December 31, 2007: MyRealEstateBubble Newsletter: Wealth Resolutions for 2008

November 19, 2007: MyRealEstateBubble Newsletter: Inflation is under control (not really!)

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Monday, November 19, 2007 

Newsletter #30: Inflation is under control (not really!)

In this issue: 

1. An interesting victim of the housing bubble bursting
2. New inflation statistics
3. The government inflation numbers are bogus
4. Consumer spending is up?
5. What does this mean to you?

  

1. An interesting victim of the housing bubble bursting 

Recently I met with a client of ours who lives at a very affluent country club community in Naples, Florida. He said that their country club in their community is in financial trouble. Why? Because the number of new home sales in their community is much lower than they were used to that they are no longer getting the new home buyer’s initial club membership fee. This has caused a financial strain on the club. This shows you that even the rich are struggling in their own way from the real estate bubble bursting. 

 

2. New inflation statistics

Inflation has been a real issue lately, especially for anyone who has bought food or gas! The most recent government inflation statistics (Consumer Price Inflation or CPI) came out this week, and the “headline” inflation is 3.5% over the last 12 months, well above a comfortable level.  “Core” inflation (inflation without food and energy in the numbers) is running at 2.1% over the same period according to the Bureau of Labor Statistics (BLS).  These inflation numbers are likely to get worse over the next few months because during all of 2007 we have consistently seen increasing monthly inflation rates and it seems like this will continue through the winter months.
 

3. The government inflation numbers are bogus 

As anyone who follows the CPI numbers know, the government inflation numbers do not really represent the world we live in. In the Clinton presidential era, the way the Bureau of Labor Statistics calculated CPI numbers was changed to benefit the government by lowering CPI. The reality is that if you calculated inflation today the way they did pre-Clinton, inflation is actually running at 7%. Other methods even show a substantially higher inflation. 

How did CPI calculation change, you ask?  Before Clinton, inflation was measured by a fixed basket of goods and the changes in the prices of these goods measured the change in inflation. However, under Clinton the BLS created a new way of measuring inflation that used a geometrically weighted basket of goods. This geometrically weighted basket automatically gave a lower weighting to CPI components that were rising in price, and a higher weighting to those items dropping in price. So if the price of steak went up and the price of light bulbs went down, then the weight of the steak in the calculation would go down and the weight of light bulbs in the calculation would go up. The result is lower stated rates of inflation because they assumed you would buy less steak and more light bulbs. 

The net effect of this change is that reported CPI was approximately 2.7% lower than what it should have been and has reduced annual cost of living adjustments in Social Security by more than a third since the 1990s.  There have been other adjustments to the CPI calculation, but that will be discussed in a future project.
 

4. Consumer spending is up? 

Consumer spending makes up 71% of the United States GDP. The most recent statistics show that consumer spending is up 5.2% year over year which implies a growing economy. However, the numbers suggest that U.S. consumers bought 16% more gasoline than last year, but in reality the increase in spending for gasoline was all related to price. The same goes for food.  If you take out food and gas from retail sales, consumer spending would be flat. There were actual spending declines on furniture, music, electronic games, online sales and other categories.  FedEx even warned that their earnings would be down due to less shipments and higher energy costs. And retailers are expecting a modest Christmas season. These signs all points to a slowing economy. And the job layoffs continue rolling on. 

Is the economy slowing so the Fed will further cut rates, or is inflation rising which will force the Fed to start raising rates?  The Fed has to be careful when deciding what to do with interest rates because if they cut too far they will cause runaway inflation and if they don’t cut they could slow down the economy. However, the real problem is that if we get stagflation, a combination of a slowing economy and rising inflation, the Fed would have a hard time fixing this situation. They couldn’t cut rates or increase rates. This is what I predict will happen.
 

5. What does this mean to you?

Inflation is a serious concern for the world’s economy. If you look at the history of inflation since the Middle Ages, we have seen four long periods of inflation that each lasted more than 100 years. We are currently in the tail end of the fourth inflation period, and this tail end is always the most volatile and challenging. My next project will be on inflation and what you need to know to prosper during it. If you are interested in becoming involved in this project please let me know by emailing me at louishill@myrealestatebubble.com.

You can  buy the real estate bubble eBook using the secure shopping cart and receive a discount by using the coupon code "newsletter" at checkout - only $9.50!:  http://shop.outstandingebooks.com/product.sc?productId=1

 

Have a happy Thanksgiving!

 
Warm Regards,

 

Louis Hill, MBA
www.MyRealEstateBubble.com
www.OutstandingEBooks.com  
888-58EBOOK (888-583-2665)
 

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***Disclaimer: The information in this newsletter and the corresponding websites do not constitute professional services, including, but not limited to investment advice. Please consult a finance and/or investment professional for services and advice.
 

 

October 15, 2007: MyRealEstateBubble Newsletter:  Lower interest rates... what you should know now

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Monday, October 15, 2007 

Newsletter #29: Lower interest rates... what you should know now 

In this issue:
 

1.  Lower interest rates
2.  Short term effects of lower interest rates
3.  Long term effects of lower interest rates
4.  What does this mean to you?

  

1. Lower interest rates
 

A lot has happened since the last newsletter, but perhaps the most significant is the Federal Reserve cutting its target for the fed funds rate by ½ percent, from 5.25% to 4.75%. This is a very aggressive move by Fed Chairman Ben Bernanke that really should have come to no surprise to those of us who know Bernanke’s background (okay, I was surprised too!). 

