This is surely going to end in tears!
US and UK Stock markets continue to defy gravity and common sense.
Those of you regularly reading the Blog (and Thank You!) will notice that Karl Denninger of Market Ticker is frequently referred to by this author.
My own view is that the fundamentals do not support what is happening but that’s amateur talk compared to the research and detail that Denninger puts into his Blog.
So here’s another very rational view of why small investors could be heading for burnt fingers, yet again. Private investors: always the last in and the last ones out!
UPDATE: And yet another convincing piece of information from Dave Rosenberg of Gluskin Sheff.
August 6, 2009
Some bad news for the long-range housing outlook
The home ownership rate surged to nearly 70% during the bubble and has since fallen back to 67.4%, but still well above pre-bubble norms. A just-released study by the University of Utah shows that the rate of home ownership in the U.S.A. is poised to decline to 63.5% by 2020 (where it was in 1985). At a time when there are still some 800,000 units in excess that are vacant AND for sale, this secular decline in demand spells one thing and one thing only, a secular deflation in residential real estate. The periodic months of “green shoot” stability will very likely prove to be little more than noise along a fundamental down-trend in pricing.
By Paul Handover
(Written on the 4th for publication at 9.00 am MT on the 6th. Markets at the time of writing are: Dow Jones 9295, S&P 500 1,001, NASDAQ 2002, FTSE 100 (now closed) 4671.)
Disclosure: No market investments, neither long or short on the indexes, heavily invested in US Treasuries.