Tuesday, September 23, 2008

Creative Real Estate Investing: Is The Bailout Going To Help The Real Estate Market?

In the words of Larry Birkhead ( Anna Nicole's ex boyfriend) " I told you so!!!
I have been shouting from the roof tops to investors for the past 24 months on the financial tsunami which would hit our economy; not only did I call the sub prime market, but I also said that after the banks started bleeding, this crisis would expand the into the insurance industry- this has happened as we have seen in the past several weeks. But what now?

The government is proposing a 700 billion dollar bailout, which at the end of the day will be more like a couple of trillion dollars with all the pork trimmings that the politicians can think of putting in. Correct me if I'm wrong, but these are the same politicians and administrators that got us into this mess in the first place, and now are asking for unrestricted, unsupervised card blanch with our takes dollars to fix what they created in the first place - " I was born at night, but not last night!"

As many of you know I am a Conservative Independent, so I don't have a horse in this race or in the present administration, but I know something has to be done. That being said, I don't think this bail out is going to solve the problem; in my humble opinion it has a 25-30% chance of success!
In the short term we may see some temporary signs of possible improvement, but this will be erased when this tsunami spreads to the credit card and unsecured loan industry, followed by the home insurance industry, followed by the market sustaining a severe correction, which will finally result in the dollar being at par with the Peso!

But in all this bad news there is light at the end of the tunnel ! Keep investing short term with lease options, and in the stock market play puts and calls on the indices on the giant move swings we have seen in weeks gone buy. Pay down or pay off your mortgages if possible and start putting an emergency fund aside if you haven't already done so.
Finally, look at buying silver to hedge against any possible unforeseen disaster; gold is to high but silver is a great value at the time of this post.

Be well and stay leveraged.

James Gage