I am 100% cash!!!

All my triggers are filled. Here is my trading histoy for the last 2-3 weeks.

Filled

Sell

GOOG

Trailing Stop

609.33

0.0

--

15:23:20 10/11/07

Order No. 3259170683 Google Inc Cl A Entered:04:52:41 10/09/07 Reuse

Filled

Sell

DGX

Trailing Stop

55.7306

0.0

--

09:43:34 10/15/07

Order No. 3236047810 Quest Diagnostics Inc Com Entered:10:13:27 10/01/07 Reuse

Filled

Buy to Cover

AMR

Trailing Stop

21.9694

0.0

--

11:11:24 09/26/07

Order No. 3220283169 Amr Corp Com Entered:09:51:14 09/25/07 Reuse

Canceled

Buy to Cover

AMR

Trailing Stop

5.00%

0.0

09/25/07

09:50:07 09/25/07

Order No. 3220248618 Amr Corp Com Entered:09:48:10 09/25/07 Reuse

Expired

Buy to Cover

AMR

Trailing Stop

5.00%

0.0

09/24/07

16:24:09 09/24/07

Order No. 3217915288 Amr Corp Com Entered:14:20:50 09/24/07 Reuse

Canceled

Buy to Cover

AMR

Stop Market

--

25.20

09/24/07

14:17:26 09/24/07

Order No. 3216668131 Amr Corp Com Entered:10:34:35 09/24/07 Reuse

Filled

Sell

GOL

Limit

22.93

--

--

15:41:41 09/20/07

Order No. 3210391837 Gol Linhas Aereas Intlg S... Entered:15:41:38 09/20/07 Reuse

Filled

Sell

GS

Trailing Stop

227.58

0.0

--

15:21:09 10/11/07

Order No. 3209124227 Goldman Sachs Group Inc Com Entered:11:02:33 09/20/07 Reuse

Filled

Sell

GOOG

Trailing Stop

578.64

0.0

--

09:55:37 10/04/07

OTA

Order No. 3209106429 Google Inc Cl A Entered:10:59:34 09/20/07 Reuse

Canceled

Sell

GOOG

Trailing Stop

3.00%

0.0

10/09/07

07:10:33 10/09/07

Order No. 3209106430 Google Inc Cl A Entered:09:55:38 10/04/07

Canceled

Sell

GOOG

Trailing Stop

4.00%

0.0

--

--

OTA

Order No. 3209092612 Google Inc Cl A Entered:10:57:12 09/20/07 Reuse Order Canceled: Please check your portfolio and/or open orders. Your sell order is greater than the quantity held in your account.

Canceled

Sell

GOOG

Trailing Stop

2.00%

0.0

--

--

Order No. 3209092613 Google Inc Cl A Entered:10:57:12 09/20/07

Canceled

Sell

GOL

Trailing Stop

8.00%

0.0

09/20/07

15:40:43 09/20/07

I had single trigger for most stocks which I adjust as an when the stock went up more than expected. My google holding had a huge run up fom 449 (my buy price) so I had two triggers with 35% holding at a trailing 3%. Sale of this 35% holding triggered another trailing stop trigger at 3-5% for the rest of the holding. I forgot to mention that there was another reason for my all cash position. Ideally I would have let 30% stay in Tech & Oil stocks, but I am planning to buy a house as well as a business and need cash for that in less risk assets. I got picked out of the market much quicker than I expected, but I will not jump in and wait for stocks to pull back once the Housing and GDP -ve growth fears start scaring people. Right now it seems that we are in overbought position. How long this position will continue is anybody's guess, but surely by the middle of next quarter we should start seeing stock pull as GDP growth starts slowing and -ve growth starts becoming visible to the market players.

Market too hot for me.

After seeing DOW having a huge run up to 14000, I have put trading triggers on all my positions (GOOG, DGX, AMR-Short, GS, GOL)with trigger % 4%-8% depending on volatility of individual stock and my long term view. I will keep adjusting the trigger % as and when I get more information. Even if I go all cash I have no regrets. In my retirement account, I have holding for the long term so I will let those run. I did add a oil services focussed mutual fund to my retirement account a month back making it almost 50% stock now.

Economic Overview: Now to Fall start

After the biggest point gain in a day since Oct 2002 (286), I believe that market will fall tomorrow unless Feds meeting is very positive. I believe that the overall US and International economy is doing great. Earnings are not as great as the first half of this year but still good. International growth will continue to fuel the company profits.


