Wednesday, August 01, 2007

Jim Cramer's advice for US home owners facing interest rate resets + negative equity - walk away...

2/28 that Cramer refers to, is when a 30 years mortgage, the first 2 years have low or no interest payment, then the "interest rate adjusts" for the remaining 28 years. Hence called Adjustable rate mortgages.

He is saying that the ARMs will ALL go bust when the crest of it arrives in Oct 07 to Feb 08. ALL... 100%... He said that the bears (that includes me?) expects 50% only... he expects 100%. Let me find out how bad it is. I last remembered it be about a many of billions.

Anyhow, Geoghegan has said that they don't do fancy mortgages such as ARMs (Adjustable rate mortgages). So he is implying that HSBC will be immune.

But when house prices drop 20%, he will realize that the US ain't HK where people will heroically keep on their house payments. Also, when it drops 20%, even prime turns into subprime.

And I will, like Cramer, also stop using the word "subprime" and 次按 to describe the US housing problem. It is now simply a "mortgage" 按揭 problem.

Anyhow, some of you have criticize me to focus only on mortgage lending in the US.

My friend, watch the UK. That's the next shoe to drop. When it does, I will pounce.

I am contrite on my timing. But I stand by my call.

This is the world famous graph prepared earlier this year by the good people over at Credit Suisse.

We are in month number 8


  1. I believe it is Jim CRAMER, not Kramer. Love his work.

  2. I am quite in line with you and don't think HSBC will be immune if the spill over effect is established (though don't know when). Avoid HSBC for a while and see what will happen in Oct.

  3. To edison

    It was 3am... I make mistakes... I make mistakes obviously hahahhaa

    To wonderdummy,

    700m provisions by HSBC for whole year concerning their 49b US mortgage portfolio.

    Green and Geog will be paying for their hubris displayed Monday

  4. 受美市拖累,匯豐今日開始跌返,心情有無輕鬆D呀孫兄?

  5. To Pakman

    Likely Green and Geog will have to pay their dues around Oct or Nov 07. See if it is the case. Meantime relax and get some comfort from Ms Wong la........... heheheheheeeeeee

  6. 肥仔,

  7. 或者我舉個比喻,想像你係古人, 你有幾個仔都要當兵.

    你有幾個option, a)征西軍, 敵人強橫, 有勝有負, 誰勝誰負未可知, 過往打賞唔多.

    b) 皇城禁軍肥缺, 肯定唔駛打仗,冇生命危險, 因為近皇帝, 打賞多, 但要駛好多錢先買到個位

    c) 皇城禁軍cheap 位, 都冇生命危險, 冇guarantee 打賞, 賺錢要靠自己, 唔駛錢都可入去做.

    如果你係老豆, 你會比自己d 仔去邊個軍隊呢? 可以全部一個, 可以分散, 但肯定唔多人選A, 因為最緊要係manage 戰死既risk, 依個亦係國內外資金只選中資股的理由. 人就是這樣, 死的risk 會看得很重, 所以我打死都唔會坐華航, 就算個個空姐都係林志玲都冇用. 大牛市, 不用防調整, 只用防股災, 資金對股災可能因素附身股特別怕怕, 亦是這個道理.

  8. To 米生...

    Not yet feel better. Puts still under water. boo hoo hoo

    to Dunn,

    Dunno, but sounds like oct and nov is reasonable.

    Finally, to 會計仔...

    After your careful analysis.

    All I can say is 一注獨贏 option B!

  9. 買匯豐即係A+B, 對或錯都好, 唔會係正常人既選擇, 其實最多人會襯個bribery money 低番d 買B, 少部人會買C, 最少人會買A, 我都會沽少少C買B.

  10. I guess depends on the cost of Option B.

    And the financing cost.

    And also the political stability.