Using Veritas to Construct the "Per…

29-04-2017 Hits:49550 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:49874 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:49193 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:51074 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:50487 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:53061 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:33895 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:51714 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:51599 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:51907 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:54384 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:53371 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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The year 2009 was the year of reflation theories and bubble blowing. Theses of "Green Shoots", catching the bottom, and QE reigning supreme were the order of the day. Sure enough, asset prices (nearly all of them) went one direction, straight up. We all saw it coming, but guys like me who actually count the money and rely on the fundamentals didn't believe it was a sustainable gain. It wasn't a bull market, but a bear market rally. After nearly one year, the reflationists have had their hay day, or have they?

One thing that I have been proven correct on thus far is the housing market. Despite what was probably at least a trillion dollars of effort directed at suspending real estate and real estate related assets, prices are resuming their downward slide after falling 28% nation wide, peak to trough, and  over 50% in some areas.

It was the sharp downturn in housing prices that started the entire domino effect and much of this country's financial infrastructure is still heavily levered into residential (and to a lesser extent, commercial) real estate. Any further downturn will, without a doubt, wreak additional havoc on the economy. Is such an additional downturn in the tea leaves? Let's take a look at some charts sourced from the upcoming BoomBustBlog subscriber "A Fundamantal Investor's Peek into the Alt-A and Subprime Market" update, which should be released withing 24 hours or so. This release will include all of the raw data necessary for users to run their own calculation and draw their own conclusions.

Click to enlarge

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The governent did succeed in temporarily raising home prices in some of worse afflicted states temporarily, but as was easily determinable from the beginning, market forces grabbed control again and prices have continued to sink. There goes a few hundred billion dollars of taxpayer monies in the process. I believe that the taxpayer capital would have been better spend on small and medium business credit line guarantees that would have had an IMMEDIATE and lasting effect on employment and incomes. Instead of trying to manipulate the real estate markets and the associated mortgaeg market, we should have been focusing on true job creation and the availability of credit to that sector of industry that employees the most people. As income to debt service rations increase, home prices would be sure to follow. Of course, prices would have fallen significantly in the interim, but that was going to happen anyway, regardless of how much money you spend and what you spent it on. That's why they call it a bubble "burst"! The government could have used that capital to purchase the properties directly and the prices still would have fell once the government attempts to resell them. The market is the market and it is waste of capital to try and manipulate it in lieu of driving the fundamentals behind what dictates it.

I fear we will be learning a very similar lesson in the equity markets, as soon as the end of the second quarter - and after trillions of dollars of QE on top it.

In the chart above, you can see where CA has made some progress interms of appreciation. CA, FL, and NV account for nearly 50% of nationwide price damage. Let's take a closer look...

image203.png

As you can see, even the effects of HAMP and QE in California are starting to wear off. Florida never broke positive ground, it just got worse at a slower pace. California's housing market may get hit even harder as that state government is literally insolvent - and the effects of that insolvency will probably be taking root in the upcoming quarters in terms of diminished services and government employment.

These illustrated negative facing trends were easily discernable 3 months ago when I dissected the Case Shiller resutls graphically, see If Anybody Bothered to Take a Close Look at the Latest Housing Numbers...

The chart below illustrates the seasonal ebbs of month to month price changes.  On a month to month basis, we see hills in the spring and summer and valleys in the fall and winter. During the onset of the bursting of the (first) bubble, this cycle was compressed, but was still there. and lasted throughout the bubble. With the onset of the government stimulus (ex. housing credits and MBS market manipulation), the peaks were significantly exacerbated. Now we are entering into the winter months again, and guess what's happening, as has happened nearly every winter cycle before. The only difference is that this dip is extraordinarily steep! I would also like to add that the month to month price changes coincide exactly with the S&P 500 move downward and upward for 2008 and 2009, to the MONTH! What a coincidence, huh? If this relationship holds,,,, well you see what direction the month to month lines are going and how steep they are, don't you?

csmtmlong.png

As you can see when we drill down into the month to month  numbers, the improvements either weaken significantly or disappear into numbers that show further declines - and this is in the face of government bubble blowing!

csmtmshort.png

Let's chop the data up using bar graphs that give the reader a greater feel for the seasonality of the moves, and you will still find the latest numbers showing what looks like a downtrend, again...

image021.png  

  Remember, the CS index measures matched sales pairs. That means that it attempts to follow the same properties being sold, so the seasonality will mean much less than if one were simply measuring transactions, irrespective of the property. The seasonally adjusted numbers look more positive, but still show a downtrend. Since I could not find the specific methodology on the "de-seasoning", and I am easily able to discern the seasonal trends over time, I am much more comfortable with the raw index data.

So, what does it mean if we get another significant downturn? Well, not only are the 2003 to 2007 vintage mortgages in trouble, but those 2008 and 2009 mortgages are at risk as well. What are the chances of this happening? Fairly significant. For all of those guys who swear we are on the brink of a booming economic recovery, recall that it was housing depreciation that set all of this off to begin with. It was not a dip in GDP, not unemployment, not a dip in corporate profits, definitely not a change in analyst's earnings forecasts and not a crash in the stock market. It was a crash in housing. What happens if we get another housing crash (or more accurately put, the continuing of the current one) after a few hundred billion of stimulus and a 62% run in the S&P to guarantee that the stocks are nice and ripe in their overvaluations? Inquiring minds want to know...

All of this information was sourced from government sources and to a much lesser extent, Bloomberg. Keep the findings above in mind when considering the big and small banks that hold billions upon billions of loans based upon these assets on a leveraged basis on their balance sheet while their share prices skyrocketed 100%+ and sell side analysts forcast rosy earnings and continued rocketing share prices. Do you remember in 2007 and 2008 when the  housing market really started to nosedive?

Better yet, what has happened to the equity markets over the last 80 or so years whenever stock prices wandered so far away from the fundamentals? I am not going to be the one to utter the word CRASH, but go back and chart it yoursefl, The last event was only two years or so ago.