There are two main issues for the market.
1> Liquidity
2> Employment
3> Housing & sub prime

It is true that cheap money has left the market, but I believe this is temporary. Corporate profits will keep on supporting the market in the form of buy backs. Private equity still has cash , though credit worries means that leverage is gone. I think situation is far from reaching a critical point.

I mentioned doom spiral earlier this year that unemployment rate is a critical information to track. Unemployment numbers inched a little higher from 4.5% to 4.6% This is a small increase, but something that we regularly track. This economy is total dependent on consumer (70% of aggregate demand) and as long our dear consumer keeps on spending their paycheck and credit, we will be fine. With record corporate profits the second leg of the aggregate demand - capital investment - will start pulling its weight in the GDP and pull the economy out of recession.

As long as people are employed, housing & sub-prime will be contained as premium credit people can make payments even slightly increased payment due to reset of ARM rates. This will have some effect on personal consumption, but as long as we keep creating jobs every quarter we are fine.

If you read the above three paragraphs you must have realized that the three points are precariously balanced and juggler of the economy will keep the three balls in motion as long as the balls behave as expected. If just one of the three balls deviates from the expected path we will see a class act fall apart.

I am banking on balancing to continue and market go up to cross 13900 (Financial and Technology will be the leader) in next 1-2 months. What will happen then ...nobody knows. Keep eyes on the three above and they will be your crystal ball to the future (Market behavior in fall & Winter) Till then keep tight and type your comments below.

Economic Outlook
Near term: very bullish
Medium term: No idea
Long term: Bullish

Market Volatility: Option time

I bought a couple of options on the Dow last month. First when Dow crossed 13800 I bought some puts. The only problem is that I bought July options when I should have bought August.
The options were expiring within a week and market didn't have time to fall. So, I lost about $1000 instead of making $3000+ if I had bought August.

Recently, I bought 5 September 135 Dow call at 3.75 and and another 2 at 2.90 for a total of 7 Sept Dow 135 calls at an effective price of 3.47.

Update Monday Aug 6th 2007:

Today, I pared this down to 5 selling 2 at 3.5 as I wanted to reduce my exposure before the Fed meeting tomorrow. If the market goes up before the Fed and my options are above $4.00 I also plan to take more profit before the Fed meeting minutes at 2:15pm, may be pare down another 2-3 options

Will Apple stock zoom up on I Phone release?

As a back ground to this post, please read

My Apple I Phone posts in Business blog site.

especially

I Phone: Does it belong in my Pocket?

I have some old Apple investment advice posts, will be writing a detailed post later, but in short don't buy it now. Wait to it to drop below 110 (Believe me it will drop) and then buy it. For more details check back in a week.

Apple & Current market outlook

(Another extract from my email to IIT wingmates)
I did recommend Apple in late 80s,but will wait for a correction at current price of 120. This stock has gone up too soon too fast. I also believe that there will be
a market pull back before August. So, hold off on all your buying especially tech till then.

In fact in the current market condition, look for stock which are short candidates. I have been short in AMR - fuel and labor trouble. I think the
airline long term trend (2-3 yrs) is down to another round of financial distress. Keep an eye, but don't pull a trigger now if you are not short
yet. There might be short term upward momentum due to recent sector upgrade by some analysts.

About Apple stock - short term outlook (2-3 months) bearish medium and long term bullish to very bullish.

About Apple not having 3G, more than US consumers it is the providers who want 3G.

For US consumers:

• US market doesn't have many 3G applications.and I Phone version 1 is for US market only. I am guessing I Phone will have another version out before Christmas with 3G for the whole world.
  
• 3G consumes more power than GSM - a key factor for small cell phone batteries

For providers:

• 3g has low cost of handling call. I think it may be due to higher bandwidth per 3g band, the same reason why it is faster.
  
• Also, most US providers already have 3G systems up without as many users...their infrastructure is depreciating with little 3G revenue and it is they who are pushing for 3g phone so they can get value out of the 3G infrastructure.
  

It may not look so but it is ALMOST the same situation as empty hotel rooms or bistro seats as the 4G will arrive in 2-3 years whether they are able to get value out of 3G or not.

The juggling between different stakeholders (stock holder, consumer and employees) with focus on 3g strategy (of Tmobile, Cingular and Sprint) is
another post that I have in draft and my to do list :(.

