Hindenburg Omen
Wall Street has been known for years to have technical formulas that can predict changes in the market. Some are real, some are contrived but there are quite a few that area really based on interpretation of real technical data. They work very well. They point to trends just like a mathematical formula that 2+2=4 or 4-2=2. So they are not all bogus. Well today I read a story that was first reported on CNBC about the Hindenburg Omen. This is one of those bad news warnings that has some basis in fact. The Hindenburg Omen is based upon technical data based on movement of stocks in the New York Stock Exchange NYSE. A major component is a number of stocks hitting new highs while simultaneously the same percentage set new lows. It is something like the VIX Index which measures volatility in the market, however the Hindenburg Omen portends a market crash is ahead.
The Great Depression was not a one year event. I am reading a new book called "The Forgotten Man" and it is clear that that bad news did not all take place in 1929 nor did the bad news end in a year or so after.it dragged on until 1940. It is amzin in the scoiety in which we live that is in tune wiht new...much of what we beleive is actually spin. The news and press these days do not report any real news stories, and contrary to popular belief this mess we are in will probably not be a one trick pony. There was a lot that lead up to the market crash in 1929 but it is what took place after 1929 that also needs to have attention paid to it. There wasn't just one market crash in 1929. This isn't about being pessimistic, but rather about informing yourself and actually seeing what is occurring. It is good to digest the news and draw your own conclusions. The last time this was called was at the lows of the 2009 market.
Personally, I believe the safest place to have money these days in still in real estate. A stock loss of millions of your dollars will be called "A paper loss!" If the value of real estate goes down you can still own the roof over your head. A home can still be a shelter from a storm.
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The Hindenburg Omen has Arrived - This also contains the formula.
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Great post! Thanks
Jim - This is why I wonder "why have the investors NOT jumped back into the market". Real property is tangible dirt...not paper like stocks. I sure wish the investors would swoop in like vultures and start picking up some amazing deals for investments. Thanks for sharing this info!
Jim - I read about the Hindenburg Omen, and it should give investors pause. While it doesn't always predict stock market disaster, it has preceded all the major falls; and it has occurred three times in recent weeks. The stock market is much too volatile for me, and though real estate is also, as you point out, when everything falls, stock certificates provide little other than a bit of brief warmth in a fire.
I saw the comment by the great Art Cashin involving this Omen. Jim he also said to hunker down the day before I believe.
Jim,
Great investment analysis post. Don't put all your eggs in one basket, is one of my favorites. While I completely believe real estate is the place to be, buying smart in any market is KEY!
All the best, Michelle
Mike Martin ~ Fontana & Inland Empire Estate DRE #01327312 (Tri County Residential Real Estate Group) Thank you so much. I thought it was food for thought.
Christine Bohn, Gainesville, FL Residential Realtor® (RE/MAX Professionals, Inc.) I still feel the best long term, and I emphasize "Long term"..investment is real estate. In the 1930's people used worthless stocks as wallpaper and insulation for homes.
John Mulkey, Housing Guru (TheHousingGuru.com) Over the years I have had more than my share of paper losses. I am very conservative and and had my fill of gambling. Real estate is the best bet. Income producing is always the best, but a personal home is even better.
John Walters (Licensed in Slidell, Louisiana) (Slidell, Pearl River, Lacombe) Art Cashing is one of my favorites. He demonstrates that you can learn from history. He is not a pundit of spin.
Michelle Francis, Atlanta GA (Tim Francis Realty) I so totally agree. That is why I have no issues with buyers trying to buy right. It is not about "Win win!" It is about winning!
Investors are seeing this as the best time to invest in real estate. I wish consumers felt the same way.
Kay Van Kampen-Springfield, Ozark, Nixa Greene County Missouri Real Estate Agent (RE/MAX Broker, RE/MAX Solutions) Even persons with damaged credit have to live somewhere.
Lets hope we don't need a war to get out of this stagnation like we did in the 40's
Can not help but feel Jim Crawford, that the stock market can be a couple players saying lets spin this stock, make a rosy third quarter prediction, promote and push it to get the little investors, tons of them to plop down the benjamins to buy, and then when the tide rises sufficiently we pull out the chunks of stock shares we own, and steered these little lambs, I mean investors to.
There are a select few who believe we will see another major stock correction soon. I can't say I would not be surprised.
