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#1
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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 ] |
#2
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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....
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#3
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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]
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#4
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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. |
#5
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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 |
#6
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Re: Walk Away From Your House by Jim Cramer
[ QUOTE ]
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 [/ QUOTE ] Are you suggesting I'll make a bigger profit if I wait until it goes up so I can pay more? To answer your question, I think the current price is idiotic, the remaining excess cash flow is clearly going to be more than the current trading value. I don't know when the price will stop being idiotic, but when it does it will quickly move up by around 100%. I can't predict when that will happen, certainly by year end, or by early next week. So I buy when I can. And in this case, the company is going to dividend those cash flows directly to shareholders. So I really don't have to care what the market price is once I've bought. I expect to have my basis returned to me by years end. |
#7
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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 |
#8
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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. |
#9
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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. |
#10
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Re: Walk Away From Your House by Jim Cramer
[ QUOTE ]
BTW, Wall Street has coined a term for this type of "value" investing. Catching a falling knife. [/ QUOTE ] We've had enough exchanges that you should know that I specialize in catching falling knifes. It's how I make my living and it's treated me very, very well. I understand why wall streeters who don't understand how to estimate value, or cannot commit to value investing, grow cold when their "picks" drop in price, and assume they made a mistake or that someone else knows something they don't and rush to sell. I guess Eddie Lampert isn't one of them. [ QUOTE ] The audacity of his Kmart investment put Lampert on the map. With Kmart in Chapter 11 in 2002, he scooped up its debt as creditors fled. But his investment swooned as the retailer got even sicker. So Lampert doubled down and bought yet more debt, enough to give him control of the bankruptcy process. [/ QUOTE ] |
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