Investment Jungle is currently hosting the Festival of Stocks #38.
He actually read all the posts and gave his own opinions on them! Great Job! Check them out.
Food And Drug Chief Gets Death
China sentenced its ex-food and drug chief to death for accepting bribes.
Quite a harsh punishment for accepting $800,000 in bribes. Pity the US doesn't have laws like that. It would do wonders for the integrity of system. Here we've become conditioned to accept that politicians will lie and accept bribes and grant favors to people who grease their palms.
I'm against capital punishment because the cost of error is too high. However, in the case of politicians, I'm willing to make an exception. Corrupt politicians should be given the death penalty or reduced sentences for lesser crimes.
Some of the other possible sentences could be
1. Asset confiscation and a life as a social worker on a $24,000 salary. No other income or jobs permitted.
2. Public flogging
3. Exile to a deserted island.
4. Neutering
What do you guys think?
Quite a harsh punishment for accepting $800,000 in bribes. Pity the US doesn't have laws like that. It would do wonders for the integrity of system. Here we've become conditioned to accept that politicians will lie and accept bribes and grant favors to people who grease their palms.
I'm against capital punishment because the cost of error is too high. However, in the case of politicians, I'm willing to make an exception. Corrupt politicians should be given the death penalty or reduced sentences for lesser crimes.
Some of the other possible sentences could be
1. Asset confiscation and a life as a social worker on a $24,000 salary. No other income or jobs permitted.
2. Public flogging
3. Exile to a deserted island.
4. Neutering
What do you guys think?
Put Your Mortgage On Your Credit Card & Earn Rewards
American Express has now announced that it will allow borrowers to put their mortgage on their amex cards get earn points!
Its great for AMEX because some of the borrowers will be late and incur penalties of 15-28%! Of course of the savvy ones will also earn a lot more reward points than they normally could.
If I could put all my rental properties on this program, I could probably earn a free ticket to anywhere in the world every year! I'm not a big fan of this idea in principle, but a free ticket is enticing.
Anyway, you can read more about it here.
Its great for AMEX because some of the borrowers will be late and incur penalties of 15-28%! Of course of the savvy ones will also earn a lot more reward points than they normally could.
If I could put all my rental properties on this program, I could probably earn a free ticket to anywhere in the world every year! I'm not a big fan of this idea in principle, but a free ticket is enticing.
Anyway, you can read more about it here.
Average Home Size Increasing
According to this article, McMansions gain popularity despite the housing slump, national new home sizes are averaging 2,400 sq ft!
Thats a huge increase from about 40 years ago. In the sixties, the average home was about 1100 sq ft with 3 bedrooms and 1 bath.
As the standard of living keeps growing I can understand the need for more living space, however after a point it becomes ridiculous. It seems difficult to understand that 20% of all new home construction be for "atleast 4 bedroom homes" when the average family size is 2.6. Somehow I can't see that the economy has been growing all that much in the past several years where people can afford to upgrade to such large houses.
I can't help but wonder how many buyers got an option-ARM loan or an interest-only adjustable mortgage and can't really afford to buy it with a "traditional" 20% down 30 year amortized mortgage.
Also, as the cost of oil and gas increases, heating these homes will also become increasingly difficult.
I wouldn't be surprised to see the number of foreclosures sky-rocket over the next few years. According to what I heard from a friend, foreclosures in California for the 1st quarter 2007 are at 86,000. This is opposed to 800 for the entire year in 2006. (I haven't verified the numbers at all, but I believe the trend).
Thats a huge increase from about 40 years ago. In the sixties, the average home was about 1100 sq ft with 3 bedrooms and 1 bath.
American homes, on average, are nearly twice as large as those in many European countries, including Britain, France and Germany. Only Luxembourg comes close among European nations, with average homes about three-quarters the size of those in the United States.
U.S. homes are also becoming more expensive. The median home value jumped more than 40 percent form 1990 to 2005, to about $167,500.
As the standard of living keeps growing I can understand the need for more living space, however after a point it becomes ridiculous. It seems difficult to understand that 20% of all new home construction be for "atleast 4 bedroom homes" when the average family size is 2.6. Somehow I can't see that the economy has been growing all that much in the past several years where people can afford to upgrade to such large houses.
I can't help but wonder how many buyers got an option-ARM loan or an interest-only adjustable mortgage and can't really afford to buy it with a "traditional" 20% down 30 year amortized mortgage.
Also, as the cost of oil and gas increases, heating these homes will also become increasingly difficult.
I wouldn't be surprised to see the number of foreclosures sky-rocket over the next few years. According to what I heard from a friend, foreclosures in California for the 1st quarter 2007 are at 86,000. This is opposed to 800 for the entire year in 2006. (I haven't verified the numbers at all, but I believe the trend).
Review Of OptimusFutures.com
I was asked to review Optimus Trading website, http://www.optimusfutures.com as part of my ReviewMe membership, which pays me to review relevant websites.
Why High Gas Prices Don't Matter
A lot of poeple have been complaining about the price of gas at the pump. In fact, Congress has enacted an anti-gouging law that provides upto 10 years in jail and upto $150 million in penalties.
But my contention is that high gas prices don't make any difference.
Gas isn't expensive
People are willing to pay $4 for a cup of $tarbucks coffee. That works out to about $1,250 per barrel. Compared to that, $65 for a barrel of light sweet crude sounds pretty cheap!
Besides this, compared to what 93% of the rest of the world pays at the pump, its still cheaper in the US.
High gas prices do not cause inflation
Some of you might think that since we use oil and gas in almost every aspect of our lives from commuting and transporting products to making plastics and profilatics that an increase in the price of oil would lead to inflation.
Well in theory thats true, but we're experiencing a much higher rate of inflation through the devaluation of the dollar and mindless government spending (through never-ending government expansion, ill-thought out entitlement programs and a very expensive war). The inflation caused by higher oil prices doesn't compare to this.
The higher oil prices don't affect our lifestyle
The only people who really feel the pinch at the pump are the people who drive SUVs and SAVs (Suburban Assalt Vehicles). Of course, if they couldn't afford the gas they wouldn't have bought them in the first place.
And if they really couldn't afford them to begin with, they should sell them and buy a Honda Fit, a Toyota Yaris or a Nissan Versa. They could also cut down on the number of miles they drive and walk a little bit too. (66% of US adults are overweight or obese).
Before you start complaining about poor people having to spend an extra $1,000/year because of higher gas prices, I know a lot of poor people who drive $25,000 cars. If they spent $15,000 on one of the cheaper cars mentioned about, the $10,000 they'd save would pay for nearly 100,000 miles worth of gas. Yet another reason to sell your car if you can't afford it.