Short term Investor/Day Trader: LEND & FMT

If you read my post about LEND buying and the fundamentals. You must be waiting for this post. yeah last week LEND moved from 3.8 + (my buying price 4.04) to 11.93. I had a trailing stock as soon as the stock jumped to 10 and my trailing stocks were sold in two lots (9.43 and9.51) - a quick 120% return over 2 days.

	03/13/2007 14:41:51		Bought 100 SAY @ 21.44		-2,153.99		-$5,153.99
	03/13/2007 15:06:22		Bought 100 LEND @ 4.0475		-414.74		-$5,568.73
	03/14/2007 02:31:15		MONEY MARKET REDEMPTION		3,000.00		-$2,568.73
	03/14/2007 02:31:36		MONEY MARKET REDEMPTION (MMDA1)		0.00		-$2,568.73
	03/15/2007 15:14:55		Sold 50 LEND @ 9.5125		465.62		-$2,103.11
	03/15/2007 15:23:05		Sold 50 LEND @ 9.4306		461.52		-$1,641.59

Now I am kicking myself for not buying more ;) Greed never stops, But I am happy with my decision. If my story about the firms monetizing their loan portfolio doesn't hold, I wouldn't have been hold on to these very risky sub prime scrips for a long time in these murky stock climate.

I am also happy with this investment as it balances some of the losses ( 1500+) I have had due to my DOW calls. I have already lost money on March calls and I have to minimize losses on Apr calls. Will keep you guys updated.

My other investment SAY is going down, but that was a 12 month investment.

I also tried my hand at day trading in sub prime stocks on Friday. After 3 unsuccessful attempts, my fourth one was a break through. The current

	03/16/2007 14:38:52		Bought 1000 LEND @ 10.98		-10,989.99		-$10,062.85
	03/16/2007 14:43:07		Sold 1000 LEND @ 10.9832		10,972.87		$910.02
	03/16/2007 14:58:53		Bought 300 LEND @ 11.26		-3,387.99		-$2,477.97
	03/16/2007 14:58:53		Bought 200 LEND @ 11.28		-2,256.00		-$4,733.97
	03/16/2007 15:01:05		Sold 500 LEND @ 11.271		5,625.33		$891.36
	03/16/2007 15:26:27		Bought 1000 FMT @ 8.529		-8,538.99		-$7,647.63
	03/16/2007 15:38:28		Sold 500 FMT @ 8.55		4,264.87		-$3,382.76

The First two LEND trades were not going anywhere and there was some resistance, so I just cut my exposure. The last FMT trade seemed to have some momentum, but was hitting triple top resistance so I paired down my exposure from 1000 to 500. Finally, It was able to break through the triple resistance and is currently trading at bid ask 8.92-9.05. There is a support at 8.75 and minor resistance at 9.25 and finally Friday top of 9.50.

The only problem is that if I do more than 4 round trades in 5 days my account will be flagged as a day trader account. So, I will have to be careful :) So, I need to get up early and trade out of this. Normally, I would have closed this position, but day trader flag message from my broker along with my belief that this is the most well managed of the sub primes, made me decide that I can run this over the weekend.



Finally, I will leave with the thought.

"In the turbulent stormy sea, the boat with the most emotionally stable and experienced captain and the biggest size has the most probabilty to succeed."

Time to load up on discount: LEND SAY

Wall street had another bad Tuesday. I took measured dip. Where? In the middle of chaos of Sub-prime meltdown. I bought 100 shares of ACCREDITED HOME (LEND) as it was mouthwatering discount sale going on. I got a price of 4.04. A very small investment - balancing the small amount to the big risk that I am taking. I don't mind losing 200-300, but I hope to make some quick bucks in next week - as market stabilizes and investors try to go for asset sales. I discounted value of their portfolio is more than the market valuation. May be even double my investment.

While there, I also loaded up 100 Satyam (SAY) at 21.44. This is a longer term buy and I am looking to hold it for the next one year. I wanted to buy some Indian Outsourcing stock. I gave up on Accenture as it have less organizational leverage than pure Indian firms. SAY seemed the cheapest one of the top firms. Another reason was a recent upgrade and rise to 39. The position size gives me an opportunity to add more if there is another 10-15% drop in the price with no change to fundamentals.

I think 60-70% of the selling is already done. We may still go below 11900, but if you are looking long term this is a good position to start buying.

