Posts Tagged ‘home prices’

U.S. Home Values to Drop by $1.7 Trillion This Year, Zillow Says

U.S. home values are poised to drop by more than $1.7 trillion this year amid rising foreclosures and the expiration of homebuyer tax credits, said Zillow Inc., a closely held provider of home price data.

This year’s estimated decline, more than the $1.05 trillion drop in 2009, brings the loss since the June 2006 home-price peak to $9 trillion, the Seattle-based company said today in a statement.

“It’s definitely going to continue into 2011,” Stan Humphries, Zillow’s chief economist, said in an interview on Bloomberg Television today. “The back half of 2010 looked horrible and 2011 should look like the mirror image of that.”

More here: U.S. Home Values to Drop by $1.7 Trillion This Year, Zillow Says – Bloomberg.

H/tip Tim Naegele


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Where is the Bottom for Housing? We May Not Know for Years

Where is the Bottom for Housing? We May Not Know for Years

Courtesy of John Lounsbury writing at Credit Writedowns 

How far are we from a bottom in U.S. home prices?  There are many estimates that there could be another 10% or more for the national average and median prices to decline.  This author estimated that 2010 had a most probable decline around 11% from December 2009, with further declines possible in 2011.  Little decline has actually been seen as prices are quite near where they were nine months ago.  However, in the past couple of months predictions of further price declines have increased.  Two weeks ago I pointed out that the outlook for home prices may be degrading.

20% Price Decline to the Bottom?

Barry Ritholtz provides the following chart, originally from the New York Times, but updated for The Big Picture by Steve Barry.

For larger image, click on graph.

This decline is certainly within the possible limits I have discussed earlier in the year (see here and here) but the projection curve drawn by Steve Barry shows a much more gradual drop to the bottom than I have envisioned. I estimate that he is showing another 3.5 to 4 years to get 90% of the way there and 5-6 years to fully bottom out. My thinking has been that the drop to the final bottom will be much quicker, driven by the weight of foreclosures over the next one to two years.  However, current market conditions are causing me to reconsider.

Could Housing Go Below “Normal”?

What has not been considered by either Barry or me is the recurrence of another depression for housing, such as occurred from WW I to WW II. What sort of economic disaster would cause home prices to decline 55% to 60% from here? That is what would happen if the decline reproduced the 1920 bottom.

Or, asking a different question: What sort of economic disaster would result if home prices declined 55% to 60% from here? In such severe deflation, most mortgagors would default and every mortgage lender would be insolvent. There would be no future TARP or other shenanigan that could accommodate that eventuality.  This will be discussed further later in the article.

Under Water Mortgages

Calculated Risk has an excellent post about underwater mortgages. CR states that 4.1 million homeowners owe 50% or more than their house…
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Take It From Someone Who Called the Housing Crash

Take It From Someone Who Called the Housing Crash (and its victims) in 2005, We Are About Midway Through the Downturn, If That Far

Courtesy of Reggie Middleton at Zero Hedge 

Bloomberg reports US Home Prices Fall Again:

Sept. 22 (Bloomberg) — U.S. home prices dropped 3.3 percent in July from a year earlier, the eighth consecutive decline, as foreclosed properties flooded the market.

Prices fell 0.5 percent from June, the Federal Housing Finance Agency in Washington said in a report today. Economists had projected prices to fall 0.2 percent from the previous month, based on the average of 15 estimates in a Bloomberg survey. The agency revised the previously reported May-to-June decline to 1.2 percent from 0.3 percent.

Foreclosures are boosting the supply of available properties and reducing prices, even as mortgage rates tumble to record lows. The time it would take to clear the market of homes for sale was 12.5 months in July, the highest in more than a decade of data, according to the National Association of Realtors. Banks seized a record 95,364 properties from delinquent borrowers in August, according to RealtyTrac Inc., an Irvine, California-based seller of housing data.

This should be of no surprise to anyone that reads the BoomBust or follows me regularly. I’ve been warning about the crash for over 5 years now, and those who feel we are nearing a bottom need to take out their spreadsheets and plug in some historical numbers.

 

Paying Subscribers are welcome to download the mortgage and credit template that was used in the original US (Don’t) Stress (US) tests, otherwise known as SCAP. We have taken the liberty to update the template on a periodic basis for the government, since it appears they are not forcing the banks to do so :-) SCAP Assumptions Updated_09082010 Web Version. This model shows a weakness in the Case Shiller method of following prices in that the CS doesn’t include investment properties (usually the first to go into foreclosure), new construction, and REOs. As a matter of fact, Case Shiller actually looked slightly rosy as of late. The following graphs were generated from  SCAP Assumptions Updated_09082010 Web Version..