Funny how some of these "poor" people I know can afford a $1,000 Plasma TV and $100/month for every single cable tv.
What about the really poor people?
There are probably a lot of poor people living below the poverty level for whom even a $200/year increase will break their budget. Sadly, these people have bigger problems. I can only suggest two things.
Buy a bicycle and read this article on how to live off $12,000 a year.
Gas prices are going to go even higher. Most of the oil's producers are at maximum capacity and the demand from India and China is growing exponentially. If you're feeling the pain now, imagine what it'll be like in a couple of years when oil is $100/barrel and you're paying $5.50 at the pump?
But my contention is that high gas prices don't make any difference.
Gas isn't expensive
People are willing to pay $4 for a cup of $tarbucks coffee. That works out to about $1,250 per barrel. Compared to that, $65 for a barrel of light sweet crude sounds pretty cheap!
Besides this, compared to what 93% of the rest of the world pays at the pump, its still cheaper in the US.
High gas prices do not cause inflation
Some of you might think that since we use oil and gas in almost every aspect of our lives from commuting and transporting products to making plastics and profilatics that an increase in the price of oil would lead to inflation.
Well in theory thats true, but we're experiencing a much higher rate of inflation through the devaluation of the dollar and mindless government spending (through never-ending government expansion, ill-thought out entitlement programs and a very expensive war). The inflation caused by higher oil prices doesn't compare to this.
The higher oil prices don't affect our lifestyle
The only people who really feel the pinch at the pump are the people who drive SUVs and SAVs (Suburban Assalt Vehicles). Of course, if they couldn't afford the gas they wouldn't have bought them in the first place.
And if they really couldn't afford them to begin with, they should sell them and buy a Honda Fit, a Toyota Yaris or a Nissan Versa. They could also cut down on the number of miles they drive and walk a little bit too. (66% of US adults are overweight or obese).
Before you start complaining about poor people having to spend an extra $1,000/year because of higher gas prices, I know a lot of poor people who drive $25,000 cars. If they spent $15,000 on one of the cheaper cars mentioned about, the $10,000 they'd save would pay for nearly 100,000 miles worth of gas. Yet another reason to sell your car if you can't afford it.
Funny how some of these "poor" people I know can afford a $1,000 Plasma TV and $100/month for every single cable tv.
What about the really poor people?
There are probably a lot of poor people living below the poverty level for whom even a $200/year increase will break their budget. Sadly, these people have bigger problems. I can only suggest two things.
Buy a bicycle and read this article on how to live off $12,000 a year.
Gas prices are going to go even higher. Most of the oil's producers are at maximum capacity and the demand from India and China is growing exponentially. If you're feeling the pain now, imagine what it'll be like in a couple of years when oil is $100/barrel and you're paying $5.50 at the pump?
What To Do In Case Of A Kitchen Fire
Here's a very short video on what to do in case of a kitchen fire. I'm filling it under personal finance since it could save your house (and maybe even your life).
That Crazy Loonie
In the wake of the commodities boom, the Canadian currency has appreciated almost 50% against the U.S. dollar since the beginning of 2002. In the last three months alone, strong economic data, inflows from mergers and acquisitions, buoyant commodity prices and above-target core inflation resulted in a rise of the Canadian dollar (CAD) of about 8%.
I'm really happy since I own a lot of Canadian Income Funds which pay out monthly dividends in Canadian dollars. So as the Loonie appreciates, my monthly dividend increases too!
Will the Loonie ever achieve parity with the US Dollar though? Some analysts are predicted it to hit $0.96 = C$1.00 which is awfully close.
What do you guys think?
I'm really happy since I own a lot of Canadian Income Funds which pay out monthly dividends in Canadian dollars. So as the Loonie appreciates, my monthly dividend increases too!
Will the Loonie ever achieve parity with the US Dollar though? Some analysts are predicted it to hit $0.96 = C$1.00 which is awfully close.
What do you guys think?
Hogs Pigging Out And An Ethanol Alternative
According to an article in the Wall Street Journal, the rush to produce ethanol has resulted in sharply higher prices for corn. Corn is used to feed cattle and pigs and as a result of the price increase, farmers are feeding their pigs trail mix, candy and Top Ramen noodles!
Its only a matter of time before corn prices become too expensive for human consumption in the US. Already its too expensive for people in Mexico and being a major ingredient in their diet, thats having an inflationary effect on their lifestyle.
Rather than using corn-based ethanol, I wish the government would look into using vegetable oil instead. There are several kits available for diesel cars that allow the owners to switch to "used" vegetable oil whenever its available. In Southern California, there are companies like Socal Greasers that will fit your diesel car with a converter kit for a reasonable price.
So next time you stop by a fast-food place for a meal you can ask the manager for some of their used cooking oil. They have to pay to dispose of it and are usually happy to give it to you for free. It burns much cleaner than gasoline and your exhaust has a nice french-fry smell too!
Besides trail mix, pigs and cattle are downing cookies, licorice, cheese curls, candy bars, french fries, frosted wheat cereal and peanut-butter cups. Some farmers mix chocolate powder with cereal and feed it to baby pigs. "It's kind of like getting Cocoa Puffs," says David Funderburke, a livestock nutritionist at Cape Fear Consulting in Warsaw, N.C., who helps Mr. Smith and other farmers formulate healthy diets for livestock.
California farmers are feeding farm animals grape-skins from vineyards and lemon-pulp from citrus groves. Cattle ranchers in spud-rich Idaho are buying truckloads of uncooked french fries, Tater Tots and hash browns.
In Pennsylvania, farmers are turning to candy bars and snack foods because of the many food manufacturers nearby. Hershey Co. sells farmers waste cocoa and the trimmings from wafers that go into its Kit Kat bars. At Nissin Foods, maker of Top Ramen and Cup Noodles, farmers drive to a Lancaster, Pa., factory and load up on scraps of the squiggly dried noodles, which pile up in bins beneath the assembly line. Hiroshi Kika, a senior manager at the company, says the farm business is "very minor" but helps the company's effort to "do anything to recycle."
Mr. Smith says he's paying about $63 to feed a single pig for five or six months before it goes to market -- up 13% from last year. His costs would be even higher if he didn't augment his feed with trail mix, which he says helps him save on average about $8 a ton on feed. This year, Mr. Smith has bought enough trail mix to feed about 5,000 hogs, and that will save him about $40,000.
Its only a matter of time before corn prices become too expensive for human consumption in the US. Already its too expensive for people in Mexico and being a major ingredient in their diet, thats having an inflationary effect on their lifestyle.