Fernando Herboso Broker: Check All www.ReallyNiceHomes.com in MD & VA (PrimeTime Realty Homes- Associate Broker 240.426.5754) I feel the same way.
Andrew Mooers | Northern Maine Real Estate / Aroostook County Broker (MOOERS REALTY) Walls Street has also been known to spin for their own gain. However, this is called after events. It is a metrics call.
Bill Gassett Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) Bill, I cannot say I am in the market so I have not paid much attention as usual. However, would I be surprised? No!
Hi Jim, my husband and i feel another crash is coming and very soon. You can "feel" it in the air. Weknow we need to move our investments fast and I hope we are not too late in deciing where! Finance is not our forte. I heard about the book, "The forgotten Man", it is supposed to be very reveaing. It is on my booklist. I also agree that finding the truth in news today is almost like trying to fiind a needle in the proverbial haystack. Great post and good reading!
Dawn Tetro (Power Realty Partners LLC) You are not alone. I pulled my money out a few years ago other than SEP IRAs...(That is fairly diversified - so it will remain) I do not have anything in the market. For years I worked on Wall Street, and I also used to work in a Commerce and Industry Library. What I am not understanding are the fundamentals the market seems to defy gravity. Company stocks that had government intervention became worthless and now investors rush into buy? It does not make any sense.
Jim I only know the signs are all there, especially gneral unrest in addition to unemployment
Karen Kruschka - Prince William, Fairfax ,Stafford County VA Real Estate Service (RE/MAX Olympic Realty) All anyone can do is stand by and watch....but it is wise to prepare for difficulties.
Great post,
As long as we all need a roof over our heads, real estate will always going to be appreaciated. Regadless of what the media says
Thanks for the post Jim
Jay Badru-Certified REO Specialist (Keller Williams Realty Cityside) Thanks! I prefer assests that have a function. Gold is not one of them. It does nto provide food, shelter, it is not easily converted to currency in dire times.
Hi Jim. This is a compelling issue. On the one hand, our economy has many obstacles holding it back. On the other hand, a story like this can become a self-fulfilling prophesy. The media predicts bad times, the weather turns cool, people stop spending, stocks fall and there you have it.
Sturbridge MA Real Estate Kathryn Acciari - REALTOR - CDPE (RE/MAX Professional Associates, Sturbridge) Interesting thought but I disagree. The mood on the economy has been numbed. People are not paying attention to the facts and they shrug off the bad news and keep their money on Wall Street. That action is called a suckers rally. People blindly investing because they have no other place to invest. The news media of late is not reporting any real facts....the economic realities are far worse than this story and yet America focuses on American Idol!
Sure, a home is a means of shelter and a roof over one's head. However, it is still an investment (unless one now looks at it as a consumable like a car).
In today's market, most homeowners have paper losses from loss of equity whether one has a mortgage or not. This was most people's "nest egg" and now fewer have one and most have 30%-50% less equity and that is huge. This is a loss of net worth and will never be recouped for most folks. (Remember it takes a 100% gain after a 50% loss to get back to even).
The best part of real estate investing today is in areas where the prices, real estate taxes, and insurance are low and the rents are high enough to generate a decent cash flow. This could provide an investor a return of total investment in a short period of time depending on the leverage (mortgage) used. And then any increase in the value of the property would be a bonus.
With all the foreclosures in the pipe line, most agree that there will be a greater demand for rental properties as these homeowners are displaced. And thus more investor opportunities.
Jim Holder,CDPE,SFR (Re/Max Suburban) I could not agree more! I also think that many keep looking at real estate too short term. It was always a long term investment.
Jim-
You're scarin' me !
But whatever happens, we'll survive.
Jim & Cathy Wood Greater Nashville Area Real Estate (Crye-Leike Realtors, Inc.) News is just news. So far nothing happened!
Jim - I've learned something new today - thanks :) Still no matter what the market do or is, a home provides security. I'd rather have this type of security than being out on the street because my landlord was foreclosed on.
Petra Norris - Lakeland Florida Realtor® Lakeland Florida Real Estate, (CDV TransAtlantic, Inc.) I agree. Several years ago I took some losses in mutual funds..it was a sickening feeling. At lease with real estate it is a long term investment. Even if it drops in value it still provides shelter. That is more than I can say about my paper losses.