Previously I have told you that Bernanke’s nickname is “Helicopter” Ben Bernanke because he is famous for being very aggressive with monetary policy to “solve” the economy’s current ailments. To be more specific, he is called “helicopter” because he will print as much money as he feels is needed to pump the economy up. Bernanke has been printing money so rapidly the Fed even stopped publishing the M-3 report which told us how much money is being printed! 

On a side note, did you know that US dollars are made using the excess denim from the manufacturers of blue jeans? I saw an interesting documentary on the History Channel and denim is what gives the US dollar its tensile strength. I am sure they need tons of denim for the amount of bills they have been printing lately!  :-)
 

2. Short term effects of lower interest rates 

Some people mistakenly believe that the ½% cut will make a difference for all of the homes in foreclosure and the people who bought adjustable mortgages. This couldn’t be further from the truth. A ½% decrease to a person with an adjustable mortgage whose interest rate adjusted up by 3% will make very little difference in their monthly payment. 

On the other hand, lower interest rates will help the economy in the short term because people can buy cars cheaper, homes are a bit cheaper, credit cards rates should be a little lower, and other purchases of expensive goods should be easier. This should stimulate the economy in the short run. 

This short term bump in the economy has contributed to the rally in the stock market we have had in the past few weeks, however I believe this is only a temporary move up in the market and that we are due for a strong correction. 
 

3. Long term effects of lower interest rates 

Long term effects of lowering interest rates are another story altogether. This kind of economic stimulation is not smart in the long run for many reasons discussed in the eBook. A further stimulated economy will only artificially drive up short-term demand in the economy and in the long-term it will increase prices leading to even higher inflation. High levels of inflation could be devastating to the worldwide economy as shown in the late 1970s and throughout history. Keep in mind that from 2001 – 2004 the Fed kept (real) rates at the lowest they’ve been since the late 1970s.
 

4. What does this mean to you? 

The current housing bubble is one result of these historic low rates but a more severe liquidation seems unavoidable. The recent Fed cut might postpone the day of reckoning, but it will only make the coming adjustment that much harsher.  Prepare yourself with a more defensive portfolio as shown in the eBook:

• Buy the eBook using the secure shopping cart and receive a discount by using the coupon code "newsletter" at checkout - only $9.50!:  https://shop.outstandingebooks.com/displayProductDocument.hg?productId=1  
• You can also purchase a full-color printed version of the book and special reports by clicking here: http://www.lulu.com/content/336678. The price is $26.99. It looks great! 

Warm Regards,
 

Louis Hill, MBA
www.MyRealEstateBubble.com
www.OutstandingEBooks.com  
888-58EBOOK (888-583-2665) 

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***Disclaimer: The information in this newsletter and the corresponding websites do not constitute professional services, including, but not limited to investment advice. Please consult a finance and/or investment professional for services and advice.
 

© 2007 www.MyRealEstateBubble.com

September 10, 2007: Foreclosures are up 93%.... even in my own rented bubble condo!

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www.MyRealEstateBubble.com
Monday, September 10, 2007

 
Newsletter #28: Foreclosures are up 93%… even in my own rented bubble condo! 

In this issue: 

1.  A MUST-SEE COMIC STRIP - HYSTERICAL!!
2.  Foreclosures are up 93%… even in my own rented bubble condo!
3.  What does this mean to you?
  

1. A MUST-SEE COMIC STRIP – HYSTERICAL!!

If you can’t see the attached comic strip, please click on the link below! It sums up the foreclosure situation and America’s weight situation! More to come on the weight issue soon:

http://www.browardpalmbeach.com/php/comics/art/thecity/thecity.jpg

 
2. Foreclosures are up 93%… even in my own rented bubble condo!
 
The slumping US housing market has caused a record number of borrower defaults. Lenders began the foreclosure process on .65% of US mortgage holders in the second quarter of 2007 versus .58% in the first quarter. To put this in perspective, foreclosures are up 93% from July 2006 to July 2007. 

As longtime readers know, I sold my Miami Beach bubble condo in early 2005 and have been renting ever since.  I currently live in downtown Fort Lauderdale at a bubble condo that is really amazing… if it was a hotel it would be a five star hotel easily… pool, hot tubs, gym, full spa, cigar humidor, wine cellar, business center, recreation rooms, marble everywhere, right on the intercoastal, it is really first class. I am sure my rent only covers 2/3 of the costs to own… a perfect example of a bubble condo. 

However, I recently found out that the owner of this condo is going into foreclosure because he bought at the top of the market and the property is now worth far less than he bought it for. I know everything will work out (for me, not necessarily for the buyer), but this example is just the tip of the foreclosure iceberg. 

And the overall problem is getting worse as the number of homes for sale has reached 4.4 million… the most ever. This means that prices will not go up for quite some time especially with all the new construction still occurring. 

Countrywide mortgage has recently announced that it is going to cut 10,000 to 12,000 jobs, but because Countrywide is the largest mortgage lender in the country their job losses will carry over to other mortgage companies. A research firm in NY believes the job losses could be as high as 100,000 jobs in the mortgage industry alone. I recently met a woman who owns her own mortgage and title company and she says that she is starting to look for other work out of real estate, a trend that worsens every day.

 

3. What does this mean to you?

The slowing real estate market will cause consumer spending to drop and will slow the entire economy down. Auto sales are down as Autonation stated that the slower car sales are due to less people making second-mortgage equity withdrawals from their homes because of a combination of lower equity in the home and the increasing difficulty to get loans.  Furniture sales are also down, home improvement is slowing and people are losing their jobs in many areas. Because consumer spending is 71% of U.S. GDP, a slower consumer means that recession will be here in short order if it is not already at our door. 