Rather than using corn-based ethanol, I wish the government would look into using vegetable oil instead. There are several kits available for diesel cars that allow the owners to switch to "used" vegetable oil whenever its available. In Southern California, there are companies like Socal Greasers that will fit your diesel car with a converter kit for a reasonable price.
So next time you stop by a fast-food place for a meal you can ask the manager for some of their used cooking oil. They have to pay to dispose of it and are usually happy to give it to you for free. It burns much cleaner than gasoline and your exhaust has a nice french-fry smell too!
New Million Dollar Coin
In part as a marketing exercise, The Royal Canadian Mint has produced a $1 million face value coin containing 100kg of .99999 pure gold.
With gold currently trading at $660 per ounce and each kilogram containing 31.1 ounces, the actual cost of the gold in the coin is worth just over $2.5 million USD!
It seems to be part of a marketing exercise to promote its .99999 pure gold Maple Leaf bullion coin. Current Maple Leaf gold coins are .9999 pure. In contrast, South African Krugerrands, while containing a full ounce of fine gold, are only .9167 percent pure with the balance made up with copper, so they actually weigh more than an ounce.
Beware The Chinese Stock Market
On the front page of today’s South China Morning Post, there’s a quote from Li Ka-shing, Asia’s richest man.
If any of you own China Funds it might be a good idea to lighten up on them now. Li Ka-shing didn't get to be Asia richest person by being dumb!
Here's a comparison between the Shanghai Stock Market Index and the Dow Jones Industrial Average.
If this doesn't look bubblicious, I don't know what does!
Note: There's a difference between the Shanghai Mainland stock market and the Hong Kong Stock Market. The Shanghai Stock Market is where the locals and Jim Rogers trade. The big multi-national companies like PTR trade on the Hong Kong Market which hasn't had such a speculative run-up.
Also of interest is this note from the China Fund (CHN), dated April 30th 2007.
Hmmm....200,000 illiterate poor farmers/workers lining up to open a brokerage account doesn't look like a market top? ok, so they don't believe that the market's over-valued. But then why are they acting like it is? Here's a quote from a few paragraphs later.
Ah, so they want to buy the somewhat undervalued Taiwan stock market and the Hong Kong Market instead of mainland China! Atleast they're not as stupid as you pretend to be!
Disclaimer: I own a miniscule amount of PetroChina (PTR) in my Roth. PTR is traded on the HK stock exchange. I'm not selling it but I'm not actively encouraging you to buy it or anything else, except maybe gold ;-)
As a Chinese, I am worried about the mainland stock market. History shows that any phenomenon whereby shares are priced at 50 to 60 times forward earnings will end in a disaster. And any economic fluctuation in the mainland will absolutely hit Hong Kong.
In a sharply volatile stock market, small investors will be the victims in the end.
If any of you own China Funds it might be a good idea to lighten up on them now. Li Ka-shing didn't get to be Asia richest person by being dumb!
Here's a comparison between the Shanghai Stock Market Index and the Dow Jones Industrial Average.
If this doesn't look bubblicious, I don't know what does!
Note: There's a difference between the Shanghai Mainland stock market and the Hong Kong Stock Market. The Shanghai Stock Market is where the locals and Jim Rogers trade. The big multi-national companies like PTR trade on the Hong Kong Market which hasn't had such a speculative run-up.
Also of interest is this note from the China Fund (CHN), dated April 30th 2007.
Our returns in April came mostly from the A-share market, which is building up a good head of steam. The 'B word' is increasingly appearing in commentaries on the market, but as veterans of the late-80s bubble in Japan, when any stock under 30X was considered dirt cheap, we think this bubble will inflate still further. There have been disparaging comments about panic buying by local investors, now opening stock accounts at the rate of about 200,000 per day. We think they are reacting perfectly rationally to extremely high earnings growth (34% in 2006, accelerating in the first quarter of 2007) and negative real interest rates (Chinese banks only pay 2.2% after tax on one-year deposits, but the latest official inflation number was 3.3%). Ahead of the 17th party congress in October, it seems unlikely that Chinese politicians will make the 'courageous' decisions necessary to stop the market (big increases in interest and exchange rates), so they will continue to fiddle in vain with increasing equity supply and administrative guidance.
Hmmm....200,000 illiterate poor farmers/workers lining up to open a brokerage account doesn't look like a market top? ok, so they don't believe that the market's over-valued. But then why are they acting like it is? Here's a quote from a few paragraphs later.
The Fund is 93.5% invested with holdings in 65 companies. In April we began a big switch, selling US$19 million of A-shares to cut the Fund’s weighting there to 24.1%, whilst buying a net US$46m of the laggard, low-priced Taiwan market to lift the Fund’s exposure there to 29.4%. We believe that the A-share market has further to run, but Taiwan looks better when risk is balanced against potential reward. The NT dollar has also recently depreciated against the weak US dollar, never mind the mighty renminbi.
In addition to the broad-based buying of Taiwan favourites (Fu Hwa Financial, Formosa Petrochemical, Wah Lee, Synnex, Lien Hwa, Wistron Neweb and Taiwan Secom) the Fund received miniscule allocations to two hot Hong Kong IPOs, Yangzijiang Shipbuilding and China Molybdenum.
Ah, so they want to buy the somewhat undervalued Taiwan stock market and the Hong Kong Market instead of mainland China! Atleast they're not as stupid as you pretend to be!
Disclaimer: I own a miniscule amount of PetroChina (PTR) in my Roth. PTR is traded on the HK stock exchange. I'm not selling it but I'm not actively encouraging you to buy it or anything else, except maybe gold ;-)
Kiyosaki's Words of Wisdom
There is a saying that goes, "When your picture appears on the cover of Time Magazine, your career is over." If you have access to the June 13, 2005 issue of Time Magazine, you will see a picture of a man hugging his home. The title and subtitle say, "HOME SWEET HOME: Why we're going gaga over real estate."
There is another saying that goes, "As General Motors goes, so does the U.S." Well, today, both General Motors and Ford have had their corporate bonds downgraded to "junk bond" status.
Rich dad would say, "As one party ends, another begins." This real estate bubble has made many people very, very, rich. I hope it has made you rich. It has certainly made Kim and I very, very rich. But in my opinion, this party is over... so see you at the next party.
Despite his being widely disliked, I think Kiyoski makes some excellent points. The real estate boom is over (especially in places like California and Florida). You have to blind and deaf (or maybe just incredibly naive) to think otherwise.
The US government is essentially bankrupt. It has trillions of dollars worth of debt on the books. Not a good sign.
