3 Metrics to Consider Before Investing In a House

Mish mentioned the first 3 metrics to consider when investing in a house:

1) How much are home price out of whack with rental prices? (i.e. What does it cost to own vs. rent a similar house? Keep in mind maintenance, property taxes, etc.)
2) How much above the trendline growth in price appreciation are home prices selling? (Was there an unexpected or unwarranted acceleration in prices over a number of years?)
3) How much have home prices appreciated vs. wages

Some Data Regarding Facebook

According to WSJ story, as of Sep 16:

• Total number of users: 300 million
• Number of users added during last 1.5 months: 50 million
• User location split US/International (%): 30/70
• First operating cash flow positive quarter: Q2 (Apr) 2009
• Expected 2009 revenue: $500 million (70% YoY growth)

Shanghai Composite Approaching 61.8% Retracement

USO Below Intermediate Term Trendline.

After repeated attempts to cross $39 mark, USO finally closed below the intermediate term trendline. MACD is also confirming waning momentum. Considering the weakness in the broader market and the strength in US dollar, its not surprising at all. Before opening a short position, it would be better to wait for a rally, which reverses at the trendline, confirming start of the down trend.

Full Disclosure: No position in USO.

Divergence in Shanghai Composite.

Since Aug 19 low, Shanghai Composite has climbed a bit but this rise has not been confirmed by MACD resulting in a divergence. Hence, we need further evidence to be confident of a reversal in current (short term) down trend, or continuation of this trend to become intermediate or long term down trend.

Some Macroeconomic Data Points about Pakistan

From a recent WSJ article, here are some macroeconomic data points:

• On August 15 central bank reduced benchmark interest rate by 1% to 13%
• The previous reduction by 1% was done in April
• The rates were raised by 5% in 2008 to reign in inflation
• Inflation was 25.3% in August 2008, 19.1% in March 2009, and 11.2% in July 2009
• Economic growth was 2% in the previous fiscal year, and was average of 6% during previous 5 years
  
• Growth is expected to be 3.3% during the current fiscal year
• Fiscal deficit was 5.1% of GDP during last fiscal year, and 7.4% during the year before that
  
• Current-account deficit was $8.6 billion during last fiscal year, and $13.6 billion during the year before that
• Foreign-exchange reserves were $11.846 billion for the week ended August 8

Shanghai Composite near 50% retracement

From the October 2008 bottom, Shanghai Composite has climbed substantially. During this run, excluding the current one, there have been two retracements both close to 61.8%. The current retracement is close to the 50% mark. From MACD at the bottom, we can see that the current retracement is sharpest of the 3 during the past 52 weeks. Whether this retracement stops around 61.8% remains to be seen.

Index ETF and SPDR returns for May 14

Disclaimer: Long position on GLD, short position in SPY and XLF.

SPY, QQQ and IWM

SPY, which closed almost at the bottom of the trend channel yesterday moved back into the channel today. The trend break still not confirm yet.



Both QQQQ and IWM have not only broken their trend lines, but also were unable to hold above the short-term supports just before the close.

Disclaimer: Short position in SPY.

Index ETF and SPDR returns for May 13

Disclaimer: Long position on GLD.