You want a more defensive portfolio as shown in the eBook:

• Buy the eBook using the secure shopping cart and receive a discount by using the coupon code "newsletter" at checkout - only $9.50!:  https://shop.outstandingebooks.com/displayProductDocument.hg?productId=1
• You can also purchase a full-color printed version of the book and special reports by clicking here: http://www.lulu.com/content/336678. The price is $26.99. It looks great! 

Warm Regards,
 

Louis Hill, MBA
www.MyRealEstateBubble.com
www.OutstandingEBooks.com  
888-58EBOOK (888-583-2665)
 

To unsubscribe from the newsletter please reply to this email and type "unsubscribe" in the subject line. 

***Disclaimer: The information in this newsletter and the corresponding websites do not constitute professional services, including, but not limited to investment advice. Please consult a finance and/or investment professional for services and advice.

 

August 14, 2007: Gold and WhiteGold (AKA Milk!) + How to Laugh & Learn for Fitness


June 25, 2007 - Global Bubble Popping Warning from the Bank of all Banks


June 4, 2007 - Investing Globally - What You Need to Know Now!



May 7, 2007 - Why is the economy slowing down while the real estate bubble is going up?


March 12, 2007 - Mortgages, the Stock Market, Recession, Oh My!

February 19, 2007 - What's happening in real estate right now and where is it going?




January 12, 2007 - Transcript from Bruce D Collins Radio Talk Show

1. First, for those who may be listening for the first time and unaware of what you do,  give us an overview of your website, myrealestatebubble.com?

Myrealestatebubble.com is a website that has several functions. First and foremost, it sells the eBook I wrote entitled“How to Prosper in the Changing Real Estate Market. Protect Yourself From The Bubble Now” which was finished in early 2006.

The opening web page describes reasons that you should buy the eBook, lets you preview sample pages directly from the eBook, and offers you a money back guarantee if you are not completely satisfied.

The second page talks about my background, including my experience in the real estate field and financial education.

There is a page that shows the table of contents of the eBook.

There is another page with articles about the real estate market.

And finally there is a page for my real estate bubble blog, which also has copies of the newsletters that I send out on a regular basis updating people on the real estate bubble.

I am pleased and honored to report that the website has had over 72,000 pageviews in the last 9 months.

 

2. Can you give us an update on the latest housing information?

Well, as I predicted in the eBook over 9 months ago, prices have been going down dramatically in all areas of the real estate market, but especially in the major markets that went up so dramatically, including San Diego, Miami,  Naples, New York, but it is even hitting the areas in the country that did not see dramatic growth.

I have heard stories of an Indiana man not being able to sell his home at the price he originally paid, 4 years ago. 

Prices of new homes appear to be still holding strong, but this is primarily due to builders throwing in dramatic freebies to entice buyers to close… including free home upgrades like granite and marble interiors, and even a new Mercedes in the garage! These upgrades, often worth up to $50,000, aren’t reflected as a reduction in the purchase price of the new home but the developer is losing their profits with these giveaways.

Not that I feel sorry for the developers, they had a great opportunity to capitalize on this real estate bubble and have made abnormal profits in the process. Many of them realize that the ride is coming to an end, but they are too far along on their projects to stop now, so as long as the banks will fund their projects they will keep building as they have no other choice.

The banks have to keep funding them by contract but even they are seeing the writing on the wall and are dramatically curtailing their new real estate loans, as they are heavily invested in real estate.

The other statistic that is of importance is the strong drop in the number of sales. Year over year, sales dropped 38% in Nevada, 34% in Florida, and 28% in California.

 
3. The media usually is the last to spot a trend. Many of them optimistically are calling the current housing conditions as a 'bottoming', meaning that prices will either level off from here or proceed to rise once again. Do you agree or disagree with this assumption?

I completely disagree with their optimistic belief that the “bottoming” of this market has happened already. If you study history, then you would see these types of asset bubbles take a good deal of time to work themselves out, most especially real estate bubbles.

For example, Japan had a runup in the 1980s in both real estate and the stock market that they are just starting to work themselves out of now, over 14 years later.

I don’t believe it will take that long for us to work through a bottom, but the real estate market is like a slow moving river. There is an old saying that nothing fast happens with real estate and that includes it’s ups and downs. And historically, we have never had such an upside to the market, all driven by too low interest rates and greed.   We experienced a 10 year runup in real estate prices and the longer the runup, the longer it takes for a recovery.

4. In your opinion, when should someone invest once again in housing or what clues should they look for that it is a good time to invest in housing?

In reality, the best time to invest in real estate is when no one else is investing in real estate and people are really suffering in the real estate market. Perhaps it is because interest rates are high, such as in the 1970s when they were at 18%, or just that real estate has fallen out of favor as an investment. This is just beginning to occur, but the pain of these high prices hasn’t had people suffering enough. 

For example, I have a good friend who is 36 who has made a great deal of money investing in real estate, fixing up homes and reselling them. Now she is stuck on 2 separate million plus homes in Miami that she can’t sell at the prices she feels they are worth. She also owns her own million dollar home. I warned her 6 months ago that this would happen and now she is feeling the pain. She is in shock at this point and has decided to rent them and hold on. Earlier this week, I gently told her that she needs to sell at least one of her investment properties at whatever price she can as I believe the real estate market will not bottom out for at least 3 to 5 years.

The eBook gives you 2 solid techniques to accurately decide if a home is a good value, the rental income test and the median income test. These two tests are worth the value of the eBook alone, so if you are interested please feel free to buy it.

5. I saw some recent headlines about a lender folding up its' tent. What will be the fallout in the banking community before this is over?

Banks, unfortunately, have grown dramatically through real estate loans and mortgages, and now find themselves in the precarious position of being highly invested in real estate. The most recent statistic I have found is that over 55% of bank assets are real estate related.

