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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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Stop Trading Until the Election Is Over

Today is turning out to be the day that most were expecting to see being that it’s the day before the election. Many investors are waiting to see what will happen tomorrow. With the way things are right now in the race, no one really knows what is to come.
As it stands right now, the markets have been holding steady throughout the day. At best it was up about 90 points and so far the lowest it’s been down is 60 points at 3:00pm.
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Reports are coming out that the credit market is tighten up lending to each other, while there really isn’t anyone out there looking to borrowing at the moment. I can relate to both sides to that issue. I’ve been holding off for some time to buy some rental properties for investment purposes. That also includes me being involved in any lending to anyone. So I have decided to hold off on it until the markets stabilize as well as waiting to see what the outcome of the election is.
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Until the election is over I will advise my readers to hold off on doing any trading except for selling some of your profits. I am expecting the market to be quite volatile throughout the day tomorrow. If Senator Obama is leading in the race too early in the day I expect the markets to be down real big. As to it having a rally after the sell off.. who knows.

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The Credit And Housing Crisis Downfall

The stock market has taken a beaten for the month of September (as well as the last twelve months) and I do expect more of the same as the rest of the year. The main reason for it is the credit and housing crisis issues that have plagued us for some time now. I spoke about it before on this site and have voiced my opinion on it.
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I don’t know where many of my readers stand on many issues, but I’m pretty sure that most would agree that this issue came about from the greedy people in the business as well as irresponsible borrowers. Some people out there feel that this issue started in the last few years and the powers-that-be are to blame.
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What people need to do is to go and get the information for themselves because “knowledge is power”. Someone may be able to take your car or your money, but they can’t take away what you learned. Once you learn something, no one can take it from you. This is why I’m putting up this video for my readers. We as investors and traders should know the history that brought us to this problem, so we can reconize the pattern for the future.
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This video is meant to be politically related, but it deals with the history of the credit and housing crisis. (I will tell you that I’m a Libertarian, I don’t agree completely with either the Democrats or the Republicans. I’m an American that believes in a smaller government, and less government involvement in my life). For that reason you need to watch it. If there’s anything that you dispute or disagree with being truthful, then do as the video says and Google any of the information that’s in this video. The video is almost eleven minutes long, but very informative.
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Please feel free to voice your opinion on this video or if you want to vent, be my guest.
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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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Cash Is King

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photo by m360


As the saying goes… “money talks, bulls**t walks”. Nothing works better than cash, because cash is king. The American dollar has gained some strength in the last couple of weeks and with any luck it will get better.


Why is it that less and less people over the last few decades have been using cash less? Let’s take a look at what’s been going on during that time period. Credit cards have been the culprit in the drop of use of the American dollar. That’s because as Americans we are living outside of their means more and more each year. We as Americans are getting very careless with our financial responsibilities by going out too much, competing with our neighbors, as well as thinking that we deserve it right now.
For us to get control of our financial future, we need to work on our present financial condition.
We need to sit down and really look at our finances in a realistic manner. How much is coming in? How much is being spent? What is it being spent on? Is this purchase necessary? These are the questions that you need to ask yourself. Instead of saying “I deserve to buy this for myself”, you should ask yourself “have I earned this and can I afford it”?. We all think to our selves that we work so we are able to live and buy the finer things in life, but what good are those items if you are paying more than you should be.


You want to have all the toys that you can afford. You would be able to buy a lot more if you bought all the things with cash than you would if you paid by credit card. Even with a great credit rating, if you don’t pay it off in full the first month your interest rate would be around 8% at best. Typically the average American household has $7000 in credit card debt and the average rate is 18%, so if you only pay the minimum balance due it would take you over ten years to pay it back. Also keep in mind that the balance will generate about $100 in interest fees each month. How are you to make your money work for you if you give over $1200 each year to someone else? If you do the math you will actually pay back over $18,000 to the card issuer.


Paying cash will make it possible for you to add more money to you savings, retirement account, or just make your money go a lot further.
I’ve paid of all of my debt and have lived that way for many years. There are times that I want to buy something, but I hold off in doing so. What I do instead is I will put money in my portfolio and make investment to increase it. When that’s done I will go ahead and purchase it. If you think about it, I end up paying less for the item by having my money do the work for me. The last big ticket item that I bought was a laptop for $1800, I put a thousand dollars to work for me and in no time it made me the other $800. Think about what you’re doing to yourself every time that you buy something with a credit card. Remember that cash is king.

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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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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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Investment Karma

I believe in the philosophy of karma, the yin and yang of life. What you put into life is what you get out of it. I try to follow that belief in every aspect of my life. Especially when dealing with the stock market. People think that you just put money in an investment and it will take care of it’s self and grow.
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Nothing could be further from the truth.

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If you want your investments to grow, you need to put a lot more, besides money, into it. I’ve spoken before about doing your due diligence. That is the biggest part of what you’ll need to put into the stock market, investment property or any other type of investment plan. With the stock market you need to study the company’ financial statements and read the earnings report. as for the investment properties you need to do inspections, look at the current owner’s income/expense report. If it’s a business you’re looking to purchase, you pretty much need to do the same things.
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I do quite a bit each day toward improving my portfolio as well as this blog. Between the two of them I spend about 6-8 hours each day on research and learning more about what it is that I’m trying to accomplish. It does help that fact that I love what I do.
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The stock market also lives by the rules of karma. Last week the market dropped a couple of 100 points & this week it returned it’s losses with a little more. If you were to pull up the chart of the Dow Industrial average for the last two years, you would see that in that time frame that the DJIA went from 11,011.41 on July 19, 2008 up to 14,164.53 and back down to close at 11,446.66 today. In my opinion a lot of that can be contributed to the fact of the bad karma that was going around in the markets(ie: mortgage/credit crisis). There was a lot of shady things going on then and they’re seeing the results from it. No matter what you refer to it as, karma is intertwined within it. The markets are no different.

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Do what you must in life, but remember that things have a way of coming back to you.

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Investment(s)

The are many different types of vehicles to invest in for your future or even for the present. When people think about investing, they typically think about retirement. Having money for the golden years is why investments are made. You get a job where you can start contributing to your company’s 401K plan & let the “experts” do the work for you for a fee. Wait till you’re 59 1/2 (to avoid penalties) & hope that they did good by you.
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I thought the same thing for quite some time & a few years ago I started to change that way of thinking. Even before I had capitol to invest on my own I was learning the stock market. When I started to invest my money, I wanted it to work for me in the near future since I was enrolled in my company’s 401K plan. What I looked into was an Investment property first. I learned about passive income as a way to subsidize my pay check & soon replace my job completely. I needed to have enough to put down on the down payment. Instead of depositing my weekly contribution in a savings or money market account, I opened a TD Waterhouse account & started to invest in ETF’s & Mutual Funds. I soon had a nice nest egg built up and moved more toward individual stocks that I knew from my research that their fundamentals were solid & that I could make a killing. my knowledge paid off & I was able to purchase a duplex apartment with 20% down. I now have an asset that pays for itself as well as an income.
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I still invest in the stock market & will continue so well into my retirement years. I enjoy what I do & will make money from it since I do my due diligence & leave my emotions at the door.

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