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Is Now The Time To Invest?

During the last two years (2008-2010) we’ve seen the stock market as well as the housing market and financial institutions go through a very rough period of correction. Now in the second half of 2010, average investors are wondering if they should start investing again. Well it depends on what you’re going to invest in.

We are no where at there bottom or the worse of it yet, but at the same time I’m looking at many different investments I may want to get in on. I will say though that the stock market is not one of them at this time. In my opinion, there is no reason for the DOW to be over 10,000 and I do expect it to come back down below 9000. When I do not know, but it will be there in due time.

What about precious metals? There is only a limited amount of gold in this world and it’s one of the few things that will retain it’s value (if not go up) in our present economic condition. I’ve been building a portfolio of just different precious metals. If you’re looking to buy gold make sure you are buying actual gold pieces and not some paper stock that trades off of gold. Between the two, only actual gold will be worth anything when and if our economy crashes.

As for the housing industry, I suggest you take your time and look for solid and profitable deals. The housing market will not turn around any time soon so you will have plenty of time to find the right one for you. We will see foreclosures going on for years to come so prices will stay in the general area if not come down even more. As an investor, you will need to look at properties that will return to good value in five to eight years from now. The days of flipping houses are on hold and will be that way for some time.

Stay away from investing in any financial institution since they are still not sure of what will happen in time with all the government regulations that will be coming down the line. So is it time to start investing? Yes if you take your time and study what it is you want to invest in.

What happened to the stock market today?

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Economic Recovery?

The Federal Reserve Chairman Ben Bernanke stated today that the economic recovery is sustainable. Along with the news of retail sales are up in the last month, one would think that this is the time to get in on the stock market. Well before you do, you need to be aware of a few things first.

The stock market (Dow Jones Industrial Average) has reached a new twelve month high after climbing 12% over the last two months and over 40 % year-to-date. Those are some great impressive gains, but does that mean that the markets will continue on this upward path? Well that’s anyone’s guess.

The last time the Dow was at these levels along with the S&P sitting at 1200, was in September of 2008. You have to ask yourself, “What was the condition of the economy in September 2008?” I did some research into this issue and found that this might not be the time to invest in the stock market.

In Sept., 2008, unemployment was at 6.2%. The foreclosure rate hasn’t slowed down. It’s estimated that 1 in every 538 homes are in foreclosure as of march 2010. The Federal reserve has printed so much more U.S. currency that it’s not even funny.

My point being that you should be waiting for a healthy pull back (8%-10%) before investing any capital.
You also have to look into the future of the economy too. Economics believe that the unemployment rate will still be at 8.4% at the end of 2011. Home prices will remain at near flat levels for the next two years. They also expect the economy to only grow 3% in 2010.

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New Home Sales Report For July

Yesterday the news came out that new home sales jumped 9.6% for the month of July. It was the fourth straight increase in sales. Sales rose to an annual rate of 433,000, up from June’s rate of 395,000. Many are saying that the bottom is definitely in and now is the time to buy, but is that really the case.
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Yes, sales are up more than 30% from the bottom in January, but nowhere near the peak of four years ago. Of course that’s was because of the inflated bubble that was created by the Fannie Mae and Freddie Mac sub-prime loans.
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So does this really mean that the bottom is in and we can expect the economy to turn around? I doubt it. Why I think that is because of the fact that the numbers are (I feel) are mis-leading. Many of the new home sales that have been happening in the last month or so were first-time home buyers. That’s because of the government’s incentive plan for first-time homeowners who qualify for an $8000 tax credit. That in itself is misleading on the fact of it’s a tax credit, not a rebate. Which means of you don’t have enough of tax liability, you won’t be able to write off all of the $8000.
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What does that mean for the industry? Well, home builders saw a jump in their stock price today, but will it be able to maintain those levels? I doubt that too. mainly because when the program will be terminated at the end of November. I believe the market will dry up again with sales. As it is, some builders have already seen a dip in home sales. In Arizona, A.F. Sterling Homes stated that sales in July stalled because the builder couldn’t guarantee the homes would be completed in time to qualify. The industry (real estate agents and builders) are really leaning on Congress to extend the the credit on the grounds of the sales could reverse from their current trend. As a matter of fact, Randy Agron, the vice president of A.F. Sterling Homes was quoted as saying “The real estate market is really a fragile thing. It’s not the right time to take (the tax credit) away”.
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With that in mind, do you really think the bottom is in? It has been proven in the past that when the government gets involved with trying to “save” the economy, it actually extends it by not letting the free market follow it’s natural course. With this program as well as the financial bailouts and “Cash For Clunkers”, we have three major industries being manipulated within the American economy.
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All I can say is…hang on, it’s going to be a bumpy ride.

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Will The Stock Market Retest The Lows?