Notice how the federal numbers show falls where CS doesn’t. Signs on the street tell me the federal numbers…
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Home Prices Drop in 36 States; Beazer Warns on Orders; 8 Million Foreclosure-Bound Homes to Hit the Market; Prices to Stagnate for a Decade

Home Prices Drop in 36 States; Beazer Warns on Orders; 8 Million Foreclosure-Bound Homes to Hit the Market; Prices to Stagnate for a Decade

Courtesy of Mish 

The small upward correction in home prices from multiple tax credit offerings died in July. Worse yet, inventory of homes for sale as well as shadow inventory both soared. 8 million foreclosure-bound homes have yet to hit the market according to Morgan Stanley.

Home Prices Drop in 36 States

CoreLogic reports Growing Number of Declining Markets Underscore Weakness in the Housing Market without Tax-Credit Support

CoreLogic Home Price Index Remained Flat in July

SANTA ANA, Calif., September 15, 2010 – CoreLogic (NYSE: CLGX), a leading provider of information, analytics and business services, today released its Home Price Index (HPI) that showed that home prices in the U.S. remained flat in July as transaction volumes continue to decline. This was the first time in five months that no year-over-year gains were reported. According to the CoreLogic HPI, national home prices, including distressed sales showed no change in July 2010 compared to July 2009. June 2010 HPI showed a 2.4 percent* year-over-year gain compared to June 2009.

"Although home prices were flat nationally, the majority of states experienced price declines and price declines are spreading across more geographies relative to a few months ago. Home prices fell in 36 states in July, nearly twice the number in May and the highest since last November when national home prices were declining," said Mark Fleming, chief economist for CoreLogic.

Methodology

The CoreLogic HPI incorporates more than 30 years worth of repeat sales transactions, representing more than 55 million observations sourced from CoreLogic industry-leading property information and its securities and servicing databases. The CoreLogic HPI provides a multi-tier market evaluation based on price, time between sales, property type, loan type (conforming vs. nonconforming), and distressed sales. The CoreLogic HPI is a repeat-sales index that tracks increases and decreases in sales prices for the same homes over time, which provides a more accurate "constant-quality" view of pricing trends than basing analysis on all home sales. The CoreLogic HPI provides the most comprehensive set of monthly home price indices and median sales prices available covering 6,208 ZIP codes (58 percent of total U.S. population), 572 Core Based Statistical Areas (85 percent of total U.S. population) and 1,027 counties (82 percent of total U.S. population) located in all


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Freddie Mac Announces 95LTV loans, Re-bubble – With This Option You Too Can Join the Underwater Club In As Little As Three Months!!!

Freddie Mac Announces 95LTV loans, Re-bubble – With This Option You Too Can Join the Underwater Club In As Little As Three Months!!!

Courtesy of Reggie Middleton

This is part one of my update on residential real estate mortgages, whose credit conditions have seen a marked improvement over the past year. Of course (yes, you know  there is always a but), I believe the improvement is the result of the rampant government intervention in the mortgage markets. As we shall see in part two for this update, even with rampant intervention some of the major mortgage institutions are so sick as to appear to be beyond mere assistance. Brace yourself for Financial Meltdown 2.0, open source edition.

Is it really a Housing Double Dip if Conditions Never Stopped Getting Worse?

Many analysts have speculated housing would reenter a “double dip” courtesy of falling home prices, decreasing home sales, increasing housing inventory, and other issues that have not been resolved since the collapse of the housing market began nearly three years ago.  Inevitably, housing policy at the federal level has completely failed to support any regeneration of demand.

Mortgage Rates Can’t Find Rock Bottom: WSJ

  • The Freddie Mac survey of 30 year mortgage rates has shown new record lows in rates for 11 straight weeks
  • 15, 10, and 5 year rates have also continued their free fall as employment data fails to ease fear in the housing market

Figure 1: Courtesy of Freddie Mac

Figure 2: Courtesy of the Kansas City Federal Reserve Branch

Figure 3: Courtesy of the National Association of Realtors

Housing Prices Climb amid Falling Home Sales (the government’s hidden bid at work): CBS

  • Foreclosures continue to increase, July home sales fell by 27%, employment conditions are not getting better, and home prices found a way to rise 7%
  • Robert Shiller claims the San Francisco market is “booming” after climbing 21% since 2009 (but don’t ask about the record drops in 2008)
  • If you are wondering where your unemployed neighbor is spending all of his free time, check and see if there is a distressed homeowners convention in town