GS: I said "What about Sub-Prime crisis"

I wrote this blog about GS and it got lost somewhere after being there for at least a week. I will update this later.

Time to take a small dip: GOOG

After the last weeks sell off, I believe there are some great opportunities. I snagged Google (GOOG) and Goldman Sachs (GS) last week as they have fallen hard and oversold. Before you read forward please note the following two points.

First, I took a dip as I was going to be busy next couple of weeks and would miss the opportunity. These are investor darlings and will not stay at bottom for very long and I am not an expert to time a perfect bottom. "If this is not the bottom, it is very close and I am willing to hold these for about a year and reap profits :)" Second, I mentioned dip I bought 8 GOOG and 10 GS shares. It is not a dive, just a small dip ;) Let us move to my rational behind these buys.

GOOG: I said "I would not touch google above 420"

Google is currently selling at 438.68. Analyst expect google to produce 2007 EPS of 13.56 - 15.49 with a median of 14.25. That gives Google a forward P/E of about 30 (Compared to Yahoo 54). I have told many people to wait for GOOG to reach 420 before you get in, but I did dive in with 8 shares as I might be busy next week to get in at the right price. Also, being GOOG, one of the most followed stock, people with get in there as soon as it touches the P/E of 30. So, it is not going to stay there for long.

Compared to their 2008 EPS, GOOG is almost 23 times earnings. With a growth of 40% in 2007, this is one of the very few times that you will have PEG of 0.95 (less than 1:). Yahoo has a PEG ratio of 2.19. So, let me back up a little - Leadership position in searches, great core product , gaining market share means stock should be cheaper. Isn't that what market is saying?

Lets look at the earnings growth opportunity. First their core busienss, search advertising. Google is still gaining market share. On top of that they have the best monetization rate of the searches based on a better algorithm. That is a double whammy.

On the content side, Google adsense still doesn't have any competition. The beauty of adwords is in the problem that it solves. There are tens of billions of website on wide variety of topics. If you are a big firm and you have your own advertising group that monetizes the spaces on your website. What about a small guy, who just has a small blog about dogs or guitar or investing:) How do you monetize the ad space on your website with out spending disproportionate amount of time on trying to target advertisers? Answers is simple - Google adsense. It generate s advertisements dynamically based in content of the site.

Finally, in next 18-24 months, some of the initiatives in the pipeline will start to trickle down to the pipeline. Google have been secretly working on a number of initiatives that can be categorized into

1> Small Business services - Google docs & spreadsheets,
2> Consumer services - maps, book scaning et all
3> Mobile inititaives - They have acquired a number of mobile software firms

These initiatives are equivalent to the drug pipelines of pharmaceutical firms and will keep the earning growth going.

So it's a great company with lots of growth, but can I make money on the stock? Let's assume that google is able to maintain it's EPS in 2007 and at the current PE of 40 for a growth company gives us a valuation of 570 in 2007. Also, if the company doesn't reduce it's earnings forecast. Based on a forward PE of 30 we get a valuation of 555.

Now Google has always blown the estimates except one quarter last year. And if they are able to deliver beyond the target.

As with any stock there are risks to this rosy picture. But, the risks are few and limited.

1> Google may not achieve these growth rates. In fact, with Panama success for Yahoo we may see yahoo capturing more of the incremental ad revenue that their current share. I believe, Panama, if successful, will not be monetized before 2008 and 2009. The current advertisers will stick to tried and tested google adwords and wait for at least a year to confirm the success of Panama.

2> The whole internet advertising may slow down. This is very likely if we get a hard landing and companies reduce advertising expenses. I believe that even in this case, GOOG is the stock least likely affected and money will move out of other search competitors first. Also, I don't believe in Hard landing just a slowing with may be one quarter of GDP contraction.

Loading Dock: anything below 420-440
12 months Target: 540
Return expected 25%

Tomorrow I will write a post about GS, but here are the price

Loading Dock at anything below 200
12 months target: around 260
Return expectation: 30%

Bears finally catch up: Rest of the year outlook

Here is the extract from and email that I sent to my friends and old college mates.

After today's fall any buy will look good, but I feel Dow has a little more to go next 3-5 trading days. So, be on look out for good buys.

Lets start with overall market:

Positives arguments:
1> P/E is very low compared historically.
2> Corporate profit margins are high
3> Fundamentals are still good & Earnings estimates are low and achievable.