This past month has been great and the way the “experts” are talking, you would think that the bottoms have been found in the stock markets. If we are to learn anything from history, it’s that it tends to repeat itself. During the Great Depression, the markets experienced bull rallies a few times only to reach a new “bottom. The process was dragged out from 1929 to 1932.
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We only started seeing the signs of a downward spin in November 2007. So what makes them think that we’ve seen a bottom? When the S&P 500 hit 741 and started to climb back up, We heard that this could be the bottom. Only to pull back and fall even further to 666. That level was reached on March 9, 2009, a year and five months after it all started. Throughout that time we also were told that the credit crisis and the housing was so screwed up by “improper practices”. How could this all be figured out and solved in such a short time.
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Now we’re hearing reports about how some banks that received government money, are looking to give it back. On top of that Goldman Sachs just reported that they nearly double what The Street had expected. Something doesn’t make sense and because of that, I’m expecting us to see the markets drop back down to the lows of March 2009.
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Another thing to take into consideration is that Barack Obama stated today in a press conference that we will still see an increase in unemployment as well as foreclosures for some time.
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Do I think that the S&P will fall below 666 soon? That I can’t answer, but I can say that it will be down to that level again before the end of the third quarter of 2009.
In the meantime, I’m going to continue to be a trader and not an investor. I suggest you do the same. If you don’t have time to do your homework on stocks you’re going to invest or trade in, don’t jump in right now. You will see that there will be another opportunity to get back in at lower levels.
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Happy Trading

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What Will Happen To The Investor Class?

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photo by joe shlabotnik

In this election year we have heard a lot about what will happen to the American people more than I can remember since I’ve been voting (which covers over 25 years). One of the major things being spoken about is taxes and yes it’s a topic that is discussed every election, but with the condition of the economy, it’s more important than ever.
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I’ve mentioned in an earlier post that I’m a Libertarian (a party that doesn’t get the recognition it deserves). I believe that our federal government has gotten too big, it spends way too much money than it should. The one true way to reduce taxes is to reduce spending.
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The reason why I bring this to light on a blog that deal solely with the stock market is that this year we could have our investments effected in ways that will hit us on many levels. If some of these ideas come to pass we may have more money pull put of the markets that will continue to cause the markets to fall.
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Take into consideration that if any one political party was to control the Presidency, the Senate as well as Congress, they would be able to mold the laws and pass bills that could take decades to change. At the present time the Democratic party controls the Senate and Congress. With the way Congress has been sitting on their a$$ for the last two years from all the filibustering that causes the delays in decision making, we can’t afford to let most of the candidates go back to Congress to serve this country again.
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Please be aware of the politicians that were involved with the issues that help cause the collapse of the housing market as well as the credit crisis. These candidates will most likely continue to do more of the same if they were to get re-elected.
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As for the Presidency, below is a link to help you think of a few other things that will be effected if the wrong person is voted in office. Remember Wall Street and Main Street are one and the same. Where does average Joe have his 401K plan? On Wall Street, that’s where we all have them.

Target the Investor Class in 2009

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When Is It Time To Take A Loss In A Stock

The economy has taken a beaten in the last year. The credit crisis and the housing market were the leading cause of it all. It’s not surprising that what has happened in the last year is the result of greed and living outside of people’s means.
From the years 2002 to 2007 the growth in this country has been outstanding, but if you really take a hindsight look at it was it real growth or just a bunch of hype. People were taking advantage of the economy and borrowing more money than they could pay back. On top of that there were companies that took advantage of people who didn’t know better or were misinformed.
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Now is the time to face the music. Many people are trying to get their finances and their lives in order by regrouping and/or starting over. I’ve read many articles in regards to homeowners who are trying to sell their homes before they lose it to foreclosure proceedings. They had a chance to sell last year, but thought that the offer price was too low and wanted to wait for their asking price. It seems now that they can’t even get what they were offered back then and are now behind the 8-ball even more.
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The same goes for your portfolio. We all buy stocks and expect them to go up in value, but with the way the economy is going it hasn’t worked out that way all the time. If the stock that you’re invested in is part of your retirement account then it isn’t that bad to wait it out if your research is sound and the fundamentals are strong, but if it’s in a portfolio that is used to subsidize your daily living then it can be nerve-racking as well as scary.
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The biggest dilemma you have to face is… Do you sell at a loss or hold on to see what happens? The choice can only be decided by you and you alone. Many people involve their emotions when they are faced with this and make their choice with those emotions. If you’re down down 20% in a stock then you have to look over the news and fundamentals and make a non-emotional and logical decision. Most companies that are down over 25% don’t come back right a way. You should always be looking at different stocks and sectors to see what is working right now and in the near future, so it may be a wise idea to take the loss and have a different stock make the loss back for you. In most cases it will work out for you better if this strategy is followed.
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P.S. Want to learn more about the stock market? take a free two week trail with Jim Cramer from TheStreet.com

