Archive for June, 2011

How the Housing Market Will Reach Bottom

A report by Diana Olick on CNBC today, “Florida Real Estate Selling Fast and Foreign,” gives a good idea on how market prices reach their bottoms. In this case, the market is condominiums and the place is Ft. Lauderdale, Florida, which was at the epicenter of the housing Bubble and ultimate bust. In the report, Ms. Olick told how the inventory of condominiums for sale in Ft. Lauderdale has dropped to 100 or less.

The liquidation process occurring in Ft. Lauderdale is the model for how the housing market will reach a bottom. Prices must get low enough to attract value investors who can buy and resell at a profit. Interestingly, the primary buyers in Ft. Lauderdale have been foreigners.



The Cost of a Little More Time

The May 28 issue of The Economist carried an article about the development of new drugs in America. Evidently, the business model for big drug companies is shifting. In the past, research has focus primarily on creating blockbuster drugs, those that are applicable to diseases that affect large numbers of people. Now, companies are increasingly investing in drugs that are more specialized, applicable to diseases that threat relatively small groups of people. My guess is that drug companies are finding it increasingly difficult to find new blockbuster drugs and development costs do not provide adequate profit margins. So, more and more, drugs coming to the FDA for approval are those developed by Biotech firms targeting small numbers of people.

Of course, to make this work financially, the price of these new drugs must be very high. Much of the new research is oriented toward treatment of advanced-stage cancer. As examples,