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The Real Estate Recovery: One House at a Time


Taking stock of the year-end tape!

It's beginning to feel a lot like Christmas, as trading ranks thin and our waistlines move in the opposite direction. The holiday (animal) spirits are alive and well, following Turnaround Tuesday's hot popper and some constructive action yesterday (the tape had every excuse to sell off; Oracle (ORCL) messed the bed and IBM (IBM) shaved 44 points off the DJIA all by its lonesome).

While this year has been the definition of a bipolar stroller-a sharp rally was the last thing on the minds of investors Monday night-it certainly feels like, absent negative headlines out of Europe, Santa will trump Scrooge into next week. I won't go so far as to say through the new year, as the path of maximum frustration might dictate a short-term top T-3 days before the New Year, but the tone and tenor is constructive, and the most recent economic data points surrounding jobs and housing have emboldened the bulls.

Speaking of which, I'll be signing a contract for my first home this morning (after 20 years of apartment-renting bachelorhood and a year of cohabitation) as I do my part to edge the housing market along. There are a few contributing factors in this decision, three of which are still in pajamas at home and one of which I've discussed at length.

I share this through the lens of "actions speak louder than words." I certainly won't catch the bottom of the real estate market but: 1) mortgage rates are at all-time lows (and I believe rates will rise, perhaps significantly) and 2) with a 10+ year time horizon, I view this as a favorable risk-reward. Perhaps most importantly, however, I foresee a plethora of "psychic dividends" for those I love, and that's the best investment on the board.

The here and now? As discussed last night on Bloomberg, the only folks who are still trading are those who have to, and the psychological metric (read: animal spirits) will make the last six sessions of the year more difficult than usual (and it's been unusually difficult this year!). The (potentially bullish) reverse head & shoulders pattern, left for dead only a few days ago, remains in play and will trigger, if and when, with a push through S&P 1260 (see the chart below).

Click to enlarge

Our tells remain constant: the dollar, market breadth, overseas financials (Deutsche Bank (DB), Barclays (BCS)), their stateside brethren (Bank America (BAC) has to hold $5 or all bets are off) and of course, the high beta plays like Google (GOOG) and Apple (AAPL). On my side, I continue to trade Research in Motion (RIMM) form the long side, selling blips and nibbling on dips, with a hard stop below recent lows.

Random Thoughts:
  • I know I'm getting old when I reference The Clash and I get strange looks from around my office.
  • I mean, who doesn't remember Rerun? Or Ponch? Or how Isaac always got lucky with the ladies?
  • I'll tell you, this Twitter generation doesn't know good old fashioned television, when you couldn't fast-forward through commercials or "tape" directly from your television. I remember VHS and DVDs and MP3 players. I went to Kool & The Gang concerts, saw The Cars and STYX live and styled my hair like Duran Duran. Heck, I remember when ATM's were invented and there were busy signals on the phone. Anyone wanna hear the roster for the 1977 New York Yankees? I can do that too. I must be old!
  • Perhaps, but I prefer old school. I'm talking Silver and Black, RUN-DMC and trading days when I would seamlessly slip in and out of the tape-and metaphorical costumes-locking profits and sharing it all through a stream of consciousness.
  • Now, I know I don't trade like I used to-for starters, I'm not running $400 million anymore and even if I was, the market is much different (has anyone else noticed the subtle shift in the financial dynamic?). What hasn't changed, for better or for worse, is that all these years later, I still spend my days staring at screens and watching red and green symbols flicker and ticker.
  • Why the walk down memory lane? Not sure; maybe I'm being nostalgic into year-end or perhaps I feel better for recently coming clean on something that was eating at me. Or maybe, just maybe, I'm enjoying the journey, putting a few shekels in the till (humbly, as always) and looking forward to next week's family vacation and the laughter of little kids. And you know what? There's nothing wrong with that.
  • I often say that I've never made money buying a stock for a takeover but I've made a ton of money owning fundamentally sound stocks that happen to get taken over. I've been thinking about that a lot given the news suddenly surrounding Research in Motion (RIMM) but there is a slight difference-I didn't buy this stock for a takeover; right or wrong, I bought it before this chatter began.
  • My sense is that RIMM trades into the high teens or low 20's. My other sense is that I won't be there to enjoy the entire ride.
  • As I collect my thoughts on 2012 themes, iconic falls from grace are vying for a spot on the roster. Jon Corzine, The Kardashians, Penn State, Rudy Ruttiger, Willie Gault, Lenny Dykstra, Lindsay Lohan... and Warren Buffett? Am I missing anyone else?
  • Last but certainly not least, I would be remiss if I didn't share that the fine folks at Jeri Cohen Fine Jewelry (1050 Third Avenue in NYC) always go above and beyond on customer satisfaction and quality of product. I'm not a product pitch man-I don't even play one on TV-but right is right and they are, in a word, tremendous. Mention Minyanville if you wanna do right by a loved one, and I'm quite sure you'll be glad you did!
Have a great day, Minyans. As always, I hope this finds you well!


Twitter: @todd_harrison

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