Did I miss something this week? What is happening with SSR resales??

[BWV Dreamin]

If Disney packaged and sold a $10,000/10 year loan for, say $8,000 to take the immediate profit and write it off their books, and they now have to hold that loan for the 10 years, if the person doesn't default, Disney will garner $16,462.15, including the principal. Or $10,462.15 in additional gross profit, but they will have to wait 10 years to see it.

If they increased the interest rate, they would see a more immediate profit in half the time...plus reduce the risk of default. Waiting 10 years for their profit is a problem....they need money NOW...

 

[Chuck S]

If they increased the interest rate, they would see a more immediate profit in half the time...plus reduce the risk of default. Waiting 10 years for their profit is a problem....they need money NOW...

Yes, but even on default, Disney simply repos the membership. And sell those points as a new contract, often at a higher price than the initial sale. So it is still a win/win as long as DVC is selling well. DVC doesn't really lose value immediately upon sale, like when a car rolls off the dealer's lot. It really isn't as risky.

 

[culli]

For a true comparison, one must compare apples to apples. Not DVC prices 15 yrs. ago, no using AP's, etc. Maybe a math guru (or accountant) can work the numbers up using todays prices for meals, rooms, tickets, etc. vs. the promo's. (That would include the cost to own DVC including the MF's). I think we will be surprised at the cost savings the promo's are providing.

I know what you are saying but I do some high level analysis and for the needs of our family it is a win. Ironically I do have the knowledge/ability to work in a "true" CBA/financial analysis but like I said it works for us and I'm just too lazy to do it. If I could count on the promos every year for where and when I want to stay and the right size accomidations then yeah I would bet that would win out. I just don't see this being available on a regular basis for the factors I'm looking for in the long run. Convienience is big thing and I do have a "portfollio" so to speak of timeshare options.....hands down DVC is the most expensive, but it provides me things nothing else will in that portfollio and that is important to our family.

 

[gkrykewy]

Yes, but even on default, Disney simply repos the membership. And sell those points as a new contract, often at a higher price than the initial sale. So it is still a win/win as long as DVC is selling well. DVC doesn't really lose value immediately upon sale, like when a car rolls off the dealer's lot. It really isn't as risky.

Precisely. I was going to reply again, but I see you've got it covered

 

[denegate]

Did you use The Timeshare Store?

 

[fkj2]

Again, I really don't see where you're coming from on this. There is no single universal pool of "investors" making the same decisions regarding investments. I am an "investor," and you have me scratching my head. In all honesty, your posts here are the first mentions I've seen on the entire internet that regards Chrysler/GM creditors as having been unreasonably wronged somehow. Further, the "toxic asset" investment programs have been received quite favorably by "investor" talking heads (CNBC et al). I really think you're barking up the wrong tree on this particular point.

Well, if I'm understanding Jim's point correctly, I'd also be unlikely to invest X number of dollars if I'm only going to recoup pennies on the dollar. If you lend money to a company--or the government--you expect to get it back: all of it.

That the talking heads of CNBC have given their endorsement to the Public-Private Investment Plan is hardly one in which I would place much faith. CNBC has (next to) no credibility as far as I'm concerned. Why would an investor, seeing what's happening to those who lent money to GM or Chrysler, be so willing to lend other struggling entities money?

Will Rogers said it best: "I'm not concerned about the return ON my money; I'm concerned about the return OF my money."

 

[JimMIA]

Again, I really don't see where you're coming from on this. There is no single universal pool of "investors" making the same decisions regarding investments. I am an "investor," and you have me scratching my head. In all honesty, your posts here are the first mentions I've seen on the entire internet that regards Chrysler/GM creditors as having been unreasonably wronged somehow.

I probably didn't explain my point very well, but actually the investors who will buy up toxic assets are exactly the ones who loaned Chrysler money -- hedge funds, because only a hedge fund is going to have that kind of risk tolerance. I'm an investor too, but you and I wouldn't loan Chrysler any money or buy bad mortgages on a bet. We would not be willing to take that much risk.

What the government tried to do with the Chrysler creditors is browbeat them into bypassing normal bankruptcy proceedings and accepting pennies on the dollar. Only problem is, those creditors have fiduciary responsibilities to their shareholders, so they couldn't agree. The only creditors who agreed are who? Right...the banks who are 100% dependent on government bailouts and in some cases largely owned by the government.

Further, the "toxic asset" investment programs have been received quite favorably by "investor" talking heads (CNBC et al).

I don't know which "talking heads" you are referring to. The discussions I've seen have mostly been negative about the recovery package, as well as the bloated budget Congress just passed. Some have been positive, but you'd have to discuss individual analysts and also look at whether they're really saying what they think or just trying to get some TV time to boost their brokerage or consultancy practice. I take all those folks with a heatlhy helping of salt, because my experience has been that they are wrong at least as often as they are right.

Really? Huge risks? I think investors in the toxic asset garbage will have losses capped at something like 15%, no? Against unlimited profit potential? They're going to be doing okay. Your bit about the windfall tax is a strawman.