But there's always a bull market somewhere. If you keep your eyes and ears open, you'll always make money. You just need to get there before everyone else. As Milton Keynes once said, "The art of investing is anticipating the anticipations of others!".
PS: Kiyosaki was quoted from an August 2005 article which you can read here.
So, Tell Me About Yourself
One of the questions I dread at interview time is the "So, tell me about yourself" question. I usually never have a clue how to answer this. Although in the past 2 years, I have become a lot better at marketing myself and a lot more perceptive of what employers are actually trying to find out.
But its usually these questions that stump me. I once interviewed at Sony, and one of the programmers asked me "so, why do you want to work here?". Unfortunately, I was speechless. I think he was trying to break the ice and by stumbling I just made it very awkward and I'm appalled that I couldn't think of anything nice to say about Sony. All I had to say was "coz Sony rocks!". Of course, I didn't get the job and I don't blame them. I certainly wouldn't hire anyone who didn't have anything good to say about my company!
Since that experience, I've gotten slightly better at interviewing but I until I read The interview that lasts for an hour over at Career Strategist, I didn't really have an idea of how to lead an interview or even start one firing on all cylinders.
Its a somewhat long post, but by far the best I've ever read on that topic. It covers all the salient points concerning an interview including do's and don'ts and what questions to ask the interviewer at the end.
Good luck with your next interview!
But its usually these questions that stump me. I once interviewed at Sony, and one of the programmers asked me "so, why do you want to work here?". Unfortunately, I was speechless. I think he was trying to break the ice and by stumbling I just made it very awkward and I'm appalled that I couldn't think of anything nice to say about Sony. All I had to say was "coz Sony rocks!". Of course, I didn't get the job and I don't blame them. I certainly wouldn't hire anyone who didn't have anything good to say about my company!
Since that experience, I've gotten slightly better at interviewing but I until I read The interview that lasts for an hour over at Career Strategist, I didn't really have an idea of how to lead an interview or even start one firing on all cylinders.
Its a somewhat long post, but by far the best I've ever read on that topic. It covers all the salient points concerning an interview including do's and don'ts and what questions to ask the interviewer at the end.
Good luck with your next interview!
Daimler Pays To Get Rid Of Chrysler
After acquiring Chrysler in 1998, Daimler Chrysler AG has cried uncle and found someone to take the loss making unit off their hands. Private Equity firm Cerberus, is paying Chrysler (note: thats Chrysler, not Daimler) $7.5 Billion to acquire 80% of it. Daimler is also chipping in approximately $650 million to get rid of $18 Billion of pension and health care liabilities.
You have to be desperate when you pay someone to take over a business! Not entirely sure what Cerberus gets out of it. I think it'll probably be a strip and flip deal that will entail taking it public again and huge profits for Cerberus (and not the subsequent stockholders). Although, public-private-public deals like Burger King (BKC) have done pretty well (even if the initial period was a bit rocky).
I saw a news item about India introducing $3,000 cars. I don't know if theres a market for such "toys" in the US, but I'm sure the US auto-manufacturers are worried. Plus, there's a good chance that we'll see a recession late this year. (33% chance of recession according to Greenspan, although to be fair his exact words were "2-1 chances we won't see a recession" which is effectively the same thing only with a positive spin on it!)
You have to be desperate when you pay someone to take over a business! Not entirely sure what Cerberus gets out of it. I think it'll probably be a strip and flip deal that will entail taking it public again and huge profits for Cerberus (and not the subsequent stockholders). Although, public-private-public deals like Burger King (BKC) have done pretty well (even if the initial period was a bit rocky).
I saw a news item about India introducing $3,000 cars. I don't know if theres a market for such "toys" in the US, but I'm sure the US auto-manufacturers are worried. Plus, there's a good chance that we'll see a recession late this year. (33% chance of recession according to Greenspan, although to be fair his exact words were "2-1 chances we won't see a recession" which is effectively the same thing only with a positive spin on it!)
New Book By Monish Pabrai
Monish Pabrai is being called the 'young Warrent Buffett'. He's been returning 30% annual returns for his investors, similar to what Warren Buffett had been returning in the initial stages of his career.
He's come out with a new book:
The Dhandho Investor: The Low - Risk Value Method to High Returns
Based on the fact that his previous book, Mosaic: Perspectives on Investing is now selling for about $495, it might be worth picking up a copy as an investment, even if you don't like reading!
I happened to meet Mr. Pabrai when he was giving a speech in Orange County a year ago and was lucky to pick up a signed copy of Mosaic. Signed copies of that book have sold for $2,500!!! I hope I didn't throw it away, it was lying in my car trunk for the longest time.
I haven't read the new book yet, but its next on my list (after I finish The Black Swan: The Impact of the Highly Improbable which is an awesome book on the philosophy on improbably events affecting investing).
He's come out with a new book:
The Dhandho Investor: The Low - Risk Value Method to High Returns
Based on the fact that his previous book, Mosaic: Perspectives on Investing
is now selling for about $495, it might be worth picking up a copy as an investment, even if you don't like reading!I happened to meet Mr. Pabrai when he was giving a speech in Orange County a year ago and was lucky to pick up a signed copy of Mosaic. Signed copies of that book have sold for $2,500!!! I hope I didn't throw it away, it was lying in my car trunk for the longest time.
I haven't read the new book yet, but its next on my list (after I finish The Black Swan: The Impact of the Highly Improbable
which is an awesome book on the philosophy on improbably events affecting investing).
Housing Demand Drys Up In Southern California
According to Hagerty's article in the WSJ, Mortgage Woes Force Banks To Take Hits to Sell Homes,
Unfortunately I was in El Centro for the weekend so I missed the auction that was held at the San Diego Convention Center. (But I did see premium gas selling for $3.99 in El Centro, sand dunes, and a gas station for sale with an estimated cash on cash return of 38% that my friend was buying).
I've been harping on and on for nearly 2 years how the market here is ripe for a correction. Finally, some real validation!
An auction of nearly 100 foreclosed homes here Saturday showed that mortgage lenders are having to accept huge discounts in some cases to unload such properties.
A surge of foreclosures over the past year or so has left lenders struggling to sell a growing backlog of homes.
At the San Diego sale, houses and condos typically sold for about 30% below the previous sale or appraisal prices. In a few cases, the discounts were around 50%.
But Ramsey Su, a San Diego investor and former real-estate broker specializing in foreclosed properties, said prices were surprisingly low on some homes and the auction showed that "demand is not that strong."
