I've recently been very lax in keeping up with the news. Last I heard, Dubai caused a minor stir in the already-screwed up credit markets, sending markets into a tizzy.
I saw on today's newspaper the big headline, "Mortgage Rates at All-Time Lows." Sheesh. Haven't we seen this TV show before?
Must we go down the same stupid road that got us here? I know, the credit standards are supposedly much higher now than they were in 2006-2007, where anybody with a pulse (and some even without) could get a loan for a piece of property. But I have heard random radio spots that hint that things really haven't changed much. Stuff like "no money down," "seller financing," and "no doc" loans…
I'm afraid we haven't learned a thing from our very recent past. I can't say I'm surprised.
The fundamentals of the market psychology hasn't changed: It still seeks short-term profits over long-term prosperity. Slow and steady hasn't kept the market happy for decades. It likes the hare, not the tortoise.
I also saw that gold hit $1200.
So how does one protect himself during these times? I'd suggest that you stick with the same old, same old:
Depending on where you are in your life, you would do best to keep the bullk of your investable assets in stocks, some in cash, a little in bonds, very little in gold, and a bit in real estate. Note that I am not including your home in this assessment. If I did, most of us would have more than 50 percent of our assets in real estate (which might be a big part of the problem, right).
I still think the US is the place to be for innovation: IT, bio tech, medicine. But I think you may want to invest a considerable portion in foreign markets. China will not stop growing for some time. India is still going to improve. Latin America still has lots left, as does Canada, Russia, and Europe.
The world, as they say, is your oyster. Choose wisely, or else you may get one that's toxic.
Will this ever end? The economy seems like it's in a funk. The patient is recovering from cancer, only to find out that it has heart problems. What's next? TERMINAL brain damage.
CIT files for 5th largest U.S. bankruptcy
Small business lender seeks court approval for a debt reorganization that has approval of bondholders.
A quartet of top U.S. bank stocks rose on Wednesday after J.P. Morgan Chase & Co. reported earnings that surpassed Wall Street estimates, and the insurance sector also weighed in with gains to lift financial stocks more than 2%.
I suggest that the management at JPM horde all that cash, as the next big mortgage resets occur in 2012 (5 years after the peak of 2007, when everybody and their mother, dog, parakeet, and gerbil bought houses with no money down, poor credit, and insufficient income).
Now that many of those same people are now either unemployed or still making less money than their mortgage payment, the pressure is going to be HUGE on the housing market, banking sector, and overall economy. Let’s hope the news that the economy and employment pictures are improving, else we fall into a really nasty tailspin. Let’s also hope I’m wrong about the resets (here’s the good personal news: my mortgage from 2004 reset at a lower interest rate).
Geez, it’s about time!
Senior administration officials pressed executives from the nation’s largest banks Tuesday to speed help to distressed borrowers after a frustrating start to the government’s foreclosure-prevention effort and set a goal of more than doubling the number of homeowners receiving aid by November.
July 21 (Bloomberg) — For CIT Group Inc., the emergence of a $3 billion loan agreement with bondholders preventing bankruptcy shows there is life after death in the credit markets.