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-   -   Walk Away From Your House by Jim Cramer (http://archives1.twoplustwo.com/showthread.php?t=467717)

Reef 08-02-2007 05:01 PM

Walk Away From Your House by Jim Cramer
 
Video Link

[ QUOTE ]
is now telling people who "made a bet and lost" to not compound the error, and to simply walk away from the mortgage and default.

[/ QUOTE ]

DesertCat 08-02-2007 05:53 PM

Re: Walk Away From Your House by Jim Cramer
 
Is this why my favorite subprime mortgage company was down 35% today? And down 50% over the last 3 weeks? I don't listen to Cramer so I bought more today and buying more tomorrow....

prohornblower 08-02-2007 06:12 PM

Re: Walk Away From Your House by Jim Cramer
 
Do you not listen to him, or do you listen and do opposite? [img]/images/graemlins/grin.gif[/img]

r3vbr 08-02-2007 06:21 PM

Re: Walk Away From Your House by Jim Cramer
 
DesertCat, do you invest in subprime lenders and/or homebuilders? I think this is def. a good time to be buying with all the people predicting the apocalipse and all, everything is on 52week lows etc.

Where do you see the most value on these markets? I really trust your analysis

DesertCat 08-02-2007 06:26 PM

Re: Walk Away From Your House by Jim Cramer
 
[ QUOTE ]
Do you not listen to him, or do you listen and do opposite? [img]/images/graemlins/grin.gif[/img]

[/ QUOTE ]

I totally ignore him.

DesertCat 08-02-2007 06:34 PM

Re: Walk Away From Your House by Jim Cramer
 
[ QUOTE ]
DesertCat, do you invest in subprime lenders and/or homebuilders? I think this is def. a good time to be buying with all the people predicting the apocalipse and all, everything is on 52week lows etc.

Where do you see the most value on these markets? I really trust your analysis

[/ QUOTE ]

I think there is some value in subprime, the problem is it's a lot of work to figure out where. I bought some DFC and made some nice profits and sold most of it before it replunged. I'm not going to buy it back until I do my homework on it in more detail now that I better understand these businesses.

The company I'm referring to in my first post is out of business and the market apparently thinks it's bloated corpse is worthless. It's been a great learning experience, I bought early before I really understood it and as it declined I've been constantly reresearching it and learning more.

Effectively what you need to understand is that most mortage/lending companies carry huge assets (securitizations) on their balance sheets that they don't own and huge liabilities are are totally non-recourse to them.

So you have to carve out a "pro forma" balance sheet of what they really own/owe. Then you look at the "stub value" of what cash they can reasonably get out of their securitizations. The securitizations are separate companies and you need to get their prospectuses and monthly reports to tease out how much cash flow they can generate and what collateral will be left over when it's closed. In some cases it's clearly nil, in some cases it's murky, and sometimes it's obvious that the parent company is going to get some cash.

Lots of work. But I think it's rewarding. I'm down $70,000 so far, but if I'm right I'll end up with a substantial profit by next year.

pig4bill 08-03-2007 01:41 AM

Re: Walk Away From Your House by Jim Cramer
 
BTW, Wall Street has coined a term for this type of "value" investing.

Catching a falling knife.

kimchi 08-03-2007 02:48 AM

Re: Walk Away From Your House by Jim Cramer
 
[ QUOTE ]
[ QUOTE ]
Do you not listen to him, or do you listen and do opposite? [img]/images/graemlins/grin.gif[/img]

[/ QUOTE ]

I totally ignore him.

[/ QUOTE ]

I totally ignore him too, but wading into a sector in a clear downtrend isn't prudent IMO.

Why would you be buying into a falling market? If valuations look good by your analysis then wouldn't it be more sensible to wait for some confirmation from price action that an upward move is more likely?

Bottom fishing can prove profitable if you make the right calls at the right time, but I doubt it provides a good risk:reward

kimchi 08-03-2007 02:54 AM

Re: Walk Away From Your House by Jim Cramer
 
[ QUOTE ]
Video Link

[ QUOTE ]
is now telling people who "made a bet and lost" to not compound the error, and to simply walk away from the mortgage and default.

[/ QUOTE ]

[/ QUOTE ]

Sensational reporting by this guy is good for his ratings but I doubt many people will be able to walk away from their houses even if the valuations continue to fall.

People still need a roof over their heads and need to weight up the costs and benefits of defaulting and paying rent as opposed to remaining with their home and mortgage.

Walking away will cause people to 'lose their deposits'. Even though the market has already taken many people's deposits, it a near psychologically impossible thing to do - albeit prudent for certiain individuals in specific situations....a point Cramer fails to expand upon.

jaydub 08-03-2007 09:18 AM

Re: Walk Away From Your House by Jim Cramer
 
[ QUOTE ]
[ QUOTE ]
Video Link

[ QUOTE ]
is now telling people who "made a bet and lost" to not compound the error, and to simply walk away from the mortgage and default.

[/ QUOTE ]

[/ QUOTE ]

Sensational reporting by this guy is good for his ratings but I doubt many people will be able to walk away from their houses even if the valuations continue to fall.

People still need a roof over their heads and need to weight up the costs and benefits of defaulting and paying rent as opposed to remaining with their home and mortgage.

Walking away will cause people to 'lose their deposits'. Even though the market has already taken many people's deposits, it a near psychologically impossible thing to do - albeit prudent for certiain individuals in specific situations....a point Cramer fails to expand upon.

[/ QUOTE ]

What deposit? His advice is aimed at the 100% LTV and neg am borrowers.

J


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