The soaring prices of the first half of the decade priced many people out of the market, and lenders' recent tightening of standards has made it harder for others to get loans. A glut of condominiums also is weighing on the market. Peter Dennehy, a senior vice president at Sullivan Group Real Estate Advisors, a research firm here, estimates that at the current sales rate there are enough condos on the market to last about 29 months.
Unfortunately I was in El Centro for the weekend so I missed the auction that was held at the San Diego Convention Center. (But I did see premium gas selling for $3.99 in El Centro, sand dunes, and a gas station for sale with an estimated cash on cash return of 38% that my friend was buying).
I've been harping on and on for nearly 2 years how the market here is ripe for a correction. Finally, some real validation!
Government Programs Getting Bigger.
Here's some interesting info.
I hate paying taxes. Here's another humorous look at our current tax system really works.
Gary Shilling, an economist in Springfield, N.J., figures that 52.6% of Americans, including dependents of direct recipients, "now receive significant income from government programs," the Christian Science Monitor reported.
Seven years ago, that number was 49.4%. And back in 1950, only a mere 28.3% of Americans relied on Washington. That really shows how government welfare has expanded over the last half century.
Investor's Business Daily puts all this in perspective: "The left delights in shrieking about how the rich beat down the poor, about how the wealthy benefit from the tax cuts at the expense of those at the bottom. But the top 5% of income earners pay 57.1% of all federal income taxes. At the same time, 45 million Americans, many of them in the lower income grouping, pay no taxes at all. Instead of the rich getting richer while the poor get poorer, the rich are paying a growing share of the tax burden while the poor's share shrinks."
I hate paying taxes. Here's another humorous look at our current tax system really works.
Recession Proof Living
Here's a somewhat decent article on ways to recession-proof your life.
Most of it is common sense. It can be summed up rather simply. Don't over-spend, over-leverage, over-invest or over-work. Look for side-income opportunities and move if the local economy sucks.
Another aspect is what to invest in. Wealth Building Lessons has a good article on current investment opportunities that would also make good investments during a recession.
Smart money recommends investing in bonds during a recession.
Meanwhile Eric Haller suggests Prisons are the ultimate recession investment.
Maybe Rick Hilton can dream of an Hilton chain of prisons specially catered to the unruly offspring of the rich and famous. He can hire Paris Hilton as consultant on the project, now that she'll have the relevant work experience!. Yet another arrow in the quiver for "accomplished" actress, singer, writer, night club owner(well sort of), fashion designer and drunk driver!
Most of it is common sense. It can be summed up rather simply. Don't over-spend, over-leverage, over-invest or over-work. Look for side-income opportunities and move if the local economy sucks.
Another aspect is what to invest in. Wealth Building Lessons has a good article on current investment opportunities that would also make good investments during a recession.
Smart money recommends investing in bonds during a recession.
Meanwhile Eric Haller suggests Prisons are the ultimate recession investment.
Maybe Rick Hilton can dream of an Hilton chain of prisons specially catered to the unruly offspring of the rich and famous. He can hire Paris Hilton as consultant on the project, now that she'll have the relevant work experience!. Yet another arrow in the quiver for "accomplished" actress, singer, writer, night club owner(well sort of), fashion designer and drunk driver!
Detroit Downtown Real Estate Is Hot
According to Bloomberg,Luxury Condo Developers are invading Downtown Detroit.
$1 million dollar penthouses and other luxury condos are going up alongside vacant skyscrappers in Downtown. Several ex-atheletes are joining in too.
Thats great, but where are the jobs? Job growth and population growth fuel the demand side of the equation. Selling a few hundred over-priced condos doesn't turn the city around. Neither does setting up gambling dens (or casinos as they're now called!). The city needs real jobs.
For the past 20 years, the median salary and the population has been dropping every year. Doesn't sound like a "tipping point" to me, even if you can buy homes for $10,000. But enough people believe that, someones definitely going to make some money!
$1 million dollar penthouses and other luxury condos are going up alongside vacant skyscrappers in Downtown. Several ex-atheletes are joining in too.
Bob Bartlett is buying a million- dollar condominium atop a historic hotel in Detroit -- the U.S. city with the highest unemployment rate, the worst violent-crime rate and thousands of abandoned houses.
It's a city that outsiders underestimate, he says.
``It is a viable place to live, and I think investment in the city of Detroit is a smart move,'' said Bartlett, a Michigan native who owns ReviewWorks, an insurance cost-containment company.
Bartlett is leaving the affluent suburb of Birmingham for a 3,900-square-foot (360-square-meter) penthouse in the downtown Book-Cadillac Hotel, renovated after sitting vacant and decaying for more than 20 years.
Only a handful of the 66 condos remain to be sold in the building, which also will house a 455-room Westin hotel. Nearby, more luxury condos and three casinos with hotels are under construction.
Bartlett represents a counterintuitive wave of investment in Detroit, where years of economic decline caused by racial divisions and a struggling auto industry eroded the population and left acres of homes selling for less than $10,000.
Thats great, but where are the jobs? Job growth and population growth fuel the demand side of the equation. Selling a few hundred over-priced condos doesn't turn the city around. Neither does setting up gambling dens (or casinos as they're now called!). The city needs real jobs.
For the past 20 years, the median salary and the population has been dropping every year. Doesn't sound like a "tipping point" to me, even if you can buy homes for $10,000. But enough people believe that, someones definitely going to make some money!
Paris Hilton Gets A Nude Sculpture
Shock scupltor Daniel Edwards just released a Paris Hilton Autopsy Sculpture. She's naked, wearing a prom-queen tiara, here legs spread open and has a cellphone in her hand. Her lovable doggie, tinkerbell is also featured. Its in pretty poor taste but he trys to put a positive spin on it by saying it'll deter teenage drinking. (yeah, just like trailer-trash barbie deters promiscuity)
Anway, you can check out the picture and decide for yourself.
Daniel Edwards is most famous for his god-awful nude Britney Spears giving birth sculpture.
Anway, you can check out the picture and decide for yourself.
Daniel Edwards is most famous for his god-awful nude Britney Spears giving birth sculpture.
Top 5 Ways To Go Broke
Ever wonder why some people go absolutely broke. Not like Donald Trump who had a negative net worth of a Billion Dollars but still lived lavishly. And maybe not in a totally homeless sort of way, with a shopping cart full of the clothes and tinned food. But so broke that it hurts and your ATM won't print out your account balance because the paper costs more.
5. Racking up credit card debt.
Some people just spend their entire credit card limit buying crap they don't need. As long as their paycheck covers the minimum balance on the credit cards, they think they can afford it. Worse, they think they deserve it because they work hard for a living. If you can't pay cash (or atleast pay off your credit card statement every month) you can't afford it. And if you can't afford it, you don't deserve it.
