We know what happened last time mortgages got too cheap, this time they’re even cheaper! After falling off the peak in October, interest rates have dropped for 9 straight weeks to fall to levels not seen since Freddie Mac started surveying lenders to find an aggregate rate for the 30 year fixed mortgage.
The 5.1% 30 year rate is pretty cheap but not as cheap as it could be considering the FED’s lax monetary policy this year. But one thing is certain, lower interest rates are indicative of more money in the banking system and banks wanting to lend. Banks have no option but to begin lending out the money TARP and the Treasury gave them, they’re so far behind on other loans its a deadly scheme to race back to par. Read more…
Investing, Real Estate
A division of Mastercard, known as SpendingPulse calculates consumer spending on its cards and other methods to determine how much money was spent over the holiday season. Even though Amazon made it out with a great holiday season, offline retailers were destroyed with a drop anywhere from 2 to 4% and excluding car and gas sales a drop of 5.5 to 8%. Read more…
Investing, Stocks
With a new year rolling around its a great time to start lining up positions. My consensus is that the automotive bailouts will continue, Obama’s stimulus will make it through Congress and into law and the effects of the stimulus will create a short term boom in the economy made available by inflated cash reaching the hands of Americans. Read more…
ETF, Investing
Fixed rate interest investments are a staple of recessions as investors turn to conservative investing strategies to protect their capital. CDs, Treasuries and money markets have returned the most since the year began but as investors pour into fixed income and government backed investments, yields are dropping rapidly.
Read more…
Bonds, Investing, Mutual Funds
Amazon has already come out to ring in the new year with a solid statement showing its good luck in the 2008 holiday season. The company said that 2008 was actually its best holiday season to date with its busiest day seeing a 17% gain over the year before. Even with the economy slowing down, consumers are willing to buy but only at the right price. Read more…
Investing
The latter part of the year developed quickly as the stock markets around the world fell from their highs to find new bottoms all in a matter of a few months. What began slowly as an energy crisis and next a mortgage crisis soon panned out to be the worst plunge the US markets have seen in quite some time. Thee roaring market of the 1990s burst much slower and over a matter of months while recent market movements have shown more volatility in days than we used to see in whole weeks or even months. Read more…
Investing
The GDP is often considered the most important economic indicator as it includes every facet of the economy and tracks how productive each economy is by a measure of the exchange of goods and services for cash. The GDP calculation is simple, yet huge, and includes everything. Here is the most simple explanation for the GDP equation:
GDP = consumption + gross investment + government spending + (exports − imports)
Read more…
Investing
When social networks meet data compiling its a win-win for investors. Currently Geezo.com uses the data it compiles from its members to categorize where the average member is shopping, how much they’re spending and how frequently they visit a shop, store or business. Their members turn over their precious spending data to be compiled in the Geezo Main Street Spending Index.
If we can’t trust the FEDs numbers and Congress lying through their teeth, the spending of the average person is something we can trust and can be plotted and understood on a chart. The Geezo community tracks 4 million consumer purchases and 800 different stores and brands to decipher how people are spending their money. Read more…
Investing
The effects of the credit crunch and US recession has spread across the world to affect virtually every country and surely every stock market. But there is still some good news, foreign stocks are cheap and their P/Es all at multiyear lows with economies that are far stronger than in the United States. This kind of situation makes foreign stocks a no brainer, they’re financially stronger, cheaper and have solvent governments to back up their products.
Sure US names are cheap but they aren’t as cheap as China. There is also a very big difference between a cheap US name and a cheap Chinese name. The US government is facing default while the Chinese government counts surpluses and fights its only inflation problem: that too much money is flowing in to buy Chinas goods. Read more…
ETF, Investing
Barack Obama has released numbers that appear to be near-official for the kick off of a 2009 economic stimulus package. Rumors suggested an aid package from $600 Billion to $1 Trillion and the new president appears to be willing to spend more than the $850 Billion figure if necessary. The new package offers similarities to the Chinese economic package aimed at developing infrastructure to create jobs. The opinion of Obama’s economic team is that this new stimulus will create as many as 2.5 million jobs over the course of its two year lifetime and raise the standard of living for US citizens. Read more…
Investing
It seems to be a common theme in this fiscal year that the regulations set in place to stop fraud, bad lending practices and stomp out the fires below the cooked books have entirely failed. This past year has been one of excess for Wall Street, the Politicians and the CEOs and hierarchy of the many now taxpayer owned businesses.