The last time this has happened was in the Savings and Loan Crisis in the early 1990s, often know as the S & L crisis. Banks at this time were highly leveraged in real estate and suffered when the real estate market went down.

Another casualty of the last real estate bust of the early 90’s was a giant insurance company, Mutual Benefit Life, went out of business because an article about the company’s large real estate holdings in the early 90’s caused a run on the company of people cashing out their policies. This run on its cash caused the company to go bankrupt.

Then there are all of the banks that have lent money on adjustable mortgages. These adjustable mortgages have caused foreclosures to rise substantially and this will only get worse. Please go to my blog for a previous newsletter I wrote on foreclosures.*** 

6. The Fed has been on pause for over six months now. First, how long do you believe the Fed will be on pause and, second, will they raise rates or lower rates?

I believe the next step will be for the Fed to continue to raise rates, sometime in the next 6 months.  Recently, inflation has been held in check for some time now only because oil prices are being held down due to the unusually warm winter. As the weather changes, I believe oil prices will continue to increase, and possibly have a super spike above $100 a barrel. At this point inflation will continue to worsen and only interest rate hikes will be the tool available to reign in inflation and keep the dollar from devaluing too far.

7. It seems like the Fed reacts slowly. What is your assessment of the Fed's performance in recent years?

The Fed under Alan Greenspan was always too slow to react. They waited too long to lower interest rates in the early 2000’s in response to a slowing economy, and then when they finally played catch up they left interest rates too low for far too long. These low rates fueled the real estate bubble by allowing people to buy more home than they could afford. We will be feeling the pain from this creation of free money for quite some time.

Now “Printing Press” Bernanke has been in dollar creation mode and every dollar pumped into the system makes every prior dollar worth less.

Many people don’t realize that due to inflation and dollar creation, in the last 25 years peoples savings have lost half of its buying power, half of its buying power.

And the Fed has even stopped publishing the M3 report which showed the number of new dollars created. The Fed has a tough road ahead.

 
8. Let's take a look at foreign currencies. What currencies are likely to do well in 2007?

I am a big fan of the Yen and the Euro.  I am surprised that the Yen hasn’t been strengthening against the dollar as strongly as the Euro has. But I believe it will catch up and am invested in Japanese Yen and other Asian currencies. The London bank just made a surprise rate increase this week, and continued increases on their part will be the pin that pops the British real estate bubble. I am a fan of Asian currencies including the Yen. I am also a fan of the Argentinian currency for 2007.

 
9. I know you touch on this in detail in your E Books at myrealestatebubble.com but can you give us a general overview of how someone listening tonight can invest in foreign currencies?

I have invested in a foreign currency based CD through Everbank.com. Everbank.com is one of the best sources for investing in foreign currencies, gold and commodities through CDs that are FDIC insured.  You can invest in CDs based in most foreign currencies and earn interest on your money and enjoy the upside potential of the foreign currency against the dollar. The CD I invested in is their Asian currency CD..

10. The US Dollar has been a major concern over the last several years. We've heard rumblings in the Middle East as well as in Asian countries about diversifying their reserve currencies to either a basket of currencies or even gold. Is this likely to be an issue for US Dollar strength sometime in the future?

Many middle-eastern countries are now considering depegging there currencies from the US dollar in the near term. This has been rumored for some time, but they are meeting in April to make their decision on this.  If this happens, and I believe it will, it will cause further weakness in the dollar. In addition, China and Russia are reducing their amounts of holdings of US dollars. This will put additional downward pressure on the dollar as well. The time to act to invest in foreign currencies is now while the dollar is still holding as it has.

11. What is your take on investing in the stock market this year?

I am very bearish on the stock market as I feel the stock market will have a strong correction over the next several months.

We have several sell signals on a number of technical indicators, including these:

    * The Volatility Index, the VIX has broken out to the upside which means people are starting to get scared even in the face of new highs for the Dow.

    * Semiconductor stocks typically lead the market and are vastly underperforming the major indices.

    * Investor sentiment is overwhelmingly bullish.

There are other technical indicators that are pointing to a downturn as well.

Remember that the market typically rallies during the first week of the year. But those gains are just as often given up by the middle of the month. I think the right time for betting against the stock market is very close.

Be very careful with your portfolio of stocks at this time. You are much better off investing in gold, foreign currencies, a bond portfolio and foreign stocks. And now might be a good time to begin shorting stocks for the aggressive investor or buying puts.

12. We've seen busts in internet stocks and, now, housing in the last couple of years. How does someone avoid the herd mentality?

First, you need to be able to spot the herd mentality. You do this by seeing that everyone is talking about a certain asset class, and all advertising is pointing to that asset. In the late 90s it was the stock market and in the 2000s it was real estate.

Second, you avoid the herd mentality by not getting caught up in the hype on an emotional level. Take all of the emotion out of investing, as much as possible, and you can avoid the herd mentality. When you can spot a trend forming, invest early and take your profits when you have made a healthy gain, but just do not wait too long.

There is an old saying in the stock market that you will never buy the actual bottom or sell the actual top, but if you are close to the bottom and made money you are doing well.  The other part of that saying is that pigs get slaughtered which is what is happening now to people holding onto their real estate too long. The suffering is only beginning.

 
13. Is inflation still a problem that the Fed should be worried about?

Inflation is definitely a concern for the Fed as it should be. The low interest rates, dollar printing and the real estate bubble has put a lot of pressure on the prices of the raw inputs, the commodities that are used to make products that we use every day including as gold, silver, copper, aluminum, cement, lumber and others.

Add to this fact China and Indias growing economies and their increasing demand for these goods and you have a potentially large problem brewing on the horizon for inflation.

