Capitalism 2.0

CME Housing Futures and Options

The Chicago Mercantile Exchange launches exchange-traded housing market index based futures and options market.  We've discussed these quite a bit on the Patrick.net blog; most recently on this thread.

The CME's official web page for these new markets can be found here.

Live real-time futures  quotes are here.

You can  track the San Francisco Bay Area's futures prices here.  SFRY is the index.

Direct closing quotes from the CME are here.

In this thread we solicit trading strategies from our readers.  Speculation or hypothetical hedging are strategies are both welcome.  We'll select the best portfolios we come up with and track them to see our hypothetical performance.

Bubblizer, a Request for Comments

Current Version:  1.2.4 (2006.04.25).  Release notes.
Download this version to be sure you have no errors.
Next Version Expected:  *none planned*
Password to unlock the spreadsheet:  cap20

9/25/2007: A number of folks have written to inform me that the spreadsheet does not operate properly in newer versions of Excel.  Rather than update the model right now I'm just making the password available to everyone (above).  I may get around to refactoring the model to operate properly sometime, but probably not very soon.

I offer the Bubblizer, an Excel spreadsheet model intended to help everyday folks rationally approach a home buying decision in today's uncertain bubble environment.  I am requesting comments, criticisms and improvements for this model.  Once this spreadsheet version of the Bubblizer is stable, I intend to create a web version (which does not require Excel, but is based upon the same model).

Please share the link to this article with your more financially and quantitatively minded colleagues and friends.

Using ETFs as Hedges and Speculations

A lot of discussion lately centers around an apparently growing feeling among many people that things are changing.  The is no shortage of uncertainty in today's economy, that much is for sure.  In threads I host on Patrick.net (a Bay Area real-estate focused blog), recurring topics of interest include the real-estate bubble, risks to the mortgage-backed security industry, overall credit risks, the US current account deficit, the weakness in the USD, oil and energy prices, and inflation (or deflation) risks.

What is one to do?  Can a reasonable person either hedge themselves or perhaps even speculate on the future in a responsible manner?  This discussion is about what exchange traded funds (ETFs) one might use, and how to use them responsibly.

Creating a Residential Real-Estate Timing Model

In a recent thread discussing macroeconomic data pointing to increasing likelihood of a hard-landing for real-estate in the US, we began brainstorming what type of timing model could be created given current technology and technique.  In this thread let's move the concept forward by more formally documenting some of our ideas, testing those ideas for validity, and perhaps even preparing a simplified simulation.

I've also started a thread on Patrick.net soliciting more general views and opinions on market timing (from a "when to buy" perspective).