Conference nyoss1::market_investing

1061.0. "My God -- The House Is Down Again!?" by REQUE::HERRLICH () Thu Mar 20 1997 09:12

This is from _The Motley Fool_ site (http://www.fool.com), one of
those "on-line chat sites" that the media is talking about when they
talk about how the Internet is influencing investing.  I though the
people here might appreciate it.  Note 1005.* talks a little more
about them.

					- Alan

FOOL ON THE HILL
An Investment Opinion by MF Templar
My God -- The House Is Down Again!?

"Holy smokes! The house is down again today!" cried Burt Campbell as
he peered at the ticker tape scrolling across CNHC.

His wife, Dottie, called out from the kitchen, "What's wrong, honey?"

"The house. It is down again today. The ticker is reporting the quote
for 121 Maple Lane as down $5000 today." Burt grimaced angrily and
pounded on the arm of his recliner with a balled-up fist.

"Could it be a mistake? You know, last week you were following 120
Maple Lane for three days before you figured out what was wrong."
Dottie turned off the kitchen faucet and proceeded to begin loading
the dishwasher.

"Dag nabbit, I am positive it was 121 Maple. There was breaking news
on the whole development earlier today." Burt stood up and began to
pace back and forth across the sparsely decorated living room. Boxes
strewn about from their recent move still littered the common
area. "It appears the Homeowner's Association is talking about raising
fees again for the swimming pool -- knocked the snot out of the entire
street, down 5% on the day."

Burt listened for a few minutes to the sound of dishes being racked
together in the new dishwasher, shook his head in an expression of
frustration, and went over to the dining room table. Sprawled out on
its surface was a carefully drawn chart entitled "121 Maple Lane,"
showing daily price information on a graph. He grabbed a sharp pencil
and began to draw in today's closing price.

"Honey, what's the house worth today at the close?" Dottie was
dropping the last few pieces of silverware into the small rack in the
dishwasher. She paused to scrape a desiccated food particle off of a
fork with her fingernail.

"$120,000. It is down $20,000 since we bought the house three weeks
ago."

"Well, we have had the whole Homeowner's thing, and then the neighbors
did get a pit bull, and we did scratch up the house a bit in the
process of moving in." Dottie closed the dishwasher and turned it on,
desperately hoping Burt would not do anything rash.

"My goodness, the house has broken critical support at $121,000 and
just fell below its 200-day moving average. The bids are drying up for
houses in this neighborhood as well, Dottie... by golly, the market
knows something here that we don't."

"I'm sure it will recover, honey." Dottie walked into the dining room
to rub her husband's neck. Burt was putting the finishing touches on
his point-and-figure chart and did not look very pleased with the
results.

"That's it. We're selling." Burt suddenly rushed for the phone,
dialing their 24-hour real estate broker. "I refuse to see our life's
savings mashed by a downturn in the real estate market."

"Burt, we just moved in."

"And we can move out just as fast. Cut your losses, let your winning
houses grow." Burt had already dialed and Ken Smith's brusque voice
barked out a greeting on the other end. "Ken, Burt Campbell here... we
are going to sell the house... yeah, I saw it broke the 200... and I
am not sure what kind of quarterly report we can put out... I mean,
the kitchen was just refinished."

"Honey... don't you think we should talk this over..."

"Good, $119,000 on the bid? I'll take it." Burt hung up the phone,
moving to the bottom of the stairs to bellow at his kids. "Alice?
Charlie? Pack up your stuff, kids. We are moving out of this house
tomorrow." A few fleeting groans floated down the stairs, but from the
footfalls Dottie knew the children had gone to comply with their
father's wishes.

"Burt, I am just not sure about this. I mean, we have only been
here..."

Burt cut her off entirely. "Dottie, I have seen the price of a house
fall as much as 50% in a few days. They are a necessary evil. When you
see one going south on you, though, you absolutely have to get out."
Burt went to the living room to retrieve the newspaper in order to
scope out a new abode.  "I think the houses on Ventura Avenue have
been rising lately. Maybe we should buy one of them to live in."

Dottie knew it was pointless to argue. Thankfully, any loss would be
made up by their retirement portfolio. Although quotes for the stocks
came out very infrequently, she knew that they had been faring
handsomely over the last ten years. They had purchased the portfolio
and mortgaged 90% of it, doing quite well in spite of the high margin
interest. Over the last twenty years, their portfolio had more than
doubled in spite of the fact that the margin interest was 8%. Thank
goodness stocks did not have daily quotes, she reflected for a
moment. Otherwise people would buy and sell them as frequently as they
did houses.

Note: The above article is an encore presentation of "Fool on the
Hill." It was originally published in the Evening News on Aug. 8, 1996
(http://www.fool.com/news/96archive/dna_0808.htm).

    That's a gem :-)