The last Fed meetings minutes showed that their concern about inflation was there greatest concern currently.

14. I attended a gold show in November in San Francisco and, once again, the crowds were not there which tells me that this asset class is still overlooked. How is gold doing as of late and how do you believe it will perform in the future?

Today we had a strong increase in gold and silver with gold increasing $12 and silver increasing 43 cents. What is really important to note is that gold has been holding steady while oil has been dropping all the way from over $70 a barrel down to around $50 a barrel. This holding steady I believe is a bottoming in the gold market and todays rally could be the start of the next leg up. You definitely want to invest in gold and silver coins, as soon as possible. To invest in gold coins I recommend a company called Gainesville coins which is who I buy my coins from. You can go to www.gainesvillecoins.com for more information.

I believe that gold at some point will be over $850 an ounce this year, and will be over $1,000 a year in the next few years. Invest in it now while it is still near $600 to be ahead of the crowds.

15. Is owning gold bullion better than owning gold stocks?

Currently that is the case. The gold stocks are now following the stock market more than the price of gold. This might be disconnected in the future, but owning gold coins and bullion is now better than owning gold stocks.

Back to everbank.com, you can invest in a CD based on the price of gold where if gold goes up you make 100% of the upside of gold. If gold goes down you do not lose any of your principal. I own one of these CDs.

16. You've had a lot of positive feedback on your E Books by a very impressive list of highly respected people at myrealestatebubble.com. If you could leave our listeners one thought or piece of advice about investing, what would it be?

First of all, I want to thank all of the people who have given me positive feedback. It makes me very proud to be respected by my peers.

The one piece of advice I can give is that you have to look at the big picture of the economy, and you don’t have to be an economist to identify the big picture clues of where the economy is going. Know that on average, every 6 years we have a recession, and the last recession was in 2001, followed by 6 years of propping up the economy by ultra low interest rates and a housing bubble. We are heading into a recessionary period, most probably this year. It might be a light recession, or perhaps not so light, but prepare with defensive investments now so that you can capitalize over the next few years by switching over to more aggressive investments when the economy rebounds.

December 11, 2006 - Two interesting real estate stories



November 27, 2006 - The US dollar tumbled last week, what you need to know now!




November 9, 2006 - The yield curve is still extremely inverted!

Over the last 50 years, the most accurate warning that a recession is coming is the inverted yield curve. This is where you earn more money investing in short term government debt than long term government debt. This has been happening on and off for almost a year, but for the last few months it has been very dramatic.  See today's rates below:

     Date    1mo  3mo  6mo  1yr   2yr    3yr   5yr   7yr   10yr  20yr  30yr

11/09/06

5.19

5.09

5.16

5.02

4.75

4.66

4.60

4.60

4.62

4.82

4.73

You can clearly see from above that by investing in a 3 month government T-bill you would earn 5.09%, but investing in a 30 year government bond you would only earn 4.73%!!!  This inverted yield curve is a sign that recession is coming! Prepare now with the eBook and special report on recession.

October 30, 2006 - Why is the Dow making new highs when 20 of its 30 stocks are lower than 6 yrs ago?

Welcome to MyRealEstateBubble.com's Newsletter!

 

The Internet's Most Popular Real Estate Bubble & Economy Newsletter!

Questions or Comments - info@myrealestatebubble.com

888-58EBOOK (888-583-2665)

 

www.MyRealEstateBubble.com

Monday, October 30, 2006

 

Newsletter # 18: Why is the Dow making new highs when 20 of its 30 stocks are lower than 6 years ago?

 

 

In this issue:

 

1. Why is the Dow making new highs when 20 of its 30 stocks are lower than 6 years ago?

2. Home sales prices dropped 9.7% in the past year - but what is the real story?

3. NEW SECTION - What this all means to you.

 

 

1. Why is the Dow making new highs when 20 of its 30 stocks are lower than 6 years ago?

 

The Dow is made up of 30 stocks and has been making record highs lately - the last time it was making record highs was in 2000. But how is that possible if 20 of its stocks are lower than they were in 2000, with 15 of them still down by more than 25%?

 

The Dow index is based on the price of its 30 stocks, with the higher priced stocks being more 'important' in the calculation. Recently, there was a surge in 4 of the Dow stocks that are the highest priced - hence, the new highs on the Dow. What this means is that you should be careful if you believe that the new highs on the Dow indicates great times are ahead for the economy and the stock market. You should examine your investment portfolio and see how much of your money is invested in U.S. based stocks - if you are like most people, heavily invested in the U.S., please see section three for some ideas to balance your portfolio and how I have my portfolio set up.

 

Also worth noting is that if the Dow was capitalization rated (weighted based on the size of the company) your total return on an investment in the Dow would only be 1.13% per year over the last 7 years, including dividends!

 

Finally, these new highs in the Dow come in the face of 2 contradictory economic indicators, 1) the Yield Curve and 2) current manufacturing activity. 

 

1) The yield curve has been inverted on and off for the last 10 months, and is now fully inverted. An inverted yield curve is when you earn more money in short term government bonds than in long term government bonds. Every time there has been an inverted yield curve in the last 50 years, recession has followed within approximately 12 months.

 

2) Manufacturing activity in the US is measured by the Philly Fed Survey - positive numbers reflect economic expansion and negative numbers are reflective of economic contraction. In August, this measure was a healthy positive 18.5. In September, it dropped to -0.4, the largest drop since January 2001. In October, the number decreased to -0.7.

 

Both of these indicators point to an economic slowdown.

