 |
|
Well, well, well, once again Jim Cramer is going to be wrong. Cramer has been going on and on for months now about the bottom in housing coming no later than the end of June, 2009. Last night on his show he declared the "official bottom" for the housing market about 2 weeks before his self imposed deadline. Keeping it all in perspective, remember that sometimes listening to Cramer can be very dangerous to your wealth. Recall if you will that he was saying all was fine with Bear Stearns right before they blew up. He will argue that he was the only one advocating a sell towards the end of last year before the market really tanked. That assumes of course that you had any money left after some of his blown calls throughout the year prior to that Today Show interview. He was also talking about the banks over the summer last year and his "fortress four" which were I believe JPM, BAC, WFC and USB which were all supposedly safe to get into. Towards the end of the summer he also began touting Wachovia and threatened to make his fortress four into the fortress five. Anyone remember that? I don't want to come off like I am bashing Cramer but hopefully people take his recommendations with a big grain of salt. Realize that he has a show to do and a vested interest in pushing stocks. He has many friends on the street and that makes for potential conflicts of interest. Why is Cramer wrong? 11 reasons: 1. It is just too early for a true bottom. Buyers are still gun-shy. 2. Unemployment will continue to rise at least through the end of this year. Even Obama has admitted as much. 3. According to RealtyTrac there is a huge shadow inventory of homes that banks have on their books that they have not done anything with yet. 4. The 17% jump in housing starts last month were largely skewed towards multi family units. 5. Interest rates are heading north, not south, and will likely continue to do so as we continue to print money at will. 6. Lending standards and credit qualifications are much tighter today than at any time over the last few years. 7. Banks are hoarding money instead of lending to keep their balance sheets bolstered. 8. Foreclosure rates and bankruptcies are actually accelerating. 9. The $8000 tax credit expires in about 2 months. 10. The bulk of Alt A and Option ARM resets are actually 1-2 years out. These resets dwarf the sub-prime resets. 11. As more and more people become unemployed and lose the ability to pay mortgages, they will also realize they are paying on a quickly depreciating asset. As that realization hits home it will become more "acceptable" to just walk away by mailing your keys back to your bank and taking the hit on your credit report. That will seem much more palatable than losing 6 figures on your house. And it won't seem as bad morally and ethically as a few hundred thousand people do the same. This may be the next big crisis that hits that not many are talking about. How all of this adds up to a bottom in housing this month boggles the mind. Before you drink the main stream media kool-aid please do some critical thinking on your own. The bottom will come in time, but that time is not this month. Tags: Housing Bottom Unemployment
|
|
|||||||||||||||||
