Ruling The Panicking Market

What is a couple of hundred billion dollars among friends? Who panics over nearly a trillion dollars in mortgage write-downs? Not me, I have GOLD TEETH! Now that my bridges are worth more than my Coca Cola stock I think I will leverage the dental work. I mean 7 ounces of gold - that's a lot of jack, Jim.

The big trouble with the market is no matter how much education, experience or resources we have at our disposal it is not possible to continually and accurately predict where the market is going. Why? I preach it all the time: the market is driven by the human emotional factor. When people feel good they invest. When people don't feel good is when the market tanks.

We the people, on the streets of the United States of America, hold in our hands a manifold destiny. It is of our choosing and of the collective consciousness for which the media and Hollywood have become the brain. I heard a report on Bloomberg yesterday which indicated that for the first time in our history 65% of the people - SIXTY FIVE PERCENT - believe our past is better than our future.

GET OFF YOUR BUMS AND START DOING WHAT IT TAKES TO TURN THIS COUNTRY AND ECONOMY AROUND!

Our fathers and grandfathers and their fathers and grandfathers (and the ladies, too) are puking in their graves and this generation and what a bunch of idiots we are. Not all of us, just those who do not read Active Rain of course. Honestly, if you truly believe the future cannot be brighter than the past then I am of the opinion that you would be better served by living in a country that would babysit you than here where we still have somewhat of an ability to be self reliant and personally responsible. But that is just my our opinion.

SO HOW DOES ONE RULE IN A PANICKING MARKET?

Knowledge is power and never has that been more true. Let me give you a little tidbit of information you probably haven't heard elsewhere. On a national merged level property values are down. The value of the dollar is also down. Supply is almost overwhelming and demand is low. If you attended the first day of economics class in Junior High (Middle School whatever) you learned this puts all the negotiating power in the control of the BUYER. This market is, for the most part, NOT the market in which to sell. So what does that make it?

Here is your nugget of gold today: Today, as I write, the dollar is worth .64 cents against the Euro. So let's say you find a home today that 12 months ago was valued at $500,000 and you can get it for $400,000. Then let's say after another 12 months the market has leveled and the dollar has improved in value 10%. GUESS WHAT. You just improved the value of your purchase by 10%. Wait now, hear me out. It's the EQUITY value we care about - not the purchase price. So if you paid down 20% which is 80k today but in 12 months the dollar is worth 10% more even though your HOME has not improved in value (has remained flat) your SPENDING POWER on your equity investment has gone up 10%. Understand?

It's the Future Value of Money. If the dollar goes flat against the Euro (Lord please) your dollar will have increased by 36% and so will your spending power. So if you bought TODAY and the property never appreciated in value but the dollar did you would STILL win in the GLOBAL economic game. For you and I this is small gain but on the macro scale with every home purchase or refinance in America it's huge.

One last thing before I go. That $200b released by the Fed earlier this week at the disposal of the primary capital lenders? In Euros it is only $129b. Don't think about it too long your head may pop.