On cats and bears and canaries

bear-stock-market-3Investors wonder these days: have we seen the bottom of the market yet? Or, as an institutional portfolio manager recently raised the picturesque question: ‘Did we reach a bottom when “the mother of all stock indices” (nearly) touched the number of the beast on March 9th?’

Since that number of the beast, we’ve seen a typical bear market rally; Soros calls it a dead cat bounce.

In real estate, I have seen quite some local markets (property is a local/national business, almost by definiton) bottoming out, and some are still in the process. Some, UK for instance, have come down quite significantly and quite quickly. These were highly overpriced in the first place. Others, like Germany, have seen a repricing also, but it is hard to tell whether they’ve hit bottom (yet). Its a different market, like I referred to previously: no party, no hangover. True, I think.

I have indicated the first green shoots twice now (search my blog for ‘shoots’). I will have to be specific: I think the West European commercial real estate market will have hit bottom and UK is first to recover. I see some opportunities for value investors. The US is still suffering from credit sickness (e.g. yesterday’s record breaking bankruptcy of General Growth Properties, which filed the biggest real estate bankruptcy in  US history), but offers opportunities for contrarians with keen market knowledgde. Bear in mind however, that a few major property bankruptcies are likely to occur in the US. Asia is heterogene and should be analysed on a country-by-country basis. I very strongly believe in niches like emerging Asian markets such as Vietnam. That said I’ve noticed Chinese property stocks rising dramatically over the past few months. A lot is said about Chinese habits, but that’s not a dead cat rebound anymore…

So much for the cats and the bears. Lets await the first canaries.