Monday, January 25, 2010

The Most Over-Hyped Housing ETFs

While everyone is debating when home prices will bottom, June last year, MacroMarkets LLC (co-founded by Robert Shiller) launched MacroShares which allowed investors to make a direct bet on housing. MacroShares Major Metro Housing Up (UMM), and MacroShares Major Metro Housing Down (DMM) were possibly the most over-hyped housing ETFs ever introduced. In fact, they aren't even ETFs, because it doesn’t hold an underlying basket of houses. Instead, it holds Treasury securities and cash, and shift assets according to the movement of the underlying indexes.

The benchmark index is the S&P Case Shiller Composite-10, an index comprised of real estate sales from San Diego, Los Angeles, San Francisco, Las Vegas, Denver, Chicago, Boston, New York, Washington DC, and Miami. Those 10 cities comprise about 30% of all the real estate transactions in the US. UMM and DMM were designed to deliver 300% of upward and downward movements of the S&P/Case Shiller Home Price Composite-10 Index, and was supposed to expire by November 25, 2014. Unfortunately, the MacroShares UMM and DMM did not track the Case-Shiller index they were supposed to follow, never attracted significant assets, and were liquidated in December 28th, 2009. Robert Shiller admitted it was a mistake and intends to try again.

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Wednesday, January 20, 2010

Worldwide House Price Indicator

The Economist compiles House Price Indicator for 19 countries around the world in addition to US Home Price Indices by Case-Shiller and FHFA.

Tuesday, January 12, 2010

Burj Dubai is Officially Open

Amid Dubai debt meltdown, Burj Dubai is officially open and was renamed after the UAE President, Burj Khalifa, last week on Monday January 4th, 2010.

For an earlier post on Burj Dubai, click here:

During construction boom, Dubai borrowed $80 billion debt hoping to transform the economy into a regional tourism and financial hub. According to Deutsche Bank, UAE suffered the world’s steepest property slump in the global recession, with home prices dropping 50% from their 2008 peak.

Talking about Dubai brought back personal memory a little more than a decade ago. Beside a job offer I received from US based consulting company, I also had few other interviews with Singaporean, UK and UAE companies. The recruiter from UAE based company told me I could have the same salary as the US based company, except it was tax free. Finally after careful consideration, money though important, but was not the only thing in life, I pursued the offer from US based consulting company. The rest is a history.

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