We’re going to have two songs today, but first …
I spent a lovely day and a half not paying attention to Wall Street, only to come back and see the downward spiral has continued. It has continued in spite of some (not a lot, but some) good earnings news, and some positive steps by the Treasury to try and ease the credit crisis.
My favorite part of the wire stories about the movements of the DJIA is the effort to attribute a rational thought to the market’s movement. One day it’s this, the next day it’s that. What are they saying today? Oh yes, that “the market” is reacting this way as the “credit crisis intensifies.”
(If you have kids in the room, have them turn away.)
(It’s safe now. And sorry, but it couldn’t be helped.)
What you’re seeing in the market now has little to do with an “intensifying” credit crisis (and has it “intensified” that severely overnight?) The average person placing trades right now isn’t looking at any real data. They’re watching the markets tank, their 401k fall and they’re panic selling and locking in their losses.
It’s like Brick Tamlin in “Anchorman” … “I DON’T KNOW WHAT WE’RE YELLING ABOUT!!!” Many people aren’t sure why they’re selling other than the fact that they don’t know what else they ought to do right now. The steps taken by the Treasury don’t mean a thing to them because they don’t understand what they’re intended to do.
This is the flip side of the days when I worked at Schwab and people would jump all over themselves to buy eBay and Yahoo. Didn’t know why they had to own the stock, but all their friends owned ir and allegedly were making fortunes. And the first day the roller coaster tipped down (and these two were all over the map), they unfastened the safety belt and jumped.
Translating to Phoenix Real Estate
Someone asked me earlier in the week where the market is now compared to a couple of weeks back. Simple answer – it hasn’t changed much at all. Depending where you are, the prices might be down a touch more than a couple of weeks back. There’s a little bit more inventory, but that’s about it.
Believe it or not, you still can get a mortgage. You need a higher credit score and a real source of income (imagine that) but mortgages still are available. Lending does exist.
For my Canadian friends, we always said the window of near-parity would close at some point. It slammed shut over the past couple of days. Does that mean it will not open again? Who knows. But the basic reality, as I’ve said over and over again, is your government would rather have the loonie at 85 cents than a dollar. It’s lower now, but who knows what will hold when people stop to look at what’s really happening.
Don’t get me wrong, dear readers. I’m not sitting here and pretending that I don’t worry about what impact all of this will have on my own family as well as all of you. There’s been a lot less sleep happening recently as I pointlessly fret over these things.
But what you’re seeing is fundamentally illogical. The economy has been hurting for a while now – it’s not like it became 20% worse overnight. There are steps being taken – it will take time to see if they do anything – but there are steps being taken that most of those driving the markets don’t seem to see.
(Another fun thing – reading wire stories today talking about how much heavier the volume is today than yesterday. Volume’s always lighter on the High Holy Days. Just a simple fact.)
So here’s my suggestion … turn off CNBC for a little while. Get away from the computer monitor and it’s display of the paper losses to the 401k (it’s all a paper loss unless you sell and lock it in.) Pull yourself away from the vortex of panic and take a walk with the dog.
It’s not going to be pretty. But panic like we’ve seen the last several days isn’t going to help a damn thing. As much as commentators like to say this is unprecedented, it’s not. In fact, maybe your walk will take you to a bookstore where you can pick up a copy of Charles MacKay’s Extraordinary Popular Delusions and the Madness of Crowds. Written in 1841, the themes will sound familiar 160 years later.
To the music … the first is for my wife, who all but demanded to go the Neil Diamond concert tonight (fun side note – my mom went to high school with Neil). And the second is my new ringer for my phone. I’ve posted it before, but it’s hard to panic when you’re listening to Bob Marley.
[youtube:http://www.youtube.com/watch?v=WzsUOmqpaeg 400 300]
[youtube:http://www.youtube.com/watch?v=KAJbFrKC91I 400 300]
[tags]Phoenix real estate[/tags]