4. Not saving for a rainy daynot saving for a rainy day.
Going hand in hand with excessive credit card debt is having no savings. Many people live one paycheck at a time. A loss of a job or a medical emergency oftens pushes them over the edge. If you don't have a cash cushion to fall back on, its going to be a pretty hard landing.
3. Getting greedy - Part 2
So many rational and otherwise sane people get taken in by the dumbest of scams. Take the Nigerian Email scam. Someone you don't know, who lives half way around the globe and writes terrible english wants to send you millions. All you have to do is put up several thousand dollars.
Or consider the latest version of that. I got this one myself. Some foreign company contacted me regarding my resume on a job site. They wanted me to act as an intermediary for their clients in the US. The clients send me the money. I take a small cut and send them the rest. All they want is my bank account details and personal information. How bloody retarded do you think I am?
2. Getting greedy - Part 1
Many people found some scheme or investment that worked out well for them. So they over-leveraged into it at the hopes of striking it rich. Kind of like the people who borrowed against their homes in 1999 and put all the money in tech stocks. Or the so called 'investors' who bought a house in California, Nevada or Florida in 2000, watched it triple by 2005 and then refinanced it pulling cash out and bought 12 more. Only by then the market had turned and they went to the poorhouse.
1. Letting your ego get in the way
Isn't it strange how most people who win the lottery are worse off after 5 years. Its because they think they geniuses now they've won the lottery and think they deserve all the trappings of success like million dollar homes and fancy cars. Unfortunately they're still the same simple people who're statiscally challenged and they end up spending too much.
Even famous stars like MC Hammer & Mike Tyson who made millions spent all their money on their entourages and ended up broke. Or the famous Hunt Brothers who thought they were brilliant and could corner the silver market. They were filthy rich when they started but went broke on this stupid exercise in ego. Kind of like how Brian Hunter lost $6 Billion for Amaranth.
Special thanks to Lazy Man's post where I found out about this Top 5 contest at ProBlogger.
5. Racking up credit card debt.
Some people just spend their entire credit card limit buying crap they don't need. As long as their paycheck covers the minimum balance on the credit cards, they think they can afford it. Worse, they think they deserve it because they work hard for a living. If you can't pay cash (or atleast pay off your credit card statement every month) you can't afford it. And if you can't afford it, you don't deserve it.
4. Not saving for a rainy daynot saving for a rainy day.
Going hand in hand with excessive credit card debt is having no savings. Many people live one paycheck at a time. A loss of a job or a medical emergency oftens pushes them over the edge. If you don't have a cash cushion to fall back on, its going to be a pretty hard landing.
3. Getting greedy - Part 2
So many rational and otherwise sane people get taken in by the dumbest of scams. Take the Nigerian Email scam. Someone you don't know, who lives half way around the globe and writes terrible english wants to send you millions. All you have to do is put up several thousand dollars.
Or consider the latest version of that. I got this one myself. Some foreign company contacted me regarding my resume on a job site. They wanted me to act as an intermediary for their clients in the US. The clients send me the money. I take a small cut and send them the rest. All they want is my bank account details and personal information. How bloody retarded do you think I am?
2. Getting greedy - Part 1
Many people found some scheme or investment that worked out well for them. So they over-leveraged into it at the hopes of striking it rich. Kind of like the people who borrowed against their homes in 1999 and put all the money in tech stocks. Or the so called 'investors' who bought a house in California, Nevada or Florida in 2000, watched it triple by 2005 and then refinanced it pulling cash out and bought 12 more. Only by then the market had turned and they went to the poorhouse.
1. Letting your ego get in the way
Isn't it strange how most people who win the lottery are worse off after 5 years. Its because they think they geniuses now they've won the lottery and think they deserve all the trappings of success like million dollar homes and fancy cars. Unfortunately they're still the same simple people who're statiscally challenged and they end up spending too much.
Even famous stars like MC Hammer & Mike Tyson who made millions spent all their money on their entourages and ended up broke. Or the famous Hunt Brothers who thought they were brilliant and could corner the silver market. They were filthy rich when they started but went broke on this stupid exercise in ego. Kind of like how Brian Hunter lost $6 Billion for Amaranth.
Special thanks to Lazy Man's post where I found out about this Top 5 contest at ProBlogger.
Closing Out JRCC
In an earlier post on investing on news, I had sold puts on JRCC.
Well JRCC was up sharply in the past few trading sessions. I closed out my position by buying back my naked puts and netted a 38% profit (sold the puts for 1.95 and bought them back for 1.20).
There's a chance the stock might go higher. But, I bought puts because it was a speculative trade and the idea was to make a quick (or somewhat short-term) buck. It went up, I made money so its time to get out.
Thats the good thing about options. They prevent you from getting married to your positions. That can be a dangerous thing if the market turns against you (speaking of which, I'm really glad I closed out my Countrywide puts after they started going against me. When I closed my puts, the stock was at $37 - now its almost $42).
Now if I could only figure out a way to make 38% returns EVERY 2 weeks!!!!!
Well JRCC was up sharply in the past few trading sessions. I closed out my position by buying back my naked puts and netted a 38% profit (sold the puts for 1.95 and bought them back for 1.20).
There's a chance the stock might go higher. But, I bought puts because it was a speculative trade and the idea was to make a quick (or somewhat short-term) buck. It went up, I made money so its time to get out.
Thats the good thing about options. They prevent you from getting married to your positions. That can be a dangerous thing if the market turns against you (speaking of which, I'm really glad I closed out my Countrywide puts after they started going against me. When I closed my puts, the stock was at $37 - now its almost $42).
Now if I could only figure out a way to make 38% returns EVERY 2 weeks!!!!!
Bought A "New" Used Car
About a week ago I picked up a 2005 Acura TSX. According to KBB.com, the private party value for it would have been about $24,500. The seller was leaving the country and wanted $23,500. I was able to use my awesome negotiating skills to lower the price to $21,250.
Its a pretty sweet ride. Even though its a 4 cylinder it has 200 HP and although the torque is a bit low in the low gears, it drives better than my 1999 V6 Honda Accord Coupe. The turning radius is also very tight and it corners extremely well, especially at high speed. The only problem is that it uses premium fuel. I tried mixing in regular on a half tank (reasoning that the blend of 87 and 91 would work out to mid-grade) and didn't notice a major difference in performance. The mileage didn't go down either.
Buying a 2 year old used car is always better than driving a new car. The first owner always has the worst depreciation in the first 2 years. If you can get a low mileage car in good condition, its almost as good as a new car anyway. You pay a lot less for it and if you keep it for 6 years before you sell, you shouldn't experience major repair costs either.
