So now that home prices are down 17% year-over-year, people are starting to get a bit panicky.
(Barry’s got a great graphic/breakdown of the stats here)
Wannabe financial journalists like Les Christie of CNN Dummy use words like “plunge” and “record drop” in this piece of crap article don’t realize that a 1% month-over-month decline and under 20% in a year ain’t nothin’!
Hell, that’s just the monthly loss is the average daily loss of the stock market this month alone! And 17% in a year, pleassssse, when you add up the perfect economic storm, leverage and illiquid assets, 17% is a friggin gift!
Of course, it’s still probly early in the cycle…
Ex-home-flippers-turned-priests (because they go to church so much to pray for their financial souls) like to reason “everything will rebound eventually”, but they don’t realize it’s possible housing could drop 50%+ and take decades to/never recover.
Check out this scary Japanese real estate bubble graphic and be afraid:
No way to know how low we go, but I’m 100% sure housing people ain’t prepared for the potential pain.
How is this related to PennyStocking? Well, the key to successful trading is understanding the risk/reward BEFORE you put ANY money down on an investment vehicle. If you’re shorting a stock and there’s $1/upside and $5/downside, especially when the downside appears likely, that’s a good trade (like my RBCAA trade from the other day)
And it doesn’t matter if you take a loss every now and then, we make mistakes as we’re only human, but we must be sure to cut losses quickly so as not to f%^ck with the risk/reward ratio (allowing a $5/share loss with only $5/of potential reward is not a good trade), so the more transactions you make with that kind of risk-reward profile, the greater your eventual gains will be.
Tags: Breakdowns, idiots