4> Productivity is good
5> Market still doesn't have any liquidity problem

6> Consumer confidence is high.
7> Unemployment rate is historically low

Negatives arguments:
1> P/E and corporate Margin can turnaround in 3 months and stock market is forward looking

2> Money in current markets can move (flight to bonds) very quickly that will affect liquidity.

3> Consumer confidence is the only thing that will keep the economy going. I believe this & unemployment are the key indicator to predict whether US economy will have a soft landing or recession.

4> Capital investment is low. Companies are investing in buying their stocks rather than investments.
5> Government spending will go down as congress puts in fiscal discipline and Iraq wind down
6> I have kept the best for the last, Housing and Auto are down.

The scenario that I have been putting in my blogs that will show up as recession.

Doom Spiral:

First let me point out. Till now consumer has been quite confident and despite housing falls have kept spending. Why ?? Unemployment is historical low. Many economist consider 5-6% as natural unemployment rate. last one year we have been as low as 4.37% unemployment. An important point in this is that if we maintain unemployment rate, it means that there is more money coming to GDP from wages. How? every year 2-3 millions (net) of new people join the workforce. Besides new graduates & immigrants , there are people who have come back to wage force after they left it due to the last recession. So, maintaining unemployment means, we are adding $50-100billion (before inflation adjust) to the GDP annually .

Unemployment rate increases>>unemployment along with housing and auto crash leads to decrease in consumer confidence>> Consumption (70%) reduces or can't increase to take out the effect of low capital investment and government spending >> GDP declines>> Companies starting reducing productions>> Companies fire people>>unemployment rate increases.

I have seen some firing by the companies 3000 Kodak/PFE, 12000 Chrysler (numbers are approximate) and these are over the next 6-36 months. These don;t add on much, but if teh trend continues we got to get our antennas So,

GUYS KEEP ON LOOK OUT FOR UNEMPLOYMENT OR CONSUMER CONFIDENCE NUMBERS.

Future Outlook:

short term: Bearish
medium term: Very Bullish
Long term: Bullish

Now to actionable advice:

I believe 2007 sectors to watch Financials, Oil, Tech/Internet, Housing and copper & Nickel. Of course Emerging markets are always good.

Over next 3-5 trading period, buy anything that is quality. As you will expect flight to quality when the selling momentun is done. So, in financial sector GS,LEH Oil firms XOM Oil services HAL, SLB tech CSCO, MSFT, AAPL(under 80) INTL (under 21) Currency EURO (FXE) & YEN Commodity Oil, Copper(may be) Gold India Play INFY,IBN,WIT Insurance MKL Berkshire, Internet Yahoo, Ebay IACI, Housing TOL, KBH, Pharma AZN Kroger MRK.

I wouldn't touch google above 420, but have been wrong on goog at 200,300 I was only right during the 380- 445 rally last year. I think there are many other better deals to put our money is stock with such high expectation that probability to fail is very high.

Otherwise look at ASPV MKL FCX DGX HD low valuations very little downside risk.

If you buy all the above stocks tomorrow and day after, you can get 10-15% return next 2 months and will be good through the end of the year.

Time period: I will go from 10% stock to 50% stock in the next 1-2 weeks and then 80% stocks by June if I don't sense recession.

Disclaimer: Most of my investing money (90+%) has been in cash for the last 2 months - having been a temporary bear. So, take it with that bias. If you have been reading my investing blog (http://rdar.blogspot.com) I have mention this. My only investment has been in my old firm KEA (acquisition story) and some funds in the emerging markets with low focus on china. I rcently acquired ASPV (cash cow story) SIRI (Long term value) and DGX (low valuation, non sexy stock - the day before the big Feb 2007 fall).

Keane buyout

Finally, Keane was bought out today. Buyout had become an even greater probability with the ex-CEO Brian Keane ousted as mentioned in my previous posts. I have been holding out Keane shares even when I expected the stock market to correct itself.. I am little disappointed at a price of less than 0.9 ttm revenue and 1.8 book value.

Apple I-Phone: Will it fly for Apple?

With the release of Apple I-phone, there is a lot of buzz in the stock. It touched it's 52 week high recently. So how much does the I-Phone add to the bottom line. I believe that Apple will have to tweak it's positioning to make the phone a huge success for the firm's bottomline.

