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Friday round up - what now?
“In October the stock market will crash as the truth about what has happened comes more fully to light. My guess is that it will come in the first or second full week of the month. The effects of this crash will not be felt in full until the late winter or early spring of 2009.”
The stock market is off 40% from last years high. As of Thursday it was down 21% in the month of October alone. This morning its down 400 points. If you started investing in the market eight years ago then you’re right back at zero. Its as if you never put money in the market in the first place. You can keep knocking off the years as the Dow continues to drop.
The Fed - in a total desperation move - cut rates this week but the response has been limp. A 30 year fixed mortgage is at 5.6% today. The problem is 19 out of 20 people can’t qualify for a refi or new purchase. So cut rates all you want - there are no qualified buyers. The Fed is officially out of options. They’ve even run the national debt clock right out of digits.
So where do you put your money?
Real estate.
Yes, I’m serious. Real estate is where its at if you can qualify and find renters to cover the mortgage. Its a buyers market and only a fraction of the buyers who used to be in the market can qualify anymore. That’s opportunity.
I was driving around Heber the other night and I could not believe the number of homes for sale. I called one of the real estate agents to ask him some questions on a home I was looking at. The guy sounded like he’d been lost in the woods and I was the first human contact he’d had in a month. According to him, everything is slash and burn. Underwater short sells are abundant.
I then ran into a builder who is trying to dump three homes on the same street. One house he had was going for $499k. Two years ago it would have been over $700k. He’s into it for $530k and is willing to finish the basement if a buyer will commit to the $499k price. Crazy.
The market is horrible now, but it may be best to wait it out through winter. I believe prices will bottom out in the spring of 2009. GREAT time to buy! If you can get renters in and wait out the recovery, you’ll make serious cash. Also, make sure your renters are solid. Unemployment is going to go through the roof next year. It may be a trick to balance but its better than most other investments out there.
Here’s another great investment right now: YOU!
Invest in yourself! Now is a good time to go back to school. Contrary to popular belief, now is a good time to start a business. Now is a good time to learn a new skill. Now is the time to plan for a career change. Now is the time to get a lot of things back on the right track. See more of my advice here.
The world fundamentally changed on September 11, 2001. This week has been the 9/11 equivalent in the markets - it will get worse. I read the other night that we ought to prepare for a “Greater Depression”. I’m not sure if I would go that far, but the dynamics of the economy and everything we’ve believed about savings and retirement have changed forever. Its a brave new world.
On another note, Glenn Beck has been brilliant on this issue. So has Ron Paul. Say what you want about Ron Paul and his supporters BUT HE AND THEY ARE AND HAVE BEEN RIGHT on this issue. Its time to return to constitutional principles if we are to save the Republic. If you support Obama or McCain you ought to consider that.
Have a great weekend and best of luck!
The U.S. President is becoming nothing more than a puppet who gives speeches and shows up for photos. He’s got advisors, staff, speechwriters and the like who tell him “what to do.”
McCain is done for, and Obama is in for a rude awakening. He’s not going to change a thing.
Left by Russ Page on 10/10/2008