Investors should demand more from their investment managers. Case in point was Madoff who seemingly made off with likely billions of dollars while destroying investments by paying off earlier investors with money that came from later investments. The classic ponzi scheme was ran perfectly for years, but it could not prevail through a number of withdrawal requests stemming from people needing cold hard cash in a less than booming business cycle. Read more…
Hedge Funds, Investing, Round Up
The media has been slamming investor Warren Buffett throughout the recent market turmoil for his time tested buy and hold investment strategies. Traders are ripping apart the idea of a buy and hold approach saying that it has died and the new emphasis should be on short term trading rather than long term investing through a buy and hold method.
But fundamentally there is simply no way that a buy and hold investment strategy could ever disappear. At the most simple level, companies use the stock market as a method of raising quick cash by liquidating a portion of their company for cash. Read more…
Investing
It isn’t very often that we get to look into the FEDs numbers. A recent report by the St Louis Federal Reserve shows us the adjusted monetary base, or M1 statistics. M1 statistics include all physical forms of cash (cold hard cash like you’d have in your wallet) plus the amount of money in bank reserves at the FED.
This report shows us the huge amount of inflation that has been created by the FEDs recent entry into the market to stabilize the economy, and the costs of half the $700 Billion bailout which were added to the reserves at the FED. In just the past three months the adjusted monetary base has skyrocketed from around $850 Billion to $1.5 Trillion. Read more…
Investing, Round Up
Candlestick analysis is adorned by some and hated by others. I find candlestick analysis to be a great way to look into the price action of a stock, especially considering I prefer momentum indicators to most others. Looking back through historical data (think October 2007) I found what predicted perfectly the market top. Read more…
Stocks
There is a new trendline that traders should consider on Monday open. The market has been in a downtrend following the collapse of the financial world and worries of a continuing recession. Many traders are calling for a late year rally as the volatility in the market ebbs and the fears investors. Read more…
Investing, Stocks
With RSS syndication you’ll be able to get updates to your desktop the second a new article is added. I’ve written a short tutorial for adding InvestingBlog.org to your feed reader:
I prefer RSSReader, its simple, doesn’t have many features (which makes it easy to use) and it finds RSS feeds quickly. Other RSS readers cost money or require a signup at another site. This is the best free RSS Reader I have found so far. Read more…
Stocks
The automotive bailout continues to go through the legislative branches and then to the President for signature. I would have blogged about this when it first appeared that the automotive bailout would come through, but just as expected Republicans in the senate are taking a hardline approach on future bailouts. Senators have lined up to show their lack of support for the $14 Billion bill, which is of course just 2% of what Congress tossed the banks in the $700 Billion bailout.
Ford is the only one of the Big Three refusing government help this time around, perhaps banking on the idea that American’s will buy Ford automobiles to show their support for a company turning down Federal funds. Or it could be that the Big Three will become the Big Two, then the Big Ford when GM and then Chrysler fail due to their own debts. Read more…
Stocks
The bailout of the banking industry produced a few up and down days of volatility. Half of the trading populace was satisfied with the bailouts while other times traders weren’t quite with it, selling quickly when the initial $700 Billion TARP program was produced.
Now the investing class has to digest a new bailout to the middle class and the entire American populace. It has become apparent that the automotive bailout will go through with ease as many democrats and republicans across the isle are seeing the need to prop up the middle class and their take home wages. The automotive bailout is being pushed to save millions of union jobs in both the assembly of cars and trucks and also to save the businesses that supply the needed parts to the assembly lines. Read more…
Stocks
Last week it appeared that the Friday surge was enough to break through the downtrend. This Monday disproved that after the Dow and major US indices plunged several percentage points from their opening price to once again fall within the limits of the downtrend and continue the fall. This Friday yielded a very similar result to that of last, but this time could we actually be out of the trend? Read more…
Stocks
The Treasury publishes the daily yields for their securities. The yield curve is essentially a natural phenomenon that happens when yields slowly rise per annum as the length of the investment grows. The most important part about the current yield curve is that it shows one of the largest divergences between short and long term interest rates. The 1 month Treasury is yielding just 1/12 of the number stated per month, that’s .003% per month, AWFUL.
To make sense of the yield curve lets first take two different investment timeframes and work them out to find out the difference in total return on an investment of $100,000. We’ll use the 1 month and 2 year yields to determine how much more an investor would make by locking up their money for 2 years instead of reinvesting into one month securities over and over. Read more…
Investing, Stocks
Following Japan and the Eurozone, the United States is officially in recession. The National Bearau of Economic Research and its economists determined that in fact the United States is in recession and that it had been since December 2007 just after the housing bubble began to burst.
This announcement prompted Ben Bernanke and Henry Paulson to make statements regarding the response of the FED and Treasury in America’s recession. Ben Bernanke wouldn’t rule out a rate cut but said that they could only do so much. He favored government programs, the recent TARP program and insuring transactions to lower interest rates. Henry Paulson mostly agreed but traders are still pricing in a cut next FED meeting. Read more…
Investing, Stocks
