Think I'll Just Sit Here On This Bank Of Sand And Watch The River Flow

And now for the Financial News:

Diamond Foods (DMND) made headlines this week when their IPO opened at $17.00 a share and quickly rose almost 25% to $21.05. Diamond Foods is engaged in the processing, marketing and distribution of nuts both here in the U.S. and internationally. I was going to buy some shares on margin myself, but was afraid of the phone call I might get if stocks should suddenly hit a wall and turn south. I mean I can just hear my broker calling me now -

"Tony, the bottom's dropped out of the market. You better cover your nuts."

(Ok, ha, ha, ha, just a little stock market humor there).

Don't know if you caught it on NBR but Susie Gharib had the CEO of Diamond Foods on the show tonight. It was a pretty good interview until they got to the part -

"Mr. Mendes, your stock has had a pretty good rise today. Is it time for investors to consider selling some of their shares and taking some profits?"

"No Susie, we think the stock still has a lot of upside. This is a growing market and even with the tremendous rise we've seen so far in the stock, I wouldn't be selling right now. I think I'd be holding my nuts."

(Hee, hee, hee...Yeah folks, I got a million of 'em)

Alright, alright, alright...enough of the Diamond Foods jokes. So what else is new? As you can probably tell this is one of those blogs where nothing is happening and I've got nothing to talk about.

Well let's see, I bought a new car. Yeah, whoopee!!! It's a nice car, got it a good price, and the first 200 miles or so have been trouble-free. So far, so good, and I can't complain I guess. (Yawn)

Gee, that was exciting. Let me think what else is happening.

Oh yeah, I was thinking about the last housing slump we had here in the Bay Area back in the 1980's. I know most people out surfing the net weren't even born back then, but if you remember at the time we had out-of-control spending in Washington, a ballooning deficit, and a lot of fast, easy money flowing into the real estate market. Of course we also had a lot of foreign investors bidding up real estate prices to unsustainable heights back in those days, but just bear with me on this, will 'ya.

Oh, and while we're at it there's something else I want to get off my chest. Why is it that whenever Asian investors start buying up American assets it's percieved as a grave threat to national security, and yet whenever Europeans start buying up assets no one even seem to notice. If you remember that's the way it was back in the 80's when Japanese investors started buying up office building and golf courses and everyone started saying what a crisis it was for the U.S., and that's the way it still is today when a Chinese company tries to buy a U.S. oil company and sets alarms ringing all the way from Capitol Hill down to the White House. Geez, if a English company had tried to buy Unocal do you think it would have created a national scandal?

Or do you think there might just be a little racism going on here? Beware the yellow peril?

Anyways, where was I. Oh yeah, I remember back in the 80's the first sign of trouble I saw in the real estate market was the rising number of homeowners that seemed to be delinquent on their property taxes. Everyone always focuses on mortgage delinquencies when looking for signs of trouble in the real estate market, but I noticed back then that it seemed like people get behind on their property taxes first, and then later on they start falling behind on their mortgages.

Another thing that happened back in the 80's was this whole business of appraisers overvaluing properties and defrauding lenders into making loans that were wildly over the true market value. I can't say I noticed that at the time, but of course we all found out what was going on when all the Savings and Loans started failing because of the billions and billions of dollars of bad loans they were holding in their portfolios.

So now let's fast forward to the present and what do I see? Well obviously I wouldn't be writing this if I didn't see the same thing starting to happen all over again. It just so happens that my job gives me a good overview of what is really happening in the local real estate market and let me tell you - I bet a good 7 out of 10 sales I see all have owners who are delinquent on their property taxes. Now to be fair it's also true that I usually see a lot of delinquent property taxes on sales because, well, what happens when people start getting behind on their taxes? Right, they sell the house. But the point is that I am seeing a LOT of people delinquent on their taxes, and it seems to me that we are starting to get into some dangerous waters here.

And then you add to that the fact that I'm also seeing more and more lenders getting questionable appraisals, and by that I mean appraisals that are just plain wrong (deliberately wrong?) as to some of the facts, and it seems to me that we may be headed for another shakeout. Not that I'm trying to predict the future or anything like that, but the warning signs are there. I think if I had some money invested in any of the big mortgage lenders out there I'd be scrutinizing things very closely and getting ready to bail at the first sign of trouble.

But like I said, I don't have a crystal ball and only a fool would take investment advice from a blog.

Well, so much for that.

Let's see, anything else happening. Oh yeah, my favorite musical superstar is coming out with a new Mozart CD next month. If you go to the Deutshe Gramophone site and look up Hilary Hahn you'll see they've got a few excerpts there you can stream. You can't tell much from a 60 second sound clip, of course, but it seems to me that we are going to get a different Hilary on this CD than we have in the past. I dont' know, there's just something in her sound that's not the same, like the child prodigy days are gone and now the mature artist phase of her career is setting in. But, like I said, how much can you really tell from a 60 second sound clip.

Sheesh, some blog huh? Probably shouldn't even have bothered. Oh well, I'm just so burned out from all the car shopping I've been doing over the past couple of weeks...Hopefully I'll have something stimulating and provacative to add to the 'ol blogosphere next time.

Hopefully...