, 19 Dec 2008 05:16:03 +0000

Regarding the derivatives link that has been posted twice:

1) aren’t there ‘puts’ and ‘calls’, therefore effectively reducing the ‘size’ of the bubble, because these should in essence cancel themselves out?

2) aren’t there variable time lines in which derivatives are due (i.e. you can have a ‘call’ for next month, or next year, or in two years time). Thus the bubble size again is effectively reduced?

3) derivatives can be used as a hedge. i.e. you can buy 100 shares in apple, and buy a put against apple to minimize potential losses (but attenuate gains)

That site did not provide evidence that the ‘derivatives bubble’ is a problem…