1> Price it for the customer segment they are targeting now.
2> Add new features to follow-on products to differentiate different segments (3G, Bigger Storage, Asian Features, business features)
3> Move out of the being just one provider (cingular) product.

I also believe that company has already worked out these issues and the rollout will be as per what I will elaborate in the post on perspectives blog. This is based on my prior experience with the company. We (4 student project team) analyzed the Apple i-tunes/ i-Pod strategy in 2003. Our final recommendation was coming out with a player with smaller storage, better battery life and half the price point to compete against the mp3 competitive landscape (Dell and Sony were coming out with their own I-Pod killers at that time). In Dec 2003, Apple release Mini with almost the same specs that we had recommended. I think battery life was the only thing different.

I believe like I-Pod, Apple has the product and pricing roadmap planned. They will tweak it based on the customer response. Unlike Apple computers Inc. of 1980s, Apple Inc. (I think they should have dropped computers in 2003 with mini) is much more customer responsive firm now. In fact, I will not be surprised if the final product in June is different from the product that was introduced in Macworld 2007.

Housing Market: Overview and Demand

I have been delaying this post for a long time. Now everyone, including hardcore housing bulls, recognizes that housing bubble has bust. Many people, including many housing stock CEO's, are saying that the housing has bottomed an turn around is just round the corner. I don't believe it. I believe housing will not turn before fourth quarter of 2007. What that does mean is that as a six month leading indicators, housing stocks are a buy during first and second quarter of 2007.

The housing price like the price of any assets in capitalism is a result of supply and demand.

Let us analyze the demand side of the market. The people who buy a house are either a new buyer or existing buyers. New buyers are moving out of the rental market or their parent's house while existing buyers are either upgrading to a bigger house or buying a second home. Existing buyers also involve people buying houses as investment to rent. Of course, I didn't mention a speculative buyer that was rampant during the last stages of the housing bubble. In this market that is a very small percent of buyer, if any.

Though the buyers are a big diverse group, there are just few economics and non-economic factors that affect the supply side of the equations.

1> Affordability: Interest rate & Home Prices
2> Future expectation: Job market
3> Rent Vs Buy (financial & emotional benefits)

Interest rate has been pretty favorable for the housing market. Though interest rate ( till 2004, after 2004) inched up a little in the middle of 2006. It has not gone up dramatically to push the morgage payments above affordability for the current buyers. My view is confirmed by very low foreclosure rate. Also, the top three primary reasons for selling the current home are

1> it was too small (19%)
2>the neighborhood was less desirable (13%)
3> so they could be closer to their job (10%)

While interest rate have been keeping steady, it is the house prices that increased to a level where affordability has been affected. The post stock market interest rate fueled housing bubble has pushed the house above the affordability threshold. I don't expect the interest rate to increase in 2007, but for housing to be affordable; the house prices have to drop.

Like interest rate, job market has been very favorable for the housing market. The unemployment rate has averaged 4.6 for 2006 and fell all through the 2006. Additionally, the consumer confidence has also been very upbeat. My outlook for 2007 is not as rosy as 2006. In fact, most economist expect the unemployment rate to inch up to 4.9 percent by the middle of 2007. In fact, I would expect the unemployment rate to go above 5.0 (low of the natural unemployment range) sometime in 2nd or third quarter of 2007.

Please don't get me wrong, I am not forecasting widescale lay offs. I am just not as convinced the capacity of US economy to create the jobs at the rate it has been to take care of the increasing labor force in a softening environment. The figure on the left shows the rate of increase of US labor force. In Dec 2006, US economy created 303,000 new jobs and still the unemployment numbers increase by 23,000 because the labor force expanded by 326,000. So, with increased unemployment rate there will be a downward pressure on consumer confidence as well as housing demand.

The last part of the demand is the rent vs buy financials. The recent run up in the housing prices have swung the pendulum towards the rent option. In fact, the current rental businesses has been doing very well and all the rent promotions during the housing boom have disappeared. To confirm, just look at the REIT's earning. As the housing bubble bust, the REITs which own and manage apartments and rental properties have been on a rampage. Some of the REITs stocks have increased by more than 40% in 2006 and I expect them to do very well in 2007 also.

We will look at the supply side of the housing markets in the next post. Till then a question for all you guys. What is the key reason that makes rental market supply much in-elastic in the short & medium term (1-2 years) compared to condo supply?