 

 

2. Home sales prices dropped 9.7% in the past year - but what is the real story?

 

Median home prices dropped to $217,100, the lowest price in 2 years. But this is actually understating the real price changes due to builder incentives! Builders have had to give away free pools, BMWs, and they have even payed the buyer's property taxes for 2 years!  These incentives avoid the appearance of decreasing prices because they are masking the real decline in prices.

 

For example, if a builder sells a million dollar home, but has to buy a $50,000.00 BMW for the buyer to close the deal, then the real price of the house is $950,000.00. If the BMW was not purchased, the home price would have been forced down to its current value, $950,000.00, for the buyer to complete the purchase. The point is that if all of these incentives were priced into the home price, then actual prices dropped more than 9.7% year over year, because 1 year ago these incentives didn't exist.

 

And what about the reported increase in sales of 5.3%??? If you look at the government website, their margin of error was +/-15.6%!!!! So the real change was somewhere between +20.9% and -10.3%!  We have no idea what the real number is yet.  Furthermore, the home sales number that were reported in June, July and August were revised down by 67,000 units, primarily due to potential home buyers cancelling the purchase of a home they were under contract to buy.

 

 

3. NEW SECTION - What this means to you.

 

The 30 stocks of the Dow Index making new highs should not lull you into a sense of security. Historically, whenever there is a slowdown in the economy, the stock market goes down. So to protect yourself and prosper, you should have some defensive, bearish investments in your portfolio in case this happens.

 

The first thing to do is to look at your overall investment portfolio and determine how much of your investments are tied up in U.S. based assets. This would include your home and investment properties; your stocks; bonds; retirement plans; and all of your other assets. I am willing to bet that most of your money is in U.S. based assets; with a sizable portion of your assets most likely being in real estate.

 

Some defensive, bearish investments you could make include:

• Gold and silver investments in the form of coins; www.goldmoney.com; or a Gold CD at www.everbank.com
• Commodities, such as a commodity CD at www.everbank.com
• Foreign currency investments, such as a foreign currency investment through www.everbank.com
• U.S. Bonds
• Foreign stocks
• Shorting the stock market, or investing in a mutual fund that shorts the stock market (most risky technique)

You might have been wondering what my portfolio is made up of, so please find below my investments and the percentage of my investment assets that they make up, (not including personal assets or my car):

• Cash: 19.1%
• Other Deposits: 4.7%
• Gold and Silver coins: 11.1%
• Gold and silver: 7.1% (held at www.goldmoney.com)
• Gold CD: 2.9% (with www.everbank.com)
• Foreign Currency CD (Asian currencies): 38.1% (with www.everbank.com)
• Commodity CD: 4.8% (with www.everbank.com)
• Life insurance cash value: 7.6%
• IRA (mostly in foreign stocks): 2.2%
• Other investment accounts (mostly in cash): 1.9%

The point I am making by sharing my portfolio with you is twofold: #1) I invest in all of the ideas I recommend; and #2) I am positioned with a bearish portfolio. The reason for this is that I believe the current situation will only get worse.  I hope I am wrong and that we do get a soft landing, but I would rather be safe than sorry!

 

Protect yourself and prosper by buying the eBook now by clicking here and receive a discount by using the coupon code "newsletter":  https://shop.outstandingebooks.com/displayProductDocument.hg?productId=1

You can also buy a full color printed version of the book and special reports by clicking here: http://www.lulu.com/content/336678. The price is $26.99.

 

 

Please forward this to your friends and family so they can be prepared as well. Anyone can sign up for the newsletter here (Your email is safe and confidential): https://app.quicksizzle.com/survey.aspx?sfid=16753 

 

Warm Regards,

 

Louis Hill, MBA

 

www.MyRealEstateBubble.com

www.OutstandingEBooks.com  

1521 Alton Road, #116

Miami Beach, Florida, 33139

888-58EBOOK (888-583-2665)

 

To unsubscribe from the newsletter please reply to this email and type in "unsubscribe" in the subject line.

 

***Disclaimer: The information in this newsletter and the corresponding websites do not constitute professional services, including, but not limited to investment advice. Please consult a finance and/or investment professional for services and advice.

 

© 2006 www.MyRealEstateBubble.com

October 23, 2006 - Dr. Kent shares some nice words about the eBook and an update on California
 

Welcome to MyRealEstateBubble.com's Newsletter!

 

The Internet's Most Popular Real Estate Bubble & Economy Newsletter!

Questions or Comments - info@myrealestatebubble.com

888-58EBOOK (888-583-2665)

 

www.MyRealEstateBubble.com

Monday, October 23, 2006

 

Newsletter # 17: Dr. Kent shares some nice words about the eBook and an update on California Real Estate

 

 

In this issue:

 

1. Dr. Kent shares some nice words about the eBook

2. A quote from an economist

3. The Los Angeles Times updates the California Real Estate Market

1. Dr. Kent shares some nice words about the eBook

 

This is an unsolicited testimonial from a retired Doctor in England, Dr. Kent, who has recently read the eBook (October 18, 2006)  -  

 ----> Dr. Kent

"Dear Louis,

Thank you for your most interesting and very well researched e-book, “How To Prosper In The Changing Real Estate Market”. I really enjoyed it, and will re-read it again very carefully indeed. I have already read through it all twice.

  

I have read many books on this subject, but yours is by far the best. It is also excellent value. I greatly appreciate all the points you make, particularly about the parallels between the Japanese and the US housing markets, and the Austrian Economic Theory.

  

I greatly appreciated your very helpful links to your research material. I also found your additional e-Reports about “Surviving a Recession”, “Gold”, and “The Collapse of the US Dollar” most informed and helpful. 

