Monday, May 9, 2011

More predictions from 2007.

From February 26, 2007:

My mind keeps circling back to the comment by the real estate agent in yesterday's Bulletin article on downtown condo's.

Let's quote it in all it's brazen glory:

"The urbanization we are seeing here is so unique to the community this size, I think we're just going to have to see more inventory and see how that goes before we'll really know.

"No guts, no glory."

This is the very definition of speculation; let's build more and see if they sell."

I'm beginning to recall that much of the predicting me and others were doing was in direct contradiction to what we were hearing from real estate and developers. They were pretty shameless, in hindsight. Yet they were continually quoted by the Bulletin and other local media.


March 6, 2007.

Here's a prediction I had wrong: thinking comic stores would be immune to a slowdown. Wishful thinking:

The media seems to be full of bad economic news; meanwhile, Pegasus isn't feeling it much. Not sure it would in any case; comics shops often do well in bad economic times. My sales tend to go up or down due to trends in my particular and peculiar part of the world, rather than because of overall economic conditions. The major exception, of course, was the depression that Bend went through in the early 80's. Still, I think it's early in the cycle, especially for Bend. The pain signals haven't reached the brain yet.


March 14, 2007.

An interesting comment on the prevailing mindset back then. I'm posting this because anyone reading this is going to go, "Well, of course we had a bubble. Of course, we were going to see a bust." But that isn't the way people were thinking back then. Being a contrarian was truly rare back then, though few will admit it now:

"Interestingly, whenever the subject comes up in the store, not only do customers not agree that there is a slowdown, or even a potential slowdown, but they seem surprised that anyone would think so.

Oh, I don't know. Anyone who reads the news? "


Another post that reflects the mindset exactly four years ago, today. April 9, 2007:

"We had an old family friend join the table yesterday. She was thinking about selling her house. So I told her, I thought she should try to sell this spring and not wait until summer or fall. The brother in law who lives in Bend, chipped in, saying he thought that Bend was going to continue booming, that we were a baby boomer mecca.

Interestingly, our old friend seemed very receptive to what I said. I think because she had already been looking into the situation, and seemed aware of some of the developing dynamics. But what was interesting to me was that my B-in-L hasn't changed his opinion about Bend's growth whatsoever."


On April 6, 2007, I have a long blog about how I think there is still a moment of "grace" where it might still be possible to escape the coming downturn if you act NOW:

I think I'll post it in full, because it turned out to be pretty correct.

"In every bubble I've experienced, there is a period of grace at the end, when it is still possible to get your affairs in order. To escape. You have to be paying attention, you need to trust your instincts, but that moment is there.

I do believe it's possible Bend is at that moment.

A couple of days ago, there were three positive economic news items on the front page of the Bulletin. I then turned to my U.S.A. Today, and there were four negative economic news items on the front page.

It's spring, and if houses are ever going to start selling, it is now. But if they aren't selling, we aren't going to really hear about it for another few months. It's still a positive moment in time.

We are the second fastest growing urban area in America. But that information is from last year. You can ride that wave of positive news, but paddling out to sea expecting another big wave is more questionable. There will be plenty of people who will look at the improved sales this spring, and the positive news in the newspaper, and think the lull is over, good times will continue. That's what gives you your opportunity. You have a period of grace.

And if it should happen that they're right, and you're wrong, you don't look back. You at least got out while it was still possible to get out. You at least didn't lose money, and you have removed the distinct possibility that you could be the last fool.

It appears to me that the fundamentals just aren't on the side of the optimists. Reality has a way of reasserting itself. But there is always that moment when the optimists are still in charge, but the pessimists are right. There is no proof, no one knows for sure, but that's the way it feels to me. Feelings can be wrong, but if you wait for the evidence, it's usually too late.

God knows, I could be completely wrong. And I don't have a house for sale, which would color my thinking. And to be honest, I'm kind of in the middle in my own business between the expansion of the last few years, and the cutting back in fear of a downturn. I'm sort of maintaining the momentum. But this feeling I'm having, that this is the period of grace, is very nostalgic and very strong. As usual, I'll wait to take action when there is a bit more evidence, and as usual that may be a little too late. I'm no different than anyone else.

That's the way of a bubble. Everyone tries to play it a little too cute."


H. Bruce Miller said...

"This is the very definition of speculation; let's build more and see if they sell."

Speculation is okay if you've got the capital to do it without overleveraging yourself and you've assessed the market demand carefully. Virtually all housing developments are built on spec; developers don't wait until 10 or 50 or 1,000 people walk into their office and tell them they want a house. It's when they go heavily into debt and build far in excess of any rationally anticipated demand that they get into trouble.

Anonymous said...

Well we know that 10, is ok.

We know that 'doubling your bet' is what brought all the small fry down, generally in any game, consecutive wins doesn't happen. All great wealth is by being in the right place at the right 'time'. If you win on the first hand, you fold and walk a set man for life.

Now your 50-1000 now comes in MIND of your GREAT HOLLERN and names like brasada, and ironwood, and all the dozens of mega-divisions that were built on the sale of 'lots' to Bends riche. (2k+ homes rotting in priny come to mind and madrass )

HOLLERN did good on NWXC, but on the next 10 projects he got hosed. Post 1992 even HOLLERN thought he had the Mida touch, that every inch of worthless desert land could be turned to gold. Insane.

