Posted in Finance, Saving on Aug 27th, 2007 No Comments »
Here’s a parody from Saturday Night Live which explains why so many of us have trouble staying out of debt.
Seriously, most people get into debt because they buy stuff they can’t afford and most likely don’t need. According to The Millionaire Next Door, most millionaires live within their means without getting sucked into the consumer-lifestyle trap. And they pay for most of their purchases with cash too (or they pay off their credit cards in full every month).
Bookmark / Email This
Read Full Post »
I’ve previously mentioned how much I love investing in Real Estate, with its leverage and all its tax advantages.
But you must have heard about the hedge funds that invested in collateralized debt obligations on subprime residential mortgage-backed securities and are now worthless, mortgage companies like Novistar and American Home Mortgage going bust, home-builders like Beazer Homes (BZH) and WCI Communities Inc (WCI) rumored to be on the verge of bankrupcy, the widespread drop in home prices and a huge spike in the number of foreclosures.
With all this negative sentiment, I bet you’re wondering if it’s a good idea to invest in real estate?
Bookmark / Email This
Read Full Post »
Posted in Investing, Stocks on Aug 19th, 2007 1 Comment »
The past few weeks have certainly been pretty volatile in the stock market. After hitting new highs for the past several months, all the market indices plummeted on July 17th. Its now mid-August and the markets have dropped significantly since then. Not only the US stock markets, but markets all over the world have dropped in unison. Last Thursday (August 16th) saw a retest of the lows created earlier in the year. On that day mutual funds recorded outflows of $19.9 Billion dollars as nervous investors pulled the plug on their investments. As mutual fund managers have to give money back to their investors, they often need to liquidate their positions at the worst time. The bad stocks have dropped the most, so in order to raise the most capital, the sometimes sell the good stocks that have appreciated a lot. This caused huge drop in almost every asset class.
Bookmark / Email This
Read Full Post »
The past week has seen a dramatic drop in the global stock markets. It first happened in the US and then spread to global markets. It seems to have been started when Bear Stearns announced that 2 of its Asset-backed Hedge Funds where completely worthless.
The two bankrupt funds, the Bear Stearns High-Grade Structured Credit Strategies Master Fund Ltd. and the Bear Stearns High-Grad Structured Credit Strategies Enhanced Leverage Master Fund Ltd. had bet heavily on subprime loans. (Funnily enough, these sub-prime Collateralized Debt Obligations or CDOs had received AAA ratings from credit-rating companies like Moodys). Most of the investors had no clue what the Hedge Funds were investing in. In fact, the names are rather complicated and misleading too. (Note that investors broke Warren Buffett’s rule of investing: If you can’t explain what a company does to a six year old, you shouldn’t invest in it).
Bookmark / Email This
Read Full Post »
