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February 29, 2008Buy or Sell?
The concept of buying low and selling high could be the most clear-cut theory in finance and simultaneously the most difficult to execute. It is the goal of every investor to maximize their return on an investment by waiting for just the right time to buy and sell. With the volatility currently being displayed in the market and the possibility of a recession looming on the horizon, the question of timing is even more evident. So how can an investor decide if a stock is attractively priced in the current market? It is a question that will most likely never be answered with concrete certainty, but there are questions an investor can ask that can increase their success.
February 27, 2008Wait and See
As the woes of the subprime mortgage debacle continue to trickle into other market segments and threaten to send the economy into a recession, everyone is looking for an answer. More specifically many people expect it to come from the Federal Reserve. However, as the eyes of the nation turn to the Fed, it seems the Federal Reserve has run out of options. The substantial rate cuts previously made by the Fed were meant to stave off recession and ease the stranglehold on credit. However, these rate cuts are also resulting in a weakening dollar and increasing commodity prices. Perhaps the biggest inflation concern is high oil prices, which soared in 2007 and are still hovering around $100 a barrel. While most analysts don't anticipate oil prices will increase dramatically in 2008, if oil prices remain near all time highs it could pose a serious problem for the US economy. So what is the Fed to do?
February 06, 2008Jingle Mail
Recently while reading yet another article discussing the troubled mortgage market, I discovered the issue has even coined a new phrase, "Jingle Mail". The term refers to the idea of borrowers simply walking away from a mortgage due to adjusting interest rates and lower property values. The lender receives the borrower's house keys in the mail, hence, "jingle mail." Evidently, the subsequent problems caused by the lack of foresight and seemingly lack of any common sense whatsoever by both borrowers and lenders has brought this concept to life. As this alternative to making the higher payments for a property, which is worth less than the day it was purchased, gains ground within the US housing market I can't help but wonder how we ended up in this position to begin with.