Too many losers did I sit in deschutes and hear them cry in the bEEEr's in 2007, about losing their 'land' how their subdivided 5 acres of 100 lots was being REPO'd. On the other hand guys 'flipping' homes or building on spec or happy as clams in 2005. Making an easy $50k buy simply buying a house one day and selling it the next, what did they do after first win? They quit their job of course and become a full-time Bend 'Home-Flipper'(tm). By 2007 their life savings is all tied in worthless Bend RE. Game Over, suicide begins.

Developers tend to simply just be 'better builders' that stash some cash, and make the BIG BET. Maybe one time they develop a successful subdivision ( < 20 homes ), and that's when they should retire, but then they think they have the 'mida touch', and repeat and lose all, saw it in every RE cycle forever. Too many names to mention.

HOLLERN of course our BIG fish got a zillion acres for free, by family trust, and as a fresh marketing-MBA he was able to market 'black-butte' and do awbrey slowly, and build a reasonable empire, 1960-1990 but after that he too believed in his little post 1992 CACB/COAR/COBA 'fraud' and the rest is simply history.

Anonymous said...

It’s never a good thing, in the long term, to be a client state of an empire, but being a client state of America is particularly bad. Normal empires, motivated by self-interest, have limits to the demands they place, but Pax Americana, whether it be led by liberals or neo-cons, is motivated by a peculiarly neo-Christian altruism, embarking on endless mad missions to spread democracy or what not around the world and dragging its unfortunate clients along with it, before turning on them willy-nilly for all sorts of obscure and ill thought out “moral” reasons.

Anonymous said...



Bewert said...

CACB looking to raise some money, offering $356M in new stock, diluting current market value of $375M by 95%. Interesting move.

Nice to see the raving lunatic back from his latest foray to Thailand.

Bewert said...

Actually, reading closer, "All 44,590,054 shares of Common Stock registered pursuant to this registration statement are to be offered by the selling stockholders."

There are only 47.21M shares outstanding.

Even more interesting, as in WTF.

Bewert said...

New investors and other insiders are dumping their stock in CACB.

"This prospectus relates to the resale of an aggregate of up to 44,590,054 shares of our common stock, representing approximately 95% of our total outstanding shares, of which 44,243,750 were issued to the selling stockholders in connection with an equity financing transaction in January 2011 (the “Private Offerings”). 41,002,554 of the shares of our common stock being registered pursuant to this registration statement are held by directors, officers or significant shareholders of the Company. We are required to file this registration statement, of which this prospectus is a part, under the terms of a Registration Rights Agreement dated January 28, 2011 with the selling stockholders to register for resale the shares of common stock issued by the Company to certain investors in connection with the Private Offerings.

We will not receive any proceeds from the sale of the shares of common stock by the selling stockholders."

A big HMMMM...

Not feeling too good about their investment going forward?

Duncan McGeary said...

My feeling about CACB -- and I emphasized it's only a feeling based on my own surviving of hard times -- that they are very, shall we say -- 'sophisticated' in how and when they report numbers.

I doubt they are doing anything illegal, but they are playing all the angles, doing just enough to satisfy the regulatory people, and playing the stock game as best they can.

Anonymous said...

Wow . . . today on the blog it's just like old times.

H. Bruce Miller said...

I have been reading an excellent book titled "The Big Short" that explains in clear, easy to understand (even for a financial illiterate like me) language how the subprime bubble was inflated and how it burst. By February 2007 home prices already were in decline and the big Wall Street firms were all trying to bail out of subprime bonds as fast as they could; it's an indication of how delusional Bend was (and is?) that people here were still denying there WAS a bubble, much less that it had popped.

Anonymous said...

Sorry BP, me home is Malay, north of KL. I do business in Singapore with friends, but now I'm in Lao for a month. Trying to get some things going in Myanmar ( formerly burma ) also, now Lao's the place. I really don't like Cambodia, and Vietnam drives me crazy. Thailand is already middle-class, so there is not much investment opportunity there.

I can't stay too much time at home got to keep moving, and seeing and and studying.

Malay is the only place that is white-guy friendly for retirement. That's why I make it my SE-Asian base.

I could write a report sometime on all this shit if you wish, but in general Jim Rogers is 100% accurate about what's going on in SE asia, and Marc Faber is accurate about Hong-Kong.

At the end of the day, its all much of a non-issue, as NOTHING is going on in Bend or the USA, but its all going on here, not that I any of you to come here and compete with me, but its always fun to share the intellectual challenges of life.

Aboriginal Australians call it a 'walk-about' its when the guy gets tired of his wives and takes off for awhile. Me love me concubines much, but its good to go. It's funny BP I had to fight like hell to leave a week ago, but now that I'm gone everyone is quite happy having 'private-time'. There is always the fear here of women that you not come back, e.g. the sugar-daddy not come back, that he find another woman, ... They simply don't understand that IMHO given I have already invested in a house and made many friends in Malay, that I really do want to return to 'base'. Just like Bend, it was my base for 40 years, but now Malay is my base. :)

The best place I think is Indonesia, in terms of the women, I like muslim women, they don't smoke, drink, or cheat, but they know how to be women :), but I really didn't want my base to be in Indonesia too far from everything. From malay I can jump to KL in a quick, and for $50 fly anywhere in SE-asia, ...

bye bp miss you much, fond of the old times :(.... (tears)