Figure 4: Courtesy of the National Association of Realtors

Federal Reserve Still Watching Foreclosure Data: International Market News

  • Average property vacancies have increased from 114 days in 2006 to 954 days in 2010


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THE ANSWER TO A HOUSING RECOVERY: LOWER PRICES

THE ANSWER TO A HOUSING RECOVERY: LOWER PRICES

housing marketCourtesy of The Pragmatic Capitalist 

The simple economics behind the situation in housing is beginning to become more apparent as the weeks go by. As we’ve noted for several years now the primary problem in the US housing market remains one of supply and demand.  As the jobs market continues to weaken, deflation takes hold of the US economy and the shadow inventory floods the market the math here remains simple enough for an Econ 101 student to understand. In order for the housing market to build a firm foundation that does not require government aid we will need to see a reduction in prices. In a recent research report Merrill Lynch described just how extreme the supply/demand imbalance has become in recent months and years:

“The collapse in housing demand means that it likely will take even longer to clear the inventory of homes for sale. In the new market, builders have continued to slash construction, maintaining incredibly lean inventories, and yet there is still supply of 9.1 months. Even more worrisome, however, is the existing home market where inventory is still on a decisive uptrend. As such, it takes 12.5 months to clear the inventory at the July sales pace. This widening gap between housing demand and supply means that construction likely will remain depressed and prices will dip lower (Chart 5).”

mer1 THE ANSWER TO A HOUSING RECOVERY: LOWER PRICES

More worrisome is the huge increase in shadow inventory that Merrill expects:

“The inventory of existing homes for sale is set to increase further as “shadow inventory” moves into the market. According to the latest Mortgage Bankers Association’s report, 9.1% of loans outstanding, which translates to 4.8 million, were seriously delinquent at the end of Q2 (capturing 90+ days delinquent or in the process of foreclosure). Unfortunately, this is not the end of the foreclosure pipeline. There were 2.6 million of mortgages either 30 or 60 days delinquent (Chart 6). It is likely that re-defaults from failed modifications — there have been 616,839 failed HAMP modifications – have contributed to early stage delinquencies.”

mer2 THE ANSWER TO A HOUSING RECOVERY: LOWER PRICES

Based on Merrill’s estimates the housing market is unlikely to normalize before 2015.  The supply/demand imbalance is simply staggering at the current levels and is likely to deteriorate if the economy weakens further:

“We define a normal housing market to be one in which housing starts


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Rosenberg Explains Why Not One New Home Priced Over $750,000 Sold In July

Rosenberg Explains Why Not One New Home Priced Over $750,000 Sold In July

Political cartoon by Thomas Nast (1840 - 1902) depicting the 'Fine-Ass' Committee,' a group of Democratic Congressmen as donkeys, blowing financial bubbles after the Panic of 1873. (Photo by Kean Collection/Getty Images)

Courtesy of Tyler Durden

The most damning words on the recent horrendous housing data come from David Rosenberg: and since he has long been spot on in his macro observations, the 15% or so in additional price losses anticipated, will make this depression a truly memorable one (we will investigate not only the surging supply side of the housing equation, but the plunging demand side in a later post), and will leave the Fed with absolutely no choice other than the nuclear option: "If the truth be told, if we are talking about reversing all the bubble appreciation that began a decade ago, then we are talking about another 15% downside from here. The excess inventory data alone tell us that this has a realistic chance of occurring…The high-end market, in particular, is under tremendous pressure. In fact, it is becoming non-existent. Guess how many homes prices above $750k managed to sell in July. Answer — zero, nada, rien; and for the second month in a row."

From today’s Breakfast With Rosie

Once again, the consensus was fooled. It was looking for 330k on new home sales for July and instead they sank to a record low of 276k units at an annual rate. And, just to add insult to injury, June was revised down, to 315k from 330k. Just as resales undercut the 2009 depressed low by 15%, new home sales have done so by 19%. Imagine that even with mortgage rates down 100 basis points in the past year to historic lows, not to mention at least eight different government programs to spur homeownership, home sales have undercut the recession lows by double-digits.

This is what we have been saying for some time, in the aftermath of a credit bubble burst and a massive asset deflation, trauma has set in. The rupture to confidence and spending from our central bankers’ and policymakers’ willingness to allow the prior credit cycle to go parabolic has come at a heavy price in terms of future economic performance. Attitudes towards discretionary spending, credit and housing have been altered, likely for a generation.

