Using Veritas to Construct the "Per…

29-04-2017 Hits:87256 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

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The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:81168 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

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What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:81016 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

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Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:85486 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

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This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:81984 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

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What is the Value Proposition For Verita…

01-04-2017 Hits:84166 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

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This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:55229 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

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Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:83432 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

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Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:83170 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

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The Country's First Newly Elected Lame D…

27-03-2017 Hits:83062 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

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Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:89320 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

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The Transformation of Television in Amer…

21-03-2017 Hits:87034 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

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I was talking with my father yesterday about the meanings of the terms recession, depression, inflation, nominal and real prices. My dad (and my mom) are my heroesLaughing. They are hard working, god fearing, extremely loving working class folk. BTW, we had this discussion on the to talking the local Hyundai dealer to sell us their top-of-the-line, fully equipped Azera model for just over $23,000, brand spanking new. This car has 85% of the amenities as luxury cars literally costing four times as much, not to mention a 7 year warranty. This is the Edmunds pricing breakdown for that exact car.

TMV Pricing Report

2008 Hyundai Azera
Limited 4dr Sedan (3.8L 6cyl 5A)
TMV®
What Others
Are Paying
  MSRP Invoice
National Base Price
$28,550 $26,517 $27,306
Regional Adjustment
for Zip Code
Change
- - $175
Optional Equipment $2,750 $2,538 $2,639
06 Option Group 06 Ultimate Navigation Package $2,750 $2,538 $2,639
Color Adjustment - - $32
Sage Green
Destination Charge $695 $695 $695
Total with Options $31,995 $29,750 $30,847
 
Incentives & Rebates -$2,500
Customer Cash Adjusted True Market Value $28,347

 

Now, why would they sell us the car for $5k less than what "others" are allegedely paying? The truth of the matter is, as many have already surmised, that the car business is doing horrible. These dealers have inventory on a floor plan (credit line) and they are apparently losing enough money where they are willing to take deep losses in order to move it off the lot. This is a sign of a depressed economy. Hyundai are the "everyman's" car. If these can't move without discounting past the point of extreme pain, the debate about recession and hard landing is simly academic. Okay, I digress. On to the topic at hand.

If I hear another pundit (ex. Ara Hovnanian) query or comment on reaching a "bottom" in the real estate market anytime soon, I am going to scream. In the conversation I was having with my father, I explained the current housing like a ball that we usually play with at ground level. Ground level is the equilibrium point. Now, I said, imagine throwing that ball 50 feet into the sky, then expecting it to suddenly stop in mid-air or 5 feet down in its descent back to the ground - ex. finding the "bottom" that the CNBC crew are in search of and expecting to come sometime next year. Physically, and realistically, this expected stop (or bottom) for the ball just ain't gonna happen. The same can be said for real estate values. When things pop that far outside of historical mean, expect a reversal. The following graph makes this point crystal clear, congealing the entire conversation I had with my pops into one picture...

Looking at the real (inflation adjusted) prices of homes over time and comparing them to the rates that tend to power them and the costs to build the home, that ball that was thrown up 50 feet into the air (the blue line) will have to drop at least 50% before it even comes close to hitting the ground again (the largest distance between the two lines, historically, excluding the 1997 spike, at at a realistic minimum). So all those guys who think the largest historical housing price spike since the US gold rush that lasted at least 7 years will be over after a year or two of relatively minor correction, study your history!

housingaffordability.gif

Now there is another way of looking at this. Many people ask me when I think the housing market prices will stabilize. I say the that houses will sell when people will be able to buy them. After the long run up, median prices have outstripped median incomes by so much that the (vast) majority of housing stock is out of reach of the everyday working couple. People like my mon and dad. It's as simple as this - houses won't start selling until people can buy them.

So taking the previous, and rather simplistic but highly informative theses into consideration, any one who believes that housing industry and financial industry that levered up on real assets and related securities at the very tippy top of that blue line in the first graph will stop writing down values by year end or even next year, I strongly suggest you start studying your history. It will be decades before we see those prices levels again. Where excessive leverage has come into play, it is quite possible that some of these assets may actually NEED to be written down to zero. Just look at the first chart and think of buying at that apex with 30x leverage, then having to suffer the trip down as the ball falls back to the ground.