Jan 19 2008

What is a Recession? California Inflation, GDP, M1 and M3, and the Art of the Federal Reserve.

It shouldn’t come as a shock to you that California has a higher rate of inflation than the rest of the country. If we are to look at historical measures, what should the price of a California home be in 2007 accounting for inflation pressures? Using the CPI for California, which includes all urban consumers we can get an idea how fast housing prices have outpaced even California inflation which has a higher rate than the rest of the nation. Let us take a point in time where home prices were reasonable in California. We will use the base point of 1999. Let us take a look at a region that has seen some of the wildest inflation, Southern California: Read More

Jan 16 2008

Housing Crisis? How About Buying a House You Can Afford!

Much has been argued about the housing and subprime crisis. It would seem from all the media exposure that the housing collapse came on the heels of some unexpected event. It was not unexpected and many people saw this coming. I’ve learned many things from observing the current market forces at work and that is very few people really understand the concept of living within their means. With access to easy credit and a nonchalant attitude about the future, many people simply mortgaged away their future for instant gratification. All of sudden we start hearing echoes of a full on bailout of the housing market. In fact, we are now hearing calls for across the board rate freezes – flipper and speculator alike. Instead of going after bad behavior, we are rewarding people that took on too much risk. If we are to let the marketplace work itself out, we are already seeing countless unscrupulous lenders going out of business. These people were making inordinate amounts of money by putting people into financially dangerous products. It was a horribly broken model. There is plenty of blame to go around and we will have plenty of time to assign it. The major issue I have with this is what about people that actually had some financial discipline and didn’t play this housing bubble game? Should they be responsible for the actions of a market they didn’t benefit from? Much has been said about the BofA / Countrywide buyout deal. In fact, there has been speculation that BofA bought out Countrywide knowing that they would be able to write off many of their losses. BofA is a very profitable company so having these write offs is simply a creative way to avoid paying taxes on their revenue. Not exactly the definition of a bailout but a clever way to avoid paying taxes; something that is not available to the general public. Read More

Jan 13 2008

Recession Investing: Where to Invest When the Market is Going Down.

It isn’t a secret that the overall economy is entering into a rough patch. The declining housing market, poor retail sales, and overall debt are breaking the back of the economic machine that is the U S of A. As an investor, what can you do to protect your wealth during these hard times? First, let us look at how a few sectors did in 2007: Read More

Jan 7 2008

The Leverage to Become Wealthy. Believing In Yourself to Achieve the Impossible.

You know I once asked a very wealthy VP of a Fortune 500 company what inspired him to be wealthy and his answer shocked me. “Money is a game and the man with the most notches on his belt wins.” This threw me back. I was in my late teens and wanted to become financially free because I never grew up with much to begin with. And when I mean nothing much, I mean zero. Yet after hearing this person tell me his response to his wealth plan, I looked deeper at him and frankly, he didn’t seem all that happy and the sense of incongruence in his life was apparent. He was out of shape and had a look in his eyes of anger. I could tell that he had crawled over many bodies to get to where he got. At that moment, I thought being financially wealthy took putting yourself first and tramping over people. It also meant that being wealthy meant putting the love of money ahead of everything. It was a conflicting time and made me reevaluate my views on money. Read More

Jan 5 2008

How to Become a Millionaire! Steps in Achieving Financial Wealth.

So you want to become a millionaire? You’ve always had the desire to be financially secure but the task seems simply overwhelming. There are a few ways in becoming extremely rich. One of them includes being born into wealth and chances are, this may not be you. Plus, you don’t have much of a say in who your parents are! Another way is to invest and save your way into financial success. Many people never even start on the road to financial security because they view the entire process as time consuming and way too complicated when in fact, it is rather straightforward and requires discipline. The way to become wealthy is to save enough and invest wisely so your investment will compound overtime. Compounding is touted as a thing of wonder even for people such as Albert Einstein. Read More

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