CHESSNOID

I really thought we could be getting near the bottom of this recession sooner than later. But as more information coming out as news headlines and companies forecasting what they can produce in the coming months, I think I am wrong to think this would be over quickly. I was thinking 2 bad quarters after the loans resets of those pesky sub primes and another 15-20 drop in real estate prices and then we could get back to normal.

For the first time since the Federal Reserve started tracking the data in 1945, the amount of debt tied up in American homes now exceeds the equity homeowners have built.

The Fed reported Thursday that homeowner equity actually slipped below 50 percent in the second quarter of last year, and fell to just below 48 percent in the fourth quarter.

And that was just one example in a day of dismal housing reports.

The Mortgage Bankers Association said foreclosures hit an all-time high in the final quarter of last year. And pending U.S. home sales — those in the gap between when a buyer signs a contract and when the deal closes — came in below analyst expectations for January and remained at the second-lowest reading on record.

“There is no sign that we’re near the bottom in the housing market,” said Douglas Elmendorf, a senior fellow at the Brookings Institution and former Fed economist. “Housing prices will probably fall for a year, two or three to come.”

I know today the government raised limits on FHA, Fannie Mae, and Freddie Mac but most people earning $100,000 will not qualify for those loans. This really helps very few borrowers. Now that creative loans have disappeared and lenders are scrutinizing everything and looking for reasons to turn loans down instead of evaluating each loan on its own merit and situation, the total number of home sales will continue to decline. Fannie Mae and Freddie Mac just posted some ugly numbers recently. If these limits were in place before, those losses would have been magnified:

Freddie Mac and Fannie Mae, the biggest U.S. mortgage finance companies, have posted their largest-ever losses as rising defaults boosted credit costs. Fannie Mae had a $3.55 billion loss in the fourth quarter, the Washington-based company said Feb. 27. Freddie Mac reported $2.45 billion fourth-quarter loss the following day.

Oil continues to wiggle its way up. It is staying above a $100 a barrel and OPEC has decided to keep production the same and called us on our bad economic policy.

Saudi Arabian Oil Minister Ali al-Naimi, who sets policy in the world’s largest oil exporter, said earlier that supply and demand were stable. Naimi said that Opec’s aim was to keep stockpiles near the five-year average.

Crude-oil prices also rose because the US dollar dropped to an all-time low against the euro, increasing the appeal of commodities as an alternative investment. The dollar touched US$1.5303 per euro, the weakest since the euro’s start in 1999.

All I know is many consumers here in the US will suffer as the gallon of gas rises to $4.00 along with the cost of everything else in the grocery store. Basically, the more you spend at the pump, the more you have to cut back somewhere else.

It is tough to see the value of your home value fall which is most consumers’ biggest asset. It is also tough to watch your stock portfolio fall on daily basis whether it’s your personal stock account or your IRAs or 401K plan at work. The closing stock numbers were:

I am a true believer the stock and real estate market will eventually bottom and turn back up. At this point, I am guessing very much later than anytime soon.

My UpDown portfolio moved up and I sold it all to lock in the gain.  I sold it prematurely because I thought the market would rally in the last hour of the day which seems to be happening more often lately. It didn’t do it today, so I could of actually had bigger gains if I was willing to risk it.

Sell Market QID 03/06/08 12:46 PM 03/06/08 1:06 PM 3,710 $53.61 $100.00 $198,793.10

Sell Market DOG 03/06/08 12:36 PM 03/06/08 12:56 PM 3,156 $64.80 $100.00 $204,408.80

Sell Market DXD 03/06/08 12:36 PM 03/06/08 12:56 PM 3,482 $59.04 $100.00 $205,477.28

Sell Market SDS 03/06/08 12:35 PM 03/06/08 12:55 PM 3,144 $66.16 $100.00 $207,907.04

Sell Market SKF 03/06/08 12:35 PM 03/06/08 12:55 PM 1,636 $131.38 $100.00 $214,837.68

But at the end of the trading day I put an order in for Google. I am hoping for a bounce on that tomorrow. So I am $35,000 from the initial $1,000,000 start up amount.

Stock Last Price Day’s Change Day’s Gain Shares Price Paid Total Gain Market Value
GOOG $432.70 -$15.00 -3.35% -$7,050.00 470 $431.83 $308.90 0.15% $203,369.00

Market Value $203,369.00
Cash $831,674.43