The scars have apparently not healed from the horrific experience with defaults, delinquencies and deleveraging of the past two years — talk about a horror flick in 3D. The number…
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HOME PRICES ARE STILL TOO HIGH

HOME PRICES ARE STILL TOO HIGH

Courtesy of The Pragmatic Capitalist 

Barry Ritholtz at The Big Picture had this excellent chart earlier this afternoon that clearly gives a 30,000 foot view of the housing market.  I’ve shown a similar chart in comparison to annual inflation, but this also provides some perspective in terms of median household income and CPI for rent.  As you can clearly see, house prices are STILL more expensive that any other time in recent history:

Median Prices HOME PRICES ARE STILL TOO HIGH

Source: The Big Picture 


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Mass Delusion – American Style

Mass Delusion – American Style

Courtesy of Jim Quinn of The Burning Platform

“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.” – Charles Mackay - Extraordinary Popular Delusions and The Madness of Crowds

 

The American public thinks they are rugged individualists, who come to conclusions based upon sound reason and a rational thought process. The truth is that the vast majority of Americans act like a herd of cattle or a horde of lemmings. Throughout history there have been many instances of mass delusion. They include the South Sea Company bubble, Mississippi Company bubble, Dutch Tulip bubble, and Salem witch trials. It appears that mass delusion has replaced baseball as the national past-time in America. In the space of the last 15 years the American public have fallen for the three whopper delusions:

  1. Buy stocks for the long run
  2. Homes are always a great investment
  3. Globalization will benefit all Americans

Bill Bonner and Lila Rajiva ponder why people have always acted in a herd like manner in their outstanding book Mobs, Messiahs, and Markets: Surviving the Public Spectacle in Finance and Politics:

“Of course, we doubt if many public prescriptions are really intended to solve problems. People certainly believe they are when they propose them. But, like so much of what goes on in a public spectacle, its favorite slogans, too, are delusional – more in the nature of placebos than propositions. People repeat them like Hail Marys because it makes them feel better. Most of our beliefs about the economy – and everything else – are of this nature. They are forms of self medication, superstitious lip service we pay to the powers of the dark, like touching wood….or throwing salt over your shoulder. “Stocks for the long run,” “Globalization is good.” We repeat slogans to ourselves, because everyone else does. It is not so much bad luck we want to avoid as being on our own. Why it is that losing your life savings should be less painful if you have lost it in the company of one million other losers, we don’t know. But mankind is first of all a herd animal and fears nothing more than not being part of the herd.”

Stocks for the


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John Paulson Will Be Wrong This Time

Courtesy of Jim Quinn at The Burning Platform

John Paulson Will Be Wrong This Time

We have arrived at critical juncture in the ongoing financial crisis. Have the government actions of the last year successfully spurred the animal spirits of Americans, resulting in a self-sustaining recovery?

The Obama administration and most of the mainstream media would answer yes. GDP has been positive for the last four quarters. Consumer spending has increased in five consecutive months. Corporate profits have been relatively strong. The country has stopped losing jobs. The missing piece has been a housing recovery.

No need to worry. Famous or infamous (depending on your point of view) $15 billion man John Paulson has assured the world that house prices will rise 8% to 10% in 2011. His basis for this forecast is that California prices have rebounded 8% to 10% in the last year, and this recovery will spread to the rest of the nation.

Maybe Paulson has teamed up with his buddies at Goldman Sachs to develop a product that guarantees a housing recovery. I tend to not believe anything that comes out of the mouth of anyone associated with Wall Street, but let’s assess the facts and see if they point to an impressive housing recovery in 2011.

The man who has been right on housing for the last ten years has been Yale Professor Robert Shiller. His analysis of U.S. housing prices from 1890 until present, which he first published in 2005, unequivocally proved that we were in the midst of the greatest housing bubble in history. At the same time, David Lereah, the chief economist (shill) for the National Association of Realtors, was pronouncing it was the best time to buy. He published his masterpiece of market tops, Are You Missing the Real Estate Boom? at the 2005 housing peak. He called a bottom in January 2007, and the NAR has continued to tell Americans it is the best time to buy for the last five years as prices have dropped 36% nationally.

