Saturday, February 28, 2009

Market Bottom

I know this is a non-stock blog, but I know most people are still interested in stocks.

I've been reading a lot about where people think the market bottom will be. Most analysts think that the low end for earnings next year for the S&P will be around $63. Now if that is true, if we take a conservative 10 multiple, that brings the S&P to around $630 versus its close of $735 on 2/28/09.

Why is this important, well, a large portion of the gains in the market happen in the few years after the bottom, so people love to guess when the bottom is and make the greatest gains. Now there are people who think that the S&P could go to 450. So, you might want to wait till then to put your money in.

Lower

Lower still!

Friday, February 20, 2009

Debt Payments

I just noticed that a majority of the corporate bonds that I own have a debt payment in March/April and September/October. I am not sure why that is so, but it is something I noticed. The reason I bring this up is because that means there will be a lot of companies that won't have as much cash in March as they did when they make this payment. Of course their liabilities will be reduced, but having cash is probably better. I don't know what kind of effect it will have on their stock prices but I doubt it is good.

Sunday, February 15, 2009

Scary

A couple articles I read scared me recently. I had read the same things on blogs and the non-mainstream media, but when you start seeing them in the mainstream media, it begins to scare me. Basically, they are saying the govt may not be able to borrow all the money it needs for the stimulus since countries don't have the money they used to. Interest payments are the 4th biggest expenditure for the US govt after Social Security, Medicare, and defense. The article that scares me the most is the one that says it is possible that the US govt loses their AAA rating. If that happens the dollar could collapse and that would be trouble. Maybe we should be buying gold!

Couple links:

Can countries afford to pay for our bailouts?


These links are embedded in the above link:
Biggest debt buyers

AAA rating ok?

Real Estate

I haven't blogged on real estate, but I think it is an obvious investment (when the prices make sense) and now would be an optimal opportunity. I would suggest anyone who does not own a home and wants to should seriously start looking and buy this year. Obama is giving first-time homebuyers who purchase their homes before Dec. 1 an $8,000 tax credit. I expect home prices to go down another 20% in the next 6 months, so now would be a good time to start looking.

Couple things to consider.
  • The treasury has been buying bonds in order to lower the interest rate
  • If you're job in is trouble, it might not be a good idea to buy a house and then have to foreclose on it.
  • Of course you also get to deduct the mortgage interest on your house.
  • Look into Mortgage credit certificates in your county, you can save a lot of money by getting tax credits through the life of the loan.
2/28/09 -- Update, looks like the CA govt might be giving a 10K tax credit also!