Cramer vs Mish on housing

In this post I mocked Jim Cramer's future failed housing call.  Yes I know this seems arrogant.  I mean, it's bad enough to make fun of people after it is obvious that they screwed up.  How much more so to do it in real time?!  Of course, I have my reasons.  I think the EW charts are pointing to a peak in the recent housing boom.  After peaks, you know what comes next.  And I'm really not laughing at Cramer, truth be told.  I'm laughing at his herding movements of which he is completely unaware.

Mish is also not buying the housing boom story.  He correctly mentions that the near term strength is nothing compared to the recent bust.  But of course without a chart, it's all just opinion.  Very smart guys, even those who are experts in their fields, are wrong as many times as they are right in my experience because they think the fundamentals drive immediate results.  If you have read this blog for any period of time you know that I think that the true fundamentals of price moves are unknown and unknowable.  A guy's dad might have lived to be 100.  He looks just like his dad.  Therefore, people surmise, he will probably live to be 100.  After all, genetics are the underlying fundamental here.  But then he gets in a car wreck or contracts cancer or marries a nag who is on his case 24/7 thus giving him a heart attack at 60.  So what are the real fundamentals here and who among us really knows for sure?
 
Peter Schiff has been saying gold to $2000+ for years now and Ron Paul has been warning us about fiat currency for 30 years.  None of the things they said would happen based on the fundamentals have actually transpired.  This is because fundamentals will drive only the end goals.  The herd takes its own path to the destination.  Schiff and Paul will both be right someday, probably right as soon as they begin to question their own wisdom.  Or so it usually goes.

In any case, Mish had a chart that I thought was interesting so I pasted it below.  I'm interested especially in the red chart which put in 5 clear waves down and is subsequently apparently in the throwover stage of the E wave of a HT.  Well, that means it is most likely E of WCB.  That means the C wave down is likely upon us real soon now.



If I were trying to sell a home, I would do it right this very minute.   Price it 10k below market and let the next greater fool walk off with it today.  That goes double if I lived in CA or WA because when I have been out there on business over the past 18 months I hear it is an absolute buying frenzy.  Places get snapped up the day they are listed and for 10% over the ask.  It's, well, a buying stampede and the herd now thinks its normal again.  Never mind the bust of a few years ago, because, get this, "the fed won't let housing go bust".


Talk about your famous last words.   I predict the bust will be worse than the last one and this time major banking names like Bank of America will BK.  There is no more political will among the people for more bail outs just like the Greek people are in no mood for externally directed Austerity.  If the herd is against it, stop wasting your time because it is not going to happen. 

Back then, congress was threatened with martial law if they didn't pay up.  Yep, the old protection racket.  Back then, the herd was scared.  The herd did not have any capacity to protect itself from such threats and thus feared the threats were real.  Back then, government was quite full of itself doing crazy things like confiscating private money operations and accusing them of counterfeiting when the only real counterfeiters I know are bankers and government! 

But since then we have seen record gun and ammo sales and the people are no longer quite so scared.  Read the comments on youtube, etc.  Read the comments I make.  I'm not going to comply with martial law.  If they declare it then I know they will use deadly force on me if I take that attitude so I don't plan on discussing it with them.  There will be no debate, no attempts to reason with them.  Declaring martial law will in and of itself mean they have decided not to be reasonable.  If they do it then it means they are desperate and will do anything to retain control.  If they do it, it will be a declaration of civil war.  I personally don't believe they have what it takes to pull it off.  I also think that they are smart enough to know this which is why, to me, the coming bust is not a threat but rather a healing.


Folks, all of this just my humble opinion.   Maybe I'm wrong about everything.  After all, Avi's model is much more upbeat than Prechter's to say the least.  Avi thinks we are now in A of 4 down with S+P 500 target of 1800.  EWI, on the other hand, thinks that the DJIA target is, ummm, brace yourself,  potentially going as low as 400.  Four Hundred.  Why?  Because according to their top level count (Prechter's at least), that was the level of the prior 4th.  

So there is not just one smart guy saying thus and such, there are multiple smart guys contradicting each other.  But I do believe that Avi never mentions the debt load whereas this is a main theme of Prechter/EWI and I do believe that exponentially rising debt is in fact a fundamental limiter of positive (or even flat) GDP numbers.

So if I were in the market to buy real estate then I would hunker down, accumulate cash and build a war chest for real estate acquisition in the 2-4 year time frame after the C wave of the above chart plays out.

Or not.