My '99 Accord (which I must confess I bought new) should last me another 2-3 years easily. I has about 100,000 miles on it and I haven't had any major repairs. Just tires, brakes and regular maintenance.
The Answer Is Yes.
A couple of days ago, I wondered if the stock market was a little over-priced.
Today I received an email from one of the many free investing newsletters I subscribe to and the echoed a similar sentiment.
Seems like the market is a bit overvalued. It may not necessarily correct but there's no point taking on unnecessary risk. So I've decided to cut back on my margin holdings. I don't usually have a lot of stock on margin but sometimes it just creeps up. I had about 12% of my portfolio on margin which I've scaled back to 8%. I'm thinking I'll lower that down to less than 5% if not 0 in the next few days.
It was 0 in January, but like I said, it has a habit of creeping up on you. Plus I recently sold some of my stocks with gains and pulled 10% cash out of my account to cover some rental vacancies and part of a car purchase for the wife. That also caused the margin-to-portfolio ratio to increase.
Today I received an email from one of the many free investing newsletters I subscribe to and the echoed a similar sentiment.
“The NASD, a brokerage regulator, recently sent out an ‘alert’ to investors outlining the risks associated with margin. Through the end of March, the latest data available, the amount of debt taken on by investors to buy stocks totaled $317.7 billion. And while that was a bit below the $321.2 billion record hit in February, it still surpasses the $300 billion in March 2000 at the top of the tech-stock bubble.
“‘If you’re borrowing money from your broker to buy stocks, you’re basically speculating,’ says Chris Johnson, investment strategist at Johnson Research Group.
“A sharp rise in margin debt means investors are eager to own stocks. And such spikes are often associated with market tops, as was the case in 1929 and 2000.
“Sure, investors have a chance to boost returns by using other people’s money - a technique called leverage - to buy more shares than they could on their own. But buying on margin is just another form of debt, another IOU, another buy-now-pay-later transaction.
“‘We’re not trying to set off alarm bells,’ says Elisse Walter, senior executive vice president at NASD. ‘But with margin debt (near record levels), we felt it was a good time to remind retail investors what margin is, how it operates and what the risks are.’”
Seems like the market is a bit overvalued. It may not necessarily correct but there's no point taking on unnecessary risk. So I've decided to cut back on my margin holdings. I don't usually have a lot of stock on margin but sometimes it just creeps up. I had about 12% of my portfolio on margin which I've scaled back to 8%. I'm thinking I'll lower that down to less than 5% if not 0 in the next few days.
It was 0 in January, but like I said, it has a habit of creeping up on you. Plus I recently sold some of my stocks with gains and pulled 10% cash out of my account to cover some rental vacancies and part of a car purchase for the wife. That also caused the margin-to-portfolio ratio to increase.
Home Prices Hot In Some Areas
The Wall Street Journal reports that not all places are experiencing a decline in home prices.
All of this sounds good and makes sense. However, as usual some spokesperson for NAR (national association of realtors), Mr Yun predicts prices nationally will bottom out sometime this summer.
Yeah right!
Why does NAR always have to put a positive spin on everything. Why not just admit that people, brokers and lenders got carried away and home prices got ahead of themselves. And that they might not recover in California, Arizona and Florida for a few more years.
I wonder how Mr Yun even came to that conclusion. According to what I read, there is a record number of foreclosures occurring in California, a million adjustable-rate mortgages about to re-adjust upwards over the next 2-3 years and a tightening of lending standards which means less people will qualify to buy homes or even refinance their existing mortgages. Also builders have started offering huge discounts on new houses and a lot of upgrades in an effort to move their inventory.
Incidentally, according to John Burns Real Estate Consulting, NARs numbers are off and home sales are falling faster than reported.
I don't think NAR is lying about the numbers, they just don't what they're talking about!
The housing news isn't all grim. Even as prices sag nationwide, there are several cities in the country where home values are climbing smartly.
Portland, Ore., Boise, Idaho, Seattle, Salt Lake City, Houston, Austin, and Charlotte and Raleigh, N.C., are among the cities bucking the national trend. Homes' appreciation there between the fourth quarters of 2005 and 2006 far exceeded the national average of 5.9%, according to the Office of Federal Housing Enterprise Oversight.
There's no single secret of these cities' apparent success, but many of them missed the housing boom of the past five years. From 2001 to 2005, annual appreciation in these cities was between 2% and 5%, far slower than the 7% to 12% national average... Now, prices are playing catch-up.
These cities emerged from the last recession later than most of the country for various reasons... Now, their economies are strong and housing prices are still perceived as affordable, luring buyers into the market.
...The growth of Portland, Salt Lake City, Boise and Seattle can be attributed in part to an influx of former Californians and people opting out of slumping Las Vegas or Phoenix. The trend may have created smaller echo booms -- especially in Boise and Salt Lake City.
All of this sounds good and makes sense. However, as usual some spokesperson for NAR (national association of realtors), Mr Yun predicts prices nationally will bottom out sometime this summer.
Yeah right!
Why does NAR always have to put a positive spin on everything. Why not just admit that people, brokers and lenders got carried away and home prices got ahead of themselves. And that they might not recover in California, Arizona and Florida for a few more years.
I wonder how Mr Yun even came to that conclusion. According to what I read, there is a record number of foreclosures occurring in California, a million adjustable-rate mortgages about to re-adjust upwards over the next 2-3 years and a tightening of lending standards which means less people will qualify to buy homes or even refinance their existing mortgages. Also builders have started offering huge discounts on new houses and a lot of upgrades in an effort to move their inventory.
Incidentally, according to John Burns Real Estate Consulting, NARs numbers are off and home sales are falling faster than reported.
I don't think NAR is lying about the numbers, they just don't what they're talking about!
Is The Stock Market Overpriced?
The Dow has currently been up 24 out of the past 27 sessions. From what I've heard, this is a record. Its NEVER done this before!!!!
And its not like the US economy is rock-solid. According to Chuck Butler of Everbank.com, the US unemployment rate should actually be at 12% instead of the 4.5% that the government actually discloses. Also, all the emerging markets have had a higher GDP growth last year than the US. This has also never happened before!
And the US Dollar is weakening against almost every other major currency there is. Not exactly a confidence builder!
There's also a saying in the stock market, "Sell in May and go away" which refers to the historic fact of summer stock price slumps that happen more often than not. There's also studies that show the major returns occur between October and April every year.
