This revelation is important on two levels. First, it's great to see there is a market for what are probably the worst of the foreclosures (I'm guessing the better inventory would be kept by the banks so they could realize the maximum recovery), and, second, the price level is surprisingly high. I would have guessed that foreclosed homes in the hands of liquidators would go for less than 50 cents on the dollar, and instead they are trading between .75 and .95 cents.
As I said on Tuesday, and as this evidence supports, I feel we are bottoming in the housing market. This is not a turnaround, but the beginning of a bottom, and that is forward-looking news. The headlines mentioned above would have you drive your car with your eyes firmly fixed on the rear-view mirror. Do not despair. Great opportunities present themselves in times of crisis.
Market Commentary We're Not Out of the Woods Yet 3/25/2008 12:57 PM EDT Some people are cheering that the worst is over, but we still have some market pain ahead of us.
Market Commentary In Praise of Candor 3/24/2008 3:50 PM EDT Since it isn't the norm, we should laud transparency in business.
Vincent Farrell Jr. is a principal of Scotsman Capital Management. Prior to joining Scotsman in April 2005, Farrell was chairman of Victory Capital Management of Cleveland and chairman of Victory SBSF Capital Management in New York. He was a founding partner of Spears Benzak Salomon & Farrell, which was acquired by KeyCorp in 1995. Vince held a variety of positions in his 23 years at SBSF, including chief investment officer, and he served as the portfolio manager on a number of the firm's largest client relationships. He is a regular guest on CNBC as well as other national print and broadcast media.
Prior to joining SBSF, Vince spent nine years at Smith Barney as a vice president, sales.
Vince graduated from Princeton University in 1969 and received his MBA from the Iona College Graduate School of Business in 1972.
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