For those who are still trying hard to buy dip in stocks and housing, you better be very cautious.
Looking back in the history, you will realize that, it's unrealistic to expect the economy to turn around quickly after such a huge financial crisis. Double dips and even prolonged stagflation is highly possible. The recent Greece debt crisis shall serve as a reminder to us that, worse might yet to come. If you believe the debt crisis is only an isolated event in Europe or PIGGS, you are too naive. You don't have to go far to see how much debt US is carrying right now.
Recent drop in commodities price is an indication that, the demand is cooling down as all those stimuli money is drying up. The question we should all ask ourselves now is, what will happen once the stimuli is gone?
Housing wise, it's obvious that, the frenzy of bidding war on short sales and foreclosures is mostly due to the very low RATE. Any raise increase will have a very subtle adverse effect on housing market. Yes, in a very long term, housing will move higher. But historically, you are talking about 4% annual return. House is simply a money pit for the owners. That's why it's crucial for investors right now, not to blindly get into the bidding war. You must make sure that, the rentals you are buying are in the areas that will have good rental demand, and your properties provide you positive cash flow. Otherwise, you better sit tide to prevent yourself from getting hit by the double dip if it does come. At least that's what I am doing now. Being an owner of some properties, I would be very happy to see all my properties double again tomorrow. But only a fool will dream about it and believe on it. It's a very long term process and you better make sure you have the mental will to do it.
Stock market wise, it's obvious that, at least the short term trend is turning to down. Looking at the chart, you can see that, the indices are trying to fight back after that 1000 drop day and failed to stay on top of the 50 MA, and it's been trending downward. The recent event has cooled quite a few hot heads out there and there are plenty of sellers waiting to either take the profit or cut loss at a better price.
At this point, cash is king and we should hold plenty of them. The hyperinflation will not come any time soon due to the huge global debt level. I do feel that, a global debt crisis is looming on the corner, which will trigger another economic down turn once it happens. For those who think that, hyper inflation is good for real estate, just look at the housing market in 1970 and 1980s.
People tend to forget. But forgetting the crisis in less than a year after it happened? You must be kidding yourself.
Looking back in the history, you will realize that, it's unrealistic to expect the economy to turn around quickly after such a huge financial crisis. Double dips and even prolonged stagflation is highly possible. The recent Greece debt crisis shall serve as a reminder to us that, worse might yet to come. If you believe the debt crisis is only an isolated event in Europe or PIGGS, you are too naive. You don't have to go far to see how much debt US is carrying right now.
Recent drop in commodities price is an indication that, the demand is cooling down as all those stimuli money is drying up. The question we should all ask ourselves now is, what will happen once the stimuli is gone?
Housing wise, it's obvious that, the frenzy of bidding war on short sales and foreclosures is mostly due to the very low RATE. Any raise increase will have a very subtle adverse effect on housing market. Yes, in a very long term, housing will move higher. But historically, you are talking about 4% annual return. House is simply a money pit for the owners. That's why it's crucial for investors right now, not to blindly get into the bidding war. You must make sure that, the rentals you are buying are in the areas that will have good rental demand, and your properties provide you positive cash flow. Otherwise, you better sit tide to prevent yourself from getting hit by the double dip if it does come. At least that's what I am doing now. Being an owner of some properties, I would be very happy to see all my properties double again tomorrow. But only a fool will dream about it and believe on it. It's a very long term process and you better make sure you have the mental will to do it.
Stock market wise, it's obvious that, at least the short term trend is turning to down. Looking at the chart, you can see that, the indices are trying to fight back after that 1000 drop day and failed to stay on top of the 50 MA, and it's been trending downward. The recent event has cooled quite a few hot heads out there and there are plenty of sellers waiting to either take the profit or cut loss at a better price.
At this point, cash is king and we should hold plenty of them. The hyperinflation will not come any time soon due to the huge global debt level. I do feel that, a global debt crisis is looming on the corner, which will trigger another economic down turn once it happens. For those who think that, hyper inflation is good for real estate, just look at the housing market in 1970 and 1980s.
People tend to forget. But forgetting the crisis in less than a year after it happened? You must be kidding yourself.
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