$50 per share in 2017, page-77

dharry

On your issues

yes the price has dropped and we haven't really hit any major issues, their profit and div are still relatively ok, what happens when some of the issues I have reflected upon hit, no I dont think they are priced in, when folks like yourself lose faith then they will be priced in, we are still working in the good news period, when reality hits $5-7 bucks would be a good buy range.

when you think about housing affordability we need to normalize it, if you owe 3 times your annual income when rates are at 18% then thats much better than 8 times your income at 5%, a liquidity trap occurs when you take interest rates to zero (free money) and folks still cant afford to borrow, then folks have to sell assets to survive

because they cant afford to borrow free money and the banks see it as to risky to lend for free (so they dont)


they can print as much money as they want but they cant force banks to lend it unless they
nationalize the banks, similar you can nationalize the banks but you cant force folks to borrow it if they dont want to borrow

anything above 7% unemployment starts to trigger mass mortgage defaults, in my model we could see anywhere in the range of 10-15% inside 18 months

take a step back prices and orders in everyone of our export sectors is tumbling, looking at our major export partners there own incomes and output is tumbling, Toyota cut production by +50%

all that will flow through to us, China is buying us up at fire sale prices

the markets have only begun to perceive the real gloom and doom, if you study all the major economic crashes of history , economies capitulate very slowly, folks keep saying to themselves, surely it cant go lower so they buy only to be proved wrong, only when all hope is gone do they recover

as traders we need to wait we see that and profit from it