Capped by WHO? By the government, of course. And yes, that would be the very same government who is trying to abrogate normal bankruptcy law and force the Chrysler lenders to accept pennies on the dollar. If the government does that with Chrysler, why wouldn't they do it here if the hedge funds lose their tails? If they don't follow the law in one case, why would anyone expect them to follow it in another case?

And if the hedge funds make big bucks, just watch the political pressure build to tax the "windfall profits" they made.

My larger point, though, is that the economy will get much worse before it gets better. I don't think it will bounce back overnight; in fact, I think it's going to take 2-3 years. The longer the economy is weak, the more it will adversely affect Disney generally and DVC sales specifically.

 

[Chuck S]

This thread has taken a turn away from the subject of DVC Resale pricing. Discussion of the governmental response to the current economic situation borders on political discussion, which is no longer allowed on the DIS Boards. Please relate your responses directly to DVC and resale pricing, not the stimulus or investment packages. Further posts not DVC related will be deleted.

Thanks.

 

[gkrykewy]

My larger point, though, is that the economy will get much worse before it gets better. I don't think it will bounce back overnight; in fact, I think it's going to take 2-3 years. The longer the economy is weak, the more it will adversely affect Disney generally and DVC sales specifically.

I continue to think you're simply all over the place on this, but bearing Chuck's post in mind, I'll just say that I can at least partially agree with your general conclusion. I agree that the economy will remain deteriorated for some time, and housing in particular won't "bottom" for awhile longer -- and the bottom will take the form of a 1990s-esque flatline rather than a real bounce back. I do not agree that this will result in "new" points dropping into the 80s, nor resale points in the 40s, unless you mean the odd stripped OKW or VB contract dipping into the high 40s as an outlier. I guess we'll see.

 

[JimMIA]

I continue to think you're simply all over the place on this,

Sorry. I've explained it as best I can.

I do not agree that this will result in "new" points dropping into the 80s, nor resale points in the 40s

If you go back and read my earlier post, you'll see that I was not predicting those price levels. I said they would not surprise me.

If you'd told me a year ago that SSR would be clearing ROFR today at 65 (and lower), that would have surprised me. In fact, I'd probably have said that was nuts. But given the overall state of the economy now and the rapid decline in resale prices (the topic of this thread), new prices in the mid to high 80's or resale prices in the 40's would not surprise me now. And no, I was not referring to odd, stripped contracts.

 

[gkrykewy]

Sorry. I've explained it as best I can.

Perhaps Chuck will permit me to explain my confusion. You said that no one would invest because GOV kept changing the rules. I said that on the contrary, the PPIP seems to have been favorably received by "talking heads", and in turn by the people who you said wouldn't invest. Then you said something general about the budget being bloated. This is what I mean by all over the place, although I think I understand where you're coming from. Like I said, I agree with your conclusion that the economy will remain quite ill for quite awhile, which I think is the important thing re: the topic at hand.

If you go back and read my earlier post, you'll see that I was not predicting those price levels. I said they would not surprise me.

If you'd told me a year ago that SSR would be clearing ROFR today at 65 (and lower), that would have surprised me. In fact, I'd probably have said that was nuts. But given the overall state of the economy now and the rapid decline in resale prices (the topic of this thread), new prices in the mid to high 80's or resale prices in the 40's would not surprise me now. And no, I was not referring to odd, stripped contracts.

Understood. I guess it's seemed to me that OKW and SSR have been stably in the 60s for awhile now, but perhaps that's not the case. It will definitely be interesting to track for the next little while. My impression is that aside from SSR and OKW, most resales have held their value pretty well, certainly relative to other assets. Is this incorrect? I know when I was hoping for a bargain AKV add-on to drop in my lap via resale, I got tired of waiting and bought direct.

 

[Mississippian]

So folks that stay at the Values are a downgrade from those who own at SSR?!

You bet they are! People pay as little as $49 per night to stay at a Value resort. SSR is supposed to be a deluxe resort. I don't think it lives up to it, but it is supposed to be one. So I think the owners are right to be upset at this practice.

 

[Mississippian]

Again, I really don't see where you're coming from on this. There is no single universal pool of "investors" making the same decisions regarding investments. I am an "investor," and you have me scratching my head. In all honesty, your posts here are the first mentions I've seen on the entire internet that regards Chrysler/GM creditors as having been unreasonably wronged somehow.

What has happened with Chrysler and perhaps will happen with GM is absolutely unprecidented in American business history. Secured creditors were forced to give up their claims in favor of unsecured creditors. Unions were given 55 percent of the new company, even though doing so put them ahead of the secured creditors. This company could have been easily liquidated and the secured creditors satisfied, and that is what should have happened. It was literally a confiscation of capital.

You may think this is fine, but who is going to be willing to loan money to a company like Chrysler again? Now that we know that secured claims will not be honored, and that Union thuggery is the name of the game, businesses are going to find it impossible to find money to operate. I guess that means the Obama machine will have to provide the money and control.

 

[Chuck S]

Political posts are no longer allowed on the DIS. This thread is now closed.