 

I totally agree with you about all the points you make, but, unlike you, I am not a market professional! I am actually a retired UK medical doctor. The housing market is still going up in the UK , according to the various published indices.  The US appears to be well ahead of the UK in the housing collapse. I sold a detached house on a housing estate, with a PE of 25 (Rent / Capital Value, as I am sure you know!) I now rent a house. The rent seems expensive, but I believe I have made the right decision. If all else fails, I will at least be a cash buyer, but I actually prefer renting at the moment.

 

Despite the talk, houses in my area do not seem to be going up very much, so I am very happy to sit it out, and wait and see what happens!

 

All my friends think I am completely mad, with my rent a waste of money! But it will not be wasted if there really is a housing collapse in the UK , as in the US . Our UK domestic interest rates have not gone up as much as yours in the US , so perhaps this is why the market has not collapsed. UK interest rates are published in a graph on www.housepricecrash.co.uk. Since world interest rates are rising, it seems unlikely that the UK will be able to prevent further larger interest rate rises.

 

It took about 9 months to sell my house, and I found it extremely stressful, which is another reason for not buying one! Although our house took longer than most to sell, many neighbours are also struggling to sell their houses. Smaller houses sell more quickly, but larger houses are definitely sticking. You, of course, make this point in your book, as an indicator of the state of the market.

 

The estate agents and the press generally are still very bullish, but I simply cannot see how houses can continue to increase in value when first time buyers cannot afford them.

 

Thank you so much for an extremely well researched e-book, which is also excellently written. It was an enormous relief to me to find that there is at least someone out there who does not think I am completely mad to have sold my house and am now renting! Your e-Book is truly excellent material, and a bargain at the price. I am very much in your debt.

 

With warmest wishes,

 

Richard Kent

 

Retired Medical Doctor

Southampton, UK"

 

THANK YOU RICHARD!

 

 

2. A quote from an economist

 

"Stock prices have reached what looks like a permantly high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as they have predicted. I expect to see the stock market a good deal higher within a few months." - Dr. Irving Fisher, Professor of Economics at Yale University, one of the most importand US economists of his day, speaking on October 17, 1929, a few weeks before the Great Crash of the stock market. 

 

Allow history to remind you not to get caught up in the hype of the current US stock market's new highs. Read the eBook and prepare now!

 

 

3. The Los Angeles Times updates the California Real Estate Market

 

"More Homeowners Going Into Default," states the LA Times:

 

"The number of Californians who are significantly behind on their mortgage payments and at risk of losing their homes to foreclosure more than doubled in the three months ended Sept. 30, 2006, providing the latest evidence of trouble in the housing market, figures released Wednesday show.

Lenders sent out 26,705 default notices - the first step toward a foreclosure - during the July-to-September period, up from 12,606 during the same quarter in 2005, according to DataQuick Information Systems.

'We were putting buyers in homes with loans they could not afford to sustain over the long haul,' said Bob Casagrand, a San Diego real estate agent. 'If you're a marginal buyer with an adjustable mortgage, you're rolling the dice on the future.'"

Protect yourself and prosper by buying the eBook now by clicking here and receive a discount by using the coupon code "newsletter":  https://shop.outstandingebooks.com/displayProductDocument.hg?productId=1

 

You can also buy a full color printed version of the book and special reports by clicking here: http://www.lulu.com/content/336678. The price is $26.99.

 

 

Please forward this to your friends and family so they can be prepared as well. Anyone can sign up for the newsletter here (Your email is safe and confidential): https://app.quicksizzle.com/survey.aspx?sfid=16753 

 

Warm Regards,

 

Louis Hill, MBA

 

www.MyRealEstateBubble.com

www.OutstandingEBooks.com  

1521 Alton Road, #116

Miami Beach, Florida, 33139

888-58EBOOK (888-583-2665)

 

To unsubscribe from the newsletter please reply to this email and type in "unsubscribe" in the subject line.

 

***Disclaimer: The information in this newsletter and the corresponding websites do not constitute professional services, including, but not limited to investment advice. Please consult a finance and/or investment professional for services and advice.

 

© 2006 www.MyRealEstateBubble.com

October 16, 2006 -  Fraud in Fort Lauderdale! (Dan Marino)

• Lawsuits for shoddy construction work
• General contractors suing subcontractors as costs rise and they do not perform their jobs
• Developers suing speculators for flipping properties prematurely
• Mortgage brokers sued for not fully disclosing risks of ARMs
• Appraisers being sued for inflated appraisals
• And other frauds that have been rampantly occurring

• Citigroup's Metal Analyst forecasts gold will test $700 per ounce in 2006 and $850 in 2007-2008
• J.P. Morgan's senior analyst say gold may reach $800 per ounce in 2007
• Baker Steel Capital Managers state gold prices may reach $700 per ounce in 2006 and surpass $850 per ounce
• Goldman Sachs states gold may average $785 an ounce in 2007

 

Warm Regards,

 

Louis Hill, MBA

 

www.MyRealEstateBubble.com

www.OutstandingEBooks.com  

1521 Alton Road, #116

Miami Beach, Florida, 33139

888-58EBOOK (888-583-2665)

 

To unsubscribe from the newsletter please reply to this email and type in "unsubscribe" in the subject line.

 

***Disclaimer: The information in this newsletter and the corresponding websites do not constitute professional services, including, but not limited to investment advice. Please consult a finance and/or investment professional for services and advice.

 

© 2006 www.MyRealEstateBubble.com

October 10, 2006: The Dow hit new highs this week - This week's newsletter!

