Friday, February 1, 2008

Housing Meltdown

Lets take a brief break away from Hall of Shame Inductees to see the fruits of their labors. Here is a great article from Business Week. This is end-result of all the shameful activity that has been going on the past few years. My biggest concern at the moment is where to put my money. I've moved a lot of my 401K out of stocks, although I will continue to buy into stock funds with my weekly contributions, thinking I'll buy on the way down. I'm predicting S&P 500 finishes the year around 1000. If it's flat, or rising, I suppose that could be the effect of davaluing the dollar. There's just too much volatility in the market right now. It's scary out there.

2008-02-01: Housing Meltdown
Why home prices could drop 25% more on average before the market finally hits bottom
Starting in 2000, home prices soared far above their long-term trend. They've only just started to return to normal. This chart shows the history of home prices adjusted for inflation going back to 1890, compiled by Yale University economist Robert Shiller. The black line is BusinessWeek's calculation of the long-term trend growth rate: just 0.4% a year after inflation.

The drop in stock prices earlier this decade shows how overpriced markets can abruptly decline. This chart shows the Standard & Poor's 500 stock index adjusted for inflation, stated in 2007 dollars. Prices got back on trend in the last few years, though they've been falling in 2008.


davidrocky said...

Hey tyrone I get upset when you dont post at least once a day. Heck I think you should be posting twice a day.

Tyrone said...

Sorry, davidrocky. The day job has been hectic. Then I pour through the news articles reading all the ridiculous Realtor quotes and if just makes my head spin. Stay tuned; I'll get back at it.