I'm not even going to read the whole articles. I can get the drift. And I only care about the big picture, anyway. Two articles posted under News Section on my website today:
What's interesting is how the good news gets accompanied by the bad news, and the meaning gets lost in between. The bad news in the Bernanke article is that stocks fell as a result of Bernanke's talk! Why would stocks fall when the Fed says the economy is so strong??
They fell because when the economy is strong, the Fed keeps interest rates high. Why? Because if money was super-cheap, people would build business and commerce on easy borrowed money so fast, that the economy would then over-heat. The danger in an overheated economy is that prices begin to rise. (Inflation. I'll explain that connection in another blog.) Inflation out of control sends the whole house of cards tumbling.
So, while some sectors like real estate have been waiting for interest rates to come down, it ain't gonna happen for a while now. Good news, bad news. The message? Stocks are tumbling momentarily because some people want interest rates down and they're not happy. But interest rates are staying high because the economy is hot right now - and overall that's good for stocks, if a little rough for real estate.
Don't worry, it'll shift sometime later up the road. The two markets tend to see-saw each other. Right now it's stocks' day in the sun.
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The debate stock vs real estate has been going on for as long as they've been written about, reported on and of course regulated.
Unfortunately there is no benefit whatsoever to the 'consumer' to pick either one industry over the other. The brokers will pitch stocks and justify it their way, loan brokers will justify refinancing your home their way.
Bottom line is an educated AND experienced investor will make money in either industry in up down sidewasy markets just like Michael Schumacher is (was) the fastest race car driver when he drives straight, turns right or turns left, whether he's in Monza, Monte CArlo or Brazil. (ok F1 may not qualify as a realy car race in the US but you get the idea)
I prefer Real Estate for some reason:
1) I know how to get it below market value consistently
2) It's the closest thing to free market I've come across (as long as you're not a licensed agent)
3) I can set it up so it throws off cash every month/quarter in an up, down or sideways market.
4) I can use the same money to buy multiple pieces of real-estate
5) I can ADD VALUE to my properties and make more profit on the resale
6) There is no ONE global market that can manipulated by an oligarchy. At any given time there is an up market somewhere in the US, even more so in the world and it's really easy to pick it.
That being said, I've reopened a stock brokerage account in March and bought a software system that does the work for me. I've benn up between 4-7% every month since.
So these guys know their market I pay them handsomely for their work and I know a portion of Real Estate and get paid handsomely for my work.
Also an important point is that the newspapers and TV stations are PR outlets for big firms. Think reporters get up in the morning LOOKING for a story?
They go to their fax machines and emails and pick up the press releases of the industries they SPECIALIZE in. Meaning they've learned the lingo of that industry and can refer back to that industry's historical events.
The vehicle to your wealth lies in your ability to become expert at one or two things and get paid handsomely for it and/or to associate with those who are are ride their wave to the shores.
Remember there is someone making money on Toilet Paper.
Warmest Regards,
Yves Baggi
www.PeanutsRealEstate.com
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