Given all this good news, is the stock market currently overpriced? A lot of my stocks have done ok and a few have done exceptionally well. (Anglo-America(AAUK), BHP Billington(BHP) and Yumana Gold(AUY) are up over 30% in the past 6 months). The Canadian Income Funds I own are mostly break-even but they pay out around 1% every month so I'm not really concerned, especially with the Canadian Loonie strengthening against the USD and hitting 90 cents now.
Even stocks in the retirement accounts like Petro-China(PTR) have finally shown some signs of life! After jumping from $109 to $140 and then dropping back down to $109 its back up at $129.
Most of these stocks that I'd like to hold for the long term. There are however, several stocks which are a bit more speculative. They're roughly 10% of my portfolio and about 1-2% of my net worth. So even if they were to drop it wouldn't negatively affect my lifestyle.
That being said, no one likes to lose money. Especially if it looks like everything is stacked against you.
I've heard of some people liquidating 50% of their positions and taking the summer off. Doesn't sound like a bad idea, but there are tax consequences to this. Plus, if you don't do anything and the market comes back in the fall, the commissions and taxes were unnecessary. Plus you might miss a big move.
What are you guys doing?
And its not like the US economy is rock-solid. According to Chuck Butler of Everbank.com, the US unemployment rate should actually be at 12% instead of the 4.5% that the government actually discloses. Also, all the emerging markets have had a higher GDP growth last year than the US. This has also never happened before!
And the US Dollar is weakening against almost every other major currency there is. Not exactly a confidence builder!
There's also a saying in the stock market, "Sell in May and go away" which refers to the historic fact of summer stock price slumps that happen more often than not. There's also studies that show the major returns occur between October and April every year.
Given all this good news, is the stock market currently overpriced? A lot of my stocks have done ok and a few have done exceptionally well. (Anglo-America(AAUK), BHP Billington(BHP) and Yumana Gold(AUY) are up over 30% in the past 6 months). The Canadian Income Funds I own are mostly break-even but they pay out around 1% every month so I'm not really concerned, especially with the Canadian Loonie strengthening against the USD and hitting 90 cents now.
Even stocks in the retirement accounts like Petro-China(PTR) have finally shown some signs of life! After jumping from $109 to $140 and then dropping back down to $109 its back up at $129.
Most of these stocks that I'd like to hold for the long term. There are however, several stocks which are a bit more speculative. They're roughly 10% of my portfolio and about 1-2% of my net worth. So even if they were to drop it wouldn't negatively affect my lifestyle.
That being said, no one likes to lose money. Especially if it looks like everything is stacked against you.
I've heard of some people liquidating 50% of their positions and taking the summer off. Doesn't sound like a bad idea, but there are tax consequences to this. Plus, if you don't do anything and the market comes back in the fall, the commissions and taxes were unnecessary. Plus you might miss a big move.
What are you guys doing?
Its Machiavelli's Birthday
The world's first management guru, Nicollo Machiavelli was born on May 3rd 1496 near Florence, Italy. He was politician, philosopher, poet and musician. He's most famous for his book The Prince, whose central argument is commonly believed to be 'the ends justify the means'.
A really entertaining book on Machiavellianism (which means to achieve one's goal through unscruplous, deceitful and dishonest tactics) is What Would Machiavelli Do? The Ends Justify the Meanness.
Don't expect any nuggets of wisdom though. Its a satire and the only thing you'll learn is how to become the meanest son of a bitch your office! But its very funny if you appreciate that sort of humor.
, whose central argument is commonly believed to be 'the ends justify the means'.A really entertaining book on Machiavellianism (which means to achieve one's goal through unscruplous, deceitful and dishonest tactics) is What Would Machiavelli Do? The Ends Justify the Meanness
. Don't expect any nuggets of wisdom though. Its a satire and the only thing you'll learn is how to become the meanest son of a bitch your office! But its very funny if you appreciate that sort of humor.
Housing Update
Seeking Alpha has a great summary of nearly all the current topics related to housing, mortgages and real estate.
Some of the interesting articles are:
Lacklustre housing market
Hottest 10 Buyers Real Estate Markets Announced
Bernanke Is Wrong on Inflation, Goldman, Merrill Say.
Some of the interesting articles are:
Lacklustre housing market
Manhattan… apartment prices unchanged from a year ago. Philadelphia, PA: Demand for residential mortgages was nearly flat… consumers were shifting from variable-rate home-equity lines to fixed-rate home-equity loans… Cleveland, OH: Prices held, thanks to steady sales and new homes that were priced relatively higher than existing properties. Richmond,VA: House prices declined by 2-4%... condo prices were off 7-9%, compared to a year ago… Asheville, and Greenville, NC… Low- to middle-price houses were moving briskly... Atlanta, Georgia: Residential home sales and construction continued to decline in most areas, especially Florida with both new and existing home sales below year-ago levels in March…Chicago, IL: Residential construction continued to decline in most areas… The rise in mortgage applications was attributed to the growth in refinancing… St. Louis, MO: Home sales were unchanged in St. Louis, declined 6% in Memphis… Louisville home sales rose 4% and Little Rock's were up 2%, y/o/y in February. Little Rock housing permits down 25%... Minneapolis, MN: Housing permits were down a whopping 54% in March, compared to March 2006… Kansas City, AK: Weak residential construction business… low- to mid-level priced homes sold relatively well, while more expensive, high-end listings languished. Prices unchanged [y/o/y]… Dallas, Texas: Dallas, Fort Worth and Austin are facing a glut of new homes… depressing prices and forcing builders to lay it on thick with incentives.
Hottest 10 Buyers Real Estate Markets Announced
In Albuquerque, New Mexico, housing is projected to appreciate 9.1% by the year's end… Salt Lake City, Utah placed third… experiencing the beginning of a slow down in its housing markets after nearly a 20% increase in appreciation in 2006… Salt Lake [should appreciate through] the end of the year… New Orleans, Louisiana placed fourth, followed by Austin, Texas, Houston and Biloxi, Mississippi, which is experiencing unprecedented growth with a booming local economy in the wake of Hurricane Katrina."
Bernanke Is Wrong on Inflation, Goldman, Merrill Say.
Chief economists at Goldman Sachs, Merrill Lynch and UBS say the worst housing slump in a decade may drive the U.S. economy into a recession and stifle consumer prices. [They] say the Fed will cut its target for overnight loans between banks at least three times this year... Central bank governors found no evidence that the housing market had affected the broader economy [at] their March policy meeting... Goldman, Merrill and UBS are among seven of the 21 so- called primary dealers, who trade directly with the Fed, forecasting that the central bank will cut its target rate from 5.25% to 4%. If the Feds really cut the rates to 4% it'll be a good time to lock in your mortgage to a fixed rate product.
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