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Foreclosure Investments

Last month I talked about the foreclosure issues in this country and who’s to blame. I do feel bad for the people who are behind the 8-ball and are trapped in the corner looking for some relief, but I’m an investor and I know that the time is now to start looking for some properties that are on the market (many of them are foreclosure properties). I live in Florida and there are many homes right here in my city that are up for grabs, some of them are duplexes and tri-plexes that other investors have and are taken a beaten with the properties.
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I’ve been looking at these investments for over six months now and most of them have come down on their asking price. One particularly that I have in mind has come about 25% since I first looked at it in February. The owner is in talks with the bank and so far he’s been able to hold on to it. At the price that he was asking for back then, it wasn’t a wise investment. Now that he’s come down to his new price, It’s really looking appealing. I will be talking to my Realtor after the holiday weekend to have her make him an offer that will be about 15-20% lower than what he’s asking. If he refuses to budge on the price that will be OK. If he takes my offer then it just might be a good investment. Of course I will have to look at his financial statements as well as the rent-rolls to make that final decision. The way I write my contracts, they all have several clauses that if for one reason or another I don’t think that the purchase is not a good deal, then I have a way to exit the agreement.
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I don’t know if you invest in real estate or not, but for me it’s a great way for passive income. You might want to look into it.

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Are You In Need Of Money? Be Careful.

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photo by MattC

The credit crisis has been one hell of a ride for some, but for others it’s been nothing short of a nightmare. There are many who are guilty for this problem that we’re experiencing and I think you readers know who I mean. Just in case you’re new to this blog, please read this post I wrote about Foreclosure Issues


If you’re one of the many that are behind on their bills and payments, be careful of different tactics that are available to you. Quite a few of these options will only put you further in the hole. As a matter of fact I was going through my feed and saw this article from CNN Money titled The best (and worst) ways to raise fast cash.


I looked over the list and in my opinion it should really be titled “Here’s about three or four ideas to help you and over a dozen other ideas that will make it worse”.
When you are in debt, the last thing you want to do is borrow more money. One of the ideas they offer is to go through Prosper where if your FICO score is 720 or better, you can get a loan at 9.4%. That’s a pretty good rate when you borrow hard-money, but if you’re in dire straits already most likely you’re credit is not that high. If you go to their site, they advertise rates as low as 6.58% and I’m sure that you’ll have to jump through hoops to get a rate that low.


When I talk about buying into any company I say to do your due diligence and that goes for your financial decisions too. When you look over your list of options, leave you emotions at the door and make your choice logically and wisely.

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Foreclosure Issues

One of the biggest stories in recent months has been the foreclosure problems and the credit crisis in America. Many people have lost their homes already and more are in danger of the same situation. I myself know five people who are faced with it. I feel bad for all that are involved in this mess, but who is really to blame and who should bear the burden of it all.
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Well, let’s start with the blame. First we have the banks and mortgage companies that came up with the idea of an adjustable fixed mortgage for people with bad credit or not enough for the down payment. It seems that they were not forth coming with all the stipulations in the contract and how it would effect the monthly payments. They knew that they shouldn’t have lowered the standards by which someone qualifies for a loan. The mess that they’re in right now with all the write downs and the price of their shares are because of their own actions, Boo Hoo. Maybe the CEO and the executives should give back all those millions that they received as bonuses back to the company and the shareholders(dream on).
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What about the appraisers that inflated the prices of those homes knowing damn well that their assessment weren’t near the actual value of the house. It’s came out recently that some were being paid “under-the-table” to exaggerate the prices(oh, what a surprise).
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As for the people who applied for those loans. They too need to take some of the blame for not reading the fine print and understanding the break down of the contract. One person I know that is in this situation, actually refinanced over the phone with a mortgage broker. I’ve never signed anything in my life without reading everything or having an attorney go over the papers for me. Don’t get me wrong, I’ve been heavily in debt and had to dig my way out of it myself. I didn’t blame the credit card companies, I blamed myself.
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Now for who should bear the burden of this and help all these people out. Like I said before, I worked on fixing my credit with the help of the CC companies. I work out a plan and stuck to it. When my wife and I bought our house, we didn’t go ahead and buy our “dream home”. We looked around for a house that we would be able to afford the monthly payments. I also did my due diligence on what was involved with having a loan(it was our first and still the home that we purchased). When we paid off our home, we did it with our money. We weren’t able to go to some government agency and say “we cant pay for our home, help us”.
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The only solution to this whole crisis is to have all people who were involved in each loan come back to the table and work out a new contract. Maybe the only involvement the government should have is to oversee and regulate the problem, not throw our tax dollars to other people’s mistake.
Then again, what do I know.
If you have any comments or insight to this post, please do so. I welcome all opinions.

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