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ShelladyOptions
Senior Contributor

OptionEye...Jan 18th

Good morning.

 

Glass half full? Half empty? Or is the glass just twice too big.

 

Looks like a slow grind higher in the short term with traders focused on the tight supply issues and I don't see that changing without some new inputs. I'm going up to our farm this weekend to get some farmer points of view. Always good to get the 'real' story.

 

As for the rest of the world, stocks grind higher as well. Economic news still mixed but the world is 'sick and tired of being sick and tired' so now is only focused on the positive.

 

Gold is higher, oil is slightly lower and the 10 year yield is still in that 1.86% range. I am sure that the existing home sales number later this morning will get some headlines but it is hard to ignore that 1 out of 5 housed in America is underwater and the other 4 out of 5 are worth significantly less than they were in 2006/07.

 

Three day weekend puts a little 'hop in your step'.

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5 Replies
GoredHusker
Senior Contributor

Re: OptionEye...Jan 18th

I've often times wondered why people believe their houses should gain in value over the years.  A house as an asset resembles a vehicle as an asset much more than it does something like farm ground.  A house is a net loser in the fact that one has taxes on it and repairs on it much like a vehicle.  No income is derived from a house unless one can verify they run some sort of business from it.  I highly doubt too many people are upset that the vehicle they purchased new in 2006/07 is worth considerably less today.  A house is something to live in comparable to a vehicle is something to get us from point A to point B.  Unless someone is buying houses for rental property, I'm really not sure why it matters if the asset value goes higher or lower.  I think we can all acknowledge the problems that arise when people start using their house equity like a credit card. 

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Palouser
Senior Advisor

Re: OptionEye...Jan 18th

Yup, that was Wall St's story on all the phoney paper they cranked out of their plastic fantastic money machines. After the crash. Unfortunately they got greedy and insured the value of the paper in order to help sucker in the corps and banks around the globe to overlook what was going in the sausage. Whoops!

 

Yeah, nobody should count on home values, jobs, retirements - nothing. We should all be Mom and Pop operations on Main St. True, we'd no longer be a world financial power and we'd have to cut back on all spending and scale down our defenses and global power brokering. No credit to grease the rails for something as stupid as financial centers and big finance of corporations.

 

Think of it as big money keeping us on our toes and lean and mean.

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sw363535
Honored Advisor

Re: OptionEye...Jan 18th

Gored I keep tellin' my wife that.........   She knows your right.--------------------------- Thank God.

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GoredHusker
Senior Contributor

Re: OptionEye...Jan 18th

It's just like anything else.  Take my farm ground for instance.  It matters very little to me whether it's worth 1000 bucks an acre or 10000 bucks an acre.  I'm shooting for 400+ bucks an acre profit from it every year.  Other than fluffing up one's balance sheet, it really doesn't matter unless you're into flipping ground, houses, etc.  It's when people start borrowing money against the fluff when things get bad.  This is exactly what happened in the 80's which is what led to reduced values by the late 80's.  Most people buy houses to live in them not flip them.  Basically, the housing market saw a reset much like farm ground did back in the 80's.  I think we'd all be naive not to believe we won't see a reset in farm ground again.   

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Palouser
Senior Advisor

Re: OptionEye...Jan 18th

You're betraying your farmer think again. Most people (certainly not farmers) have been moving somewhere after 5 years residency in a house. They move to get a different job, a better job, get a new job after being downsized or bought out, get a bigger house for a growing family,  etc. To a farmer that's 'flipping'. To a suburbanite that's life. It's also one of the reasons farmers get subsidy checks - to keep populations in rural areas to keep a constantly downsizing rural economy from a death spiral after a downturn.

 

Farmers often inherit a land base and a big house - or one that makes economic sense to add on to. And it's a function of family farming that you get to live where you work for efficiency and lifestyle needs. Few other jobs offer that kind of situation long term.

 

Meanwhile the person that is underwater on their house may now be trapped. They can't move to find another job, develop another business in another market, or get a better job. It hurts the economy.

 

Let's face it. There are certain times when farmers just can't quite get it in the outside world.

 

 

 

 

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