• The Everbank.com Gold CD and Commodity CD:  http://www.everbank.com/main.asp?affid=eb
• Buy rare gold and silver coins: Contact Mike Fisher of Gainesville Coins at (352) 672-2002.
• Buy the new American Buffalo 24 Karat Gold Coin from the US Government (mine came this week and they come in a very nice display case): http://usmint.gov/mint_programs/buffalo24k/
• Invest in gold and buy and sell it easily using Goldmoney:  www.Goldmoney.com

 

Warm Regards,

 

Louis Hill, MBA

 

www.MyRealEstateBubble.com

www.OutstandingEBooks.com  

1521 Alton Road, #116

Miami Beach, Florida, 33139

888-58EBOOK (888-583-2665)

 

To unsubscribe from the newsletter please reply to this email and type in "unsubscribe" in the subject line.

 

***Disclaimer: The information in this newsletter and the corresponding websites do not constitute professional services, including, but not limited to investment advice. Please consult a finance and/or investment professional for services and advice.

 

© 2006 www.MyRealEstateBubble.com

September 20, 2006 - Gold is a great buy - This week's newsletter!

 

Warm Regards,

 

Louis Hill, MBA

 

www.MyRealEstateBubble.com

www.OutstandingEBooks.com  

1521 Alton Road, #116

Miami Beach, Florida, 33139

888-58EBOOK (888-583-2665)

 

To unsubscribe from the newsletter please reply to this email and type in "unsubscribe" in the subject line.

 

***Disclaimer: The information in this newsletter and the corresponding websites do not constitute professional services, including, but not limited to investment advice. Please consult a finance and/or investment professional for services and advice.

 

© 2006 www.MyRealEstateBubble.com

August 30, 2006 - Hurricane Ernesto Striketh!
    I am sitting here updating my blog as Hurrican Ernesto passes us by. Last night, every time a stiff wind blew through my storm shutters on my bedroom windows, they rattled and shook so loudly that they woke me up! It was not much fun, but it could have been much worse. At least we still have power, which after Hurricane Wilma last year we lost for a week! Cold showers get old, really quickly.
    I woke up this morning and thought about the last great real estate bubble that occurred in Florida in the 1920's. In that time, speculators came to Florida in droves, buying up real estate so quickly that it sometimes doubled in value in only a few short weeks!
    What finally killed the real estate bubble of the 1920s? A large hurricane in 1926 smashed through Florida and destroyed any interest in owning real estate there. Many people lost entire fortunes as their paper equity disappeared. This loss of paper equity will happen again.
    As proof of this future occurrence, the yield curve is still inverted - now for the last 13 days in a row. This is the single biggest indicator of a coming recession, and recession will mean less consumer spending, job losses, and this will lead to a loss of real estate values. I predict recession will be upon us in the next 8 to 16 months. I write more about this in the eBook and share with you a website where you can see the updated daily yield curves for yourself.
    It won't be "different this time". It will be the same as every other asset bubble in history that went up and then down.
    Market sentiment is rapidly changing. In Miami, many people now believe that it will be better to buy next year. If everyone is saying it is better to buy next year, than in reality it will be better to buy in three years! Never follow the herd, especially when you are trying to pick the bottom of the real estate market.
    Prepare yourself while there is still time by buying the real estate bubble eBook "How To Prosper In The Changing Real Estate Market" by clicking here now: https://shop.outstandingebooks.com/displayProductDocument.hg?productId=1


August 20, 2006 - Recession is Coming
    I was interviewed on an Internet Radio Talk Show Friday Night and we talked about the economy.

    I made many predictions in that show, including:           

• THE REAL ESTATE BUBBLE HAS BURST AND IT IS ON THE WAY DOWN
• THERE WILL BE NO SOFT REAL ESTATE LANDING; A HARD LANDING IS COMING
• RECESSION IS COMING IN 12 - 18 MONTHS
• THE STOCK MARKET WILL GO DOWN NEXT YEAR
• THE US DOLLAR WILL DROP IN VALUE DRAMATICALLY IN THE NEXT 12 MONTHS
• GOLD WILL GO TO $1,000 AN OUNCE WITHIN THE NEXT 12 - 18 MONTHS

The following are some excerpts from the show:

Q: Louis, the number of foreclosures in the housing market are starting to rise. In fact, mortgage defaults are up 67% here in California. Louis, has the housing bubble popped in your opinion?

A: The housing bubble has popped in my opinion. We are definitely past the top of the real estate market for a number of reasons.

First, no market goes up indefinitely, all markets go up and down. As humans, it is in our nature to fool ourselves into believing that markets will keep going up and that is part of the hype that creates the bubble in the first place. The real estate bubble is just like any other asset bubble throughout history.

Second, the times of low interest rates are over and this is made worse by the large amount of adjustable mortgages. Adjustable mortgages are mortgages whose initial interest rate is low for a year or two, and then is adjusted up to a higher interest rate. Many of the people who use adjustable mortgages shouldn’t be buying a home in the first place, because what are they going to do when their monthly mortgage payments increase by 50%?

Third, the national median mortgage payment is $1,687 a month, nearly twice the median rent payment of $868 a month. The financial gap is even larger in cities where home prices recently rose to sky-scraping heights, such as in New York, San Francisco, Los Angeles and Washington, according to USA TODAY.

Fourth, there are a number of different frauds that have been occurring in the real estate market over the past few years. These frauds include inflated appraisals, inflated income declarations by buyers, and many more which will lead to a huge number of lawsuits. I wrote more about this on my blog.

The difference with the real estate market is that it reacts much more slowly than the stock market. It is on the way down and we are past the top of the market which occurred during the summer of 2005. It is just going to take more time before everyone realizes the situation that we find ourselves in.

Q: What are some updated important statistics about the real estate market that we should be aware of?

A: Well, the media is really covering what has been