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How I predicted it: Started reading short seller message boards. Got deep into the weeds with credit default swaps. Found that you could actually see prices

How I predicted it: Started reading short seller message boards. Got deep into the weeds with credit default swaps. Found that you could actually see prices for credit default swaps on markit.com. watched priced for BBB- credit default swaps increase dramatically in early 2007. That was the signal that it was over. Got back in in early 2012 when the loan rate resets from the housing bubble all tapered off. Moral of the story: in every bubble the money is coming from somewhere. Figuring out where it is coming from will let you predict the big market turn. If you don't know where it's coming from then you probably shouldn't play with bubbles.

vadym909 9y ago
Where do you think its coming from now?
- corey_moncure 9y ago
  China.
  - deleted 9y ago
    [deleted]
  - bostik 9y ago
    You may be right but without context or the background for your educated guess that comes off as a snarky flip. I would personally add Russia to the mix. The reason is simple: both China and Russia are sources of capital flux, where those with means are funneling funds outside their respective countries. Because there are, or have been, capital controls in place, those who move money out of their countries are willing to pay a premium for it. Funnily enough, there is a name for the phenomenon where actors with money are willing to pay exorbitant transaction costs in order to move funds from one jurisdictional domain to another.
    - wsinks 9y ago
      There's some sort of wit in that last comment, but it's late and I didn't get it. Capital flight?
      - ves 9y ago
        I’m going to guess that it starts with an “m” and ends with an “oney laundering”
    - narrator 9y ago
      Russia's economy is not that big. About as large as Italy. I seriously doubt they are fueling much except a few oligarchs buying very expensive homes here and there.
- icantdrive55 9y ago
  Tech. I live in Marin County CA. The new tech money is staggering. They are buying multiple homes--new cars. The increase in traffic is very noticeable. Every vacant room is rented out, and they are paying. My new neighbor is home on the weekends, with his tech wife/business partner/girlfriend. I know they are in tech because of lingo that floats into my room when they are yacking on their porch. The dude across the street, who used to operate a back hoe, is telling everyone he can yell at, "Hay--I'm Front End Developer! Hay you--I'm in blah, blah." (He's just so proud, very lonely, and seemingly neeeds to get around people soon? I think working from home is getting to him. Do I care? He was a professional Troll before he got his dream job. You have no idea.) I used to think it was Chinese money, but I think it's VC money? It's quite a Party. I've never seen anything quite like it. On a selfish note, I'll be glad when it bursts. The traffic has got to me, plus they like to complain. I don't have a beautiful house.
- narrator 9y ago
  I don't think housing is in a bubble except for the Bay Area since new home sales are in a relatively normal range currently[1]. As far as the Bay Area goes it appears to be trickle down from FANG stocks buying up VC backed companies and the associated recycling of those proceeds into new ventures. There's also a bit of China money buying up single family homes, but China has been putting steady pressure on all that trying to plug those foreign exchange leaks, so if anything that's waning. Where's the money for the stock market coming from? It used to be quantatative easing and FED reserve bond buying. I guess the yen carry trade in part and probably lately tax cuts a bit. It's harder to see where the money is coming from in the stock market though because buyers are largely anonymous. [1].http://www.calculatedriskblog.com/2018/02/new-home-sales-decrease-to-593000.html?m=1 http://www.calculatedriskblog.com/2018/02/new-home-sales-dec...
AlexCoventry 9y ago
For me, it was reading Calculated Risk.

vadym909 9y ago

Where do you think its coming from now?

corey_moncure 9y ago
China.
- deleted 9y ago
  [deleted]
- bostik 9y ago
  You may be right but without context or the background for your educated guess that comes off as a snarky flip. I would personally add Russia to the mix. The reason is simple: both China and Russia are sources of capital flux, where those with means are funneling funds outside their respective countries. Because there are, or have been, capital controls in place, those who move money out of their countries are willing to pay a premium for it. Funnily enough, there is a name for the phenomenon where actors with money are willing to pay exorbitant transaction costs in order to move funds from one jurisdictional domain to another.
  - wsinks 9y ago
    There's some sort of wit in that last comment, but it's late and I didn't get it. Capital flight?
    - ves 9y ago
      I’m going to guess that it starts with an “m” and ends with an “oney laundering”
  - narrator 9y ago
    Russia's economy is not that big. About as large as Italy. I seriously doubt they are fueling much except a few oligarchs buying very expensive homes here and there.
icantdrive55 9y ago
Tech. I live in Marin County CA. The new tech money is staggering. They are buying multiple homes--new cars. The increase in traffic is very noticeable. Every vacant room is rented out, and they are paying. My new neighbor is home on the weekends, with his tech wife/business partner/girlfriend. I know they are in tech because of lingo that floats into my room when they are yacking on their porch. The dude across the street, who used to operate a back hoe, is telling everyone he can yell at, "Hay--I'm Front End Developer! Hay you--I'm in blah, blah." (He's just so proud, very lonely, and seemingly neeeds to get around people soon? I think working from home is getting to him. Do I care? He was a professional Troll before he got his dream job. You have no idea.) I used to think it was Chinese money, but I think it's VC money? It's quite a Party. I've never seen anything quite like it. On a selfish note, I'll be glad when it bursts. The traffic has got to me, plus they like to complain. I don't have a beautiful house.
narrator 9y ago
I don't think housing is in a bubble except for the Bay Area since new home sales are in a relatively normal range currently[1]. As far as the Bay Area goes it appears to be trickle down from FANG stocks buying up VC backed companies and the associated recycling of those proceeds into new ventures. There's also a bit of China money buying up single family homes, but China has been putting steady pressure on all that trying to plug those foreign exchange leaks, so if anything that's waning. Where's the money for the stock market coming from? It used to be quantatative easing and FED reserve bond buying. I guess the yen carry trade in part and probably lately tax cuts a bit. It's harder to see where the money is coming from in the stock market though because buyers are largely anonymous. [1].http://www.calculatedriskblog.com/2018/02/new-home-sales-decrease-to-593000.html?m=1 http://www.calculatedriskblog.com/2018/02/new-home-sales-dec...

AlexCoventry 9y ago

For me, it was reading Calculated Risk.