April 1st, 2008
Many banks have suffered tremendous losses as a result of the subprime lending mess. Some are saying that the worst is over. Can that really be true already?
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February 21st, 2008
A recession economy doesn't have to destroy your financial security. In fact, sometimes a recession can help grow your financial security.
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February 17th, 2008
If you don't know what a recession is and how the very definition of one affects you, read here.
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February 16th, 2008
A short guide on what to think about the upcoming recession and how to keep your sanity intact until it is over.
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April 1st, 2008
Tens of billions of dollars have already been wrote down by major banks. Billions more have been lost in the financial markets as shockwaves rippled through the entire market. The Federal Reserve has lowered interest rates and bailed out Bear Stearns from a major collapse. Is that all that is going to happen in this recession? Well, the verdict is still out on that.
It would be nice to say that the economy is turning around right away and everything will be better by the end of the year, but that would be foolish. It took our economy almost a year to realize what kind of a mess it really is in and it will take at least another year to clean it up. Let's be realistic. There are many many more subprime mortgages that will have interest rate resets in the next year. In fact, we haven't even seen the worst of the subprime forclosures.
What this means is that the market won't likely hit bottom until mid-year at the earliest. Sure, there will be pockets of positive news, but the overall trend will be downward until probably July and August. At that point we should have had enough of a full home buying season that at least some of the homes that were in pre-forclosure could get sold. By the end of the year I suspect that most of the people who were likely to default on their mortgage will have done so and the rest will find a way to keep, refinance, or sell their houses.
The good news is that if you have money to invest, this year is a good year to find some real long-term bargains. Many companies are seriously undervalued due to the uncertainty in the market. Also, I suspect that there is going to continue to be some overreaction to good and bad news, thus there will be some real golden opportunities to buy investments far below normal market value. Just remember, if you are going to buy this year, don't expect to be able to do a quick sell. Instead, buy for the long-term and reap the benefits of not panicing.
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