Disaster strikes Haiti…where next?…do the right thing!

When cataclysmic tragedy strikes we, as fellow Human Beings, can empathize with those who are suffering. Certainly the events in Haiti are a reminder to all of us that everything we have can be lost in an instant. As fellow Americans we should be proud that we have organizations comprised of  people who jump to the call of need when disaster strikes, at home or abroad.

The organization that I am most thankful for is the American Red Cross. Do you realize how much this organization does not only at our community level, but for others around the world? I strongly suggest you take a look , here is their website, Red Cross

Now do the right thing;

Text 24357 with the message GIVE, this will send $5 to the Red Cross. Here is the link for the instructions Click Here

Now send the link to this blog to everyone you know to do the same.

Do the right thing.

John

Do you know who Meredith Whitney is? You should…

Meredith Whitney is the CEO Of Meredith Whitney Advisory Group, and is considered “The Analyst” to call the banking debacle before the meltdown in September 2008. If you don’t know her, you should, and take stock in her opinion and analysis of the direction of our nation’s banking system.

Check out her latest comments here.

I applaud Meredith, her astute and forthright analysis that the current Big Bank system and its business behavior is counter productive to a meaningful recovery. Just more evidence that 2010 will be “the best year ever” for buying real estate. After all one should be buying low and selling high…right?

Loan Modifications Tell the Tale….

Big Banks reporting “re-default rates” on existing loan modifications offer surprising insight into the health of the real estate market. Just look at Citibank’s numbers released today…

% of modified loans at least 60 days past due?

Over 8% for loans modified as of June 2009 (Only 3 months)

Over 30% for loans modified as of September 2008 (Only 12 months)

See the trend?

Loans have to be current for the first 3 months or be dropped from the program…so as the time passes 3 to 6 to 12 months the amount of defaults grows.

One culprit…unemployment. But, unemployment should not shoulder all the blame. ( I mean even with a 17% shadow unemployment rate it doesn’t add up that Citi would have over 30% of their loan mod portfolio in default after 12 months.)

The other culprit…”perceived loss of value” which means homeowners (borrowers) feel that their home is just not worth making a mortgage payment on, and therefore would rather pay nothing and eventually walk away.

This attitude towards value will feed this foreclosure market for the next 2 years, until employment picks up and then more “Buyers” will return to the market. This is why we at Market Advisors are buying real estate at these low foreclosure prices today and holding our portfolio for the next 5 to 7 years.

Read about Citibanks re-default report from Diana Glick of CNBC.

So, What Are The Dangerous Side Effects of Ultra-Easy Money?

Every once in  while you come across an article that really does a great job of summarizing in a clear and understandable way the incredible complexity of our global financial crisis.   I think Gary Dorsch in his most recent article published in www.SafeHaven.com does a great job of doing just that.  He brings together many elements of our world-wide economy with a lot of “cause and effect” descriptions to show the “Dangerous Side Effects of Ultra-Easy Money” .

Here is Gary’s opening statement just to give you a feel for the tone of his article:  “Operating under the elixir of ultra-low interest rates, and flush with trillions of fiat currency at their disposal, courtesy of the world’s top-20 central banks, hedge funds and banking Oligarchs are once again making risky and daring bets in commodities, emerging markets, junk bonds, and blue-chip stocks, defying gravity with trades that would have been un-thinkable just six-months ago.”

I love his use of the word “Oligarchs” (Oligarchy: Government in which all power is vested in a few persons or in a dominant class or clique).  It’s probably a pretty apt description of our current banking system!  I also like the way, through the use of excellent graphs, that Gary is able to tie together so many different key factors that are all impacting our economic system (the consumer confidence index, the Dow Industrials, interest rate trends, Gold prices, unemployment, etc.).

Here is Gary’s “Big Picture” view of what is happening:  “In order to engineer a 180-degree turnaround in trader psychology, from the chronic fear of meltdowns last year, to the opposite side of the spectrum – the euphoric illusions of V-shaped recoveries, the “Group-of-20″ have committed $12-trillion of taxpayer money, equivalent to a fifth of the entire globe’s annual economic output. The G-20’s largesse has been used to fund capital injections into banks, soaking-up toxic assets, guaranteeing financial company debt, and flooding the world credit and stock markets with ultra-cheap liquidity.”

You’ll have to read Gary’s article to see how he believes all of these various government “bail-out” strategies are impacting our current economy and why he believes we are still in for a rough ride ahead before we start seeing any true recovery.

Paul Davis, Market Advisors

California….Best Bet.

I want to share the latest TIME magazine cover article…

“Despite Its Woes, California’s Dream Still Lives”

by Michael Grunwald, October 23,2009.

Please read Mr. Grunwald’s article, you will be able to understand why Market Advisors is currently building its residential investment portfolio in select communities in California.