 

Dr. Shiller continues to be the voice of reason when it comes to the housing market. He is doubtful that the recent “recovery” will continue:

    “Recent polls show that economic forecasters are largely bullish about the housing market for the next year or two. But one wonders about the basis for such a positive forecast. Momentum may be on the forecasts’


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Phil's Favorites

Peace advocates have long been found among veterans who fought in America's wars

 

Peace advocates have long been found among veterans who fought in America's wars

Veterans for Peace gather for a Veterans Day ceremony at the Minnesota State Capitol mall, Nov. 11, 2014, in St. Paul. AP/Jim Mone

Courtesy of Michael Messner, University of Southern California – Dornsife College of Letters, Arts and Sciences

If President Donald Trump had gotten his way, the nation would have celebrated the centennial of the World War I armistice last year on Nov. 11 with ...



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Zero Hedge

China's Credit Creation Unexpectedly Collapses At The Worst Possible Time

Courtesy of ZeroHedge View original post here.

Over the weekend, we observed that China's slumping wholesale inflation, or PPI, which is so critical for corporate profits and sparking benign, demand-driven inflation in the economy, and which in October tumbled to a three year low assuring that Chinese dumping and exports of deflation will only further depress global reflation efforts...

...



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Insider Scoop

These Analysts Love BellRing Brands

Courtesy of Benzinga

BellRing Brands Inc (NYSE: BRBR) is a nutrition products company known for its ready-to-drink protein shakes and was born out of the separation of Post Holdings Inc (NYSE: POST)....



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The Technical Traders

Welcome to the Zombie-land Of Investing - Part I

Courtesy of Technical Traders

This current market environment is very reminiscent of the 2006-08 market environment where price rotated into weakness on technicals and continued to establish new all-time price highs in the process – creating what we are calling a “zombie-land melt-up”.  This very dangerous price action is indicative of money chasing a falling trend.  Where technicals and fundamentals are suggesting that price is actually weakening quite substantial, yet the process of price exploration is continually biased towards the upside as investors continue to pile onto the back of the beast expecting a further melt-up.

Let’s take a look at what happened to the ES and Gold in 2006 an...



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Kimble Charting Solutions

Gold Indicator Sending Fresh Bearish Message, Says Joe Friday!

Courtesy of Chris Kimble

Could the Gold/US Dollar ratio be sending a fresh concerning message to Gold bulls this week? Joe Friday says Yes!

This chart looks at the Gold/Dollar ratio over the past 8-years.

The intersection of two long-term channel met at (1) a few months ago. The ratio was testing the bottom of one as resistance and the top of another as resistance at the same time.

As the ratio was testing both channels as resistance, a sizeable bearish reversal pattern took place at (1).

Since the reversal pattern took place, the ratio has been heading lower.

Joe Friday Just The Facts Ma’am; The ratio is breaking below...



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Digital Currencies

3 Reasons Why One Trader Didn't "Manipulate" Bitcoin Price To $20K

Courtesy of ZeroHedge View original post here.

Authored by William Suberg via CoinTelegraph.com,

Bitcoin price highs in 2017 were not the result of a single trader on an exchange, the CEO of payment company Circle claims. In a series of tweets on Nov. 4, Jeremy Allaire disputed ...



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Chart School

Gold Gann and Cycle Review

Courtesy of Read the Ticker

Gold has performed well, golden skies are here again. In fact it has been a straight line move, and this is typically unusual and a pause can be expected.

It seems the markets are happy again, new highs in the SP500, US 10 year interest rates look to re bound, negative interest may soften. The US FED has reversed their QT and now doing $250BN (not QE) repo. The main point is the FED has stopped QT, and will do QE forever. The evidence now is the FED put is under market risk and the possibility of excessive losses do not exist. 

Point: If in future if there is market risk, the FED will print it's way out of it.
Subject To: In this blog view. The above is so until the amount required rocks confidence in the US dollar as a reserve currency.&n...



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Lee's Free Thinking

Today's Fed POMO TOMO FOMC Alphabet Soup Unspin

Courtesy of Lee Adler

But make no mistake, if the Fed wants money rates to stay down by another quarter, it will need to imagineer even more money.

That’s on top of the $281 billion it has already imagineered into existence since addressing its “one-off” repo market emergency on September 17. This came via  “Temporary” Repo Man Operations money, and $70.6 billion in Permanent Open Market Operations (POMO) money.

By my calculations that averages out to $7.4 billion per business day. That works out to a monthly pace of $155 billion or so.

If they keep this up, it will be more than enough to absorb every penny of new Treasury supply. That supply had caused the system to run out of money in mid September.  This flood of paper had been inundati...



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Biotech

The Big Pharma Takeover of Medical Cannabis

Reminder: We are available to chat with Members, comments are found below each post.

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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