“It’s still a dream state. In fact, the pioneering megastate that gave us microchips, freeways, blue jeans, tax revolts, extreme sports, energy efficiency, health clubs, Google searches, Craigslist, iPhones and the Hollywood vision of success is still the cutting edge of the American future — economically, environmentally, demographically, culturally and maybe politically. It’s the greenest and most diverse state, the most globalized in general and most Asia-oriented in particular at a time when the world is heading in all those directions. It’s also an unparalleled engine of innovation, the mecca of high tech, biotech and now clean tech. In 2008, California’s wipeout economy attracted more venture capital than the rest of the nation combined. Somehow its supposedly hostile business climate has nurtured Google, Apple, Hewlett-Packard, Facebook, Twitter, Disney, Cisco, Intel, eBay, YouTube, MySpace, the Gap and countless other companies that drive the way we live.”

Read On !

Building A Successful Real Estate Portfolio

Investing in this foreclosure real estate market requires a determined effort to search through the quantities of foreclosures available and find the “diamonds” hidden within. Not an easy task…but certainly rewarding.

At Market Advisors we measure acquisition opportunities through a matrix of parameters to “mine” the target properties which best fit our portfolio at Market Advisors Real Estate Fund LP. Here are two basic principles which are the foundation of our search…

• Location
• Price Imbalance

OK so location is obvious (or is it?) and I certainly have covered our location principles in our Webinars.

But, some of you may ask what I mean by price imbalance? In our definition it is ” short term value loss” meaning prices depressed by short term circumstances that can be remedied. This is not simply supply and demand, but a circumstance where a property is priced below its current market due to; condition, or lack of lender availability.

These opportunities are few and far between within a target community or location, but when they surface they are “diamonds in the rough”.

Maximize and Energize Your Retirement Portfolio.

Today I am attending PENSCO Trust Company’s “Advanced Education Seminar” in Las Vegas. Several excellent and timely topics that have me thinking about our Readers and looking forward to sharing some valuable tips to help you maximize the returns in your retirement portfolio.

1. Make sure your retirement accounts are taking adavantage of all the opportunties available. (Go to our FREE Webinars to find out from the experts)
2. Be sure to diversify your portfolio into real estate. (Foreclosure opportunities are providing excellent returns for your retirement portfolio)
3. Find out more about how you can take control of your retirement funds and invest in assets you know and understand. (Find out more here)

Stay tuned for more from Las Vegas.

Why It’s Time to Retire the 401(k)…Comments

Did you see the cover of TIME Magazine this week? Interesting article on the “state of the 401K”. Written by Stephen Gandel, the article mostly covers the loss of significant retirement assets by individuals throughout the USA over the last 18 months. Basically almost 30% or more of retirement account values have been lost due to the stock market correction. Mr. Gandel does a good job of highlighting troubling examples of certain individuals, and then mostly draws attention to the debate of how retirement accounts should be insured (such as the way of pensions) and not tied to the fluctuations of wall street (which is the way of the mutual fund industry).

I find it quite intriguing though that not once in this massive cover story is there any mention of individuals being able to place their retirement funds under their own control and invest in assets that they know and understand other than from a menu of “mutual funds”.

Perhaps if hard working people were more aware of the choices that are available to them with “self-directed IRA and other qualified plans” the financial meltdown of the last 18 months may not have been as severe and painful.

Read TIME cover story.

“7 retirement account mishaps that cost big”

I came across this article written by Sheyna Steiner of Bankrate.com. And I wanted to point one of the mishaps that are referred to, that I find particularly important.

Letting old accounts languish

It amazes me the billions of dollars left in old 401k accounts that were set up with previous employers. Take control of those funds and put them to work in investments that you enjoy and understand! It’s simple to do.

If you want to read all of Sheyna’s article click here.

Home Price Gains Are Seasonal and Federally Fueled…Bravo Diana!

Once again I want to share these words of wisdom from our friend Diana Glick of CNBC…check this out.

“I’m not a bear, I’m a realist. Let’s get that out first.

Today’s headlines from the folks at S&P/Case Shiller are not untrue, they’re just not the whole picture. Yes, home prices, in most areas (and by no means everywhere) are no longer in freefall. Some local markets have hit bottom, others are falling less precipitously, and still others are showing some strength.

But if we’re going to be forced to spew these national numbers, that the markets seem to crave (for some reason that I generally and specifically don’t understand), then we have to take them with not a grain, but a shaker of salt. The top ten and top twenty market composites that the S&P/CS folks report are off their lows that we saw at the end of 2008 and beginning of 2009. Even the year over year numbers show it.”

Diana goes on to point out…quite intelligently I might add…that the rebounds we are seeing in the real estate markets are results of government intervention, certainly not a bad thing, and most definitely a necessity. But, proper perspective and an understanding of all the facts are key to successful investing.

Read all of Diana Glick’s blog here.

I want to invite my readers to comment back to me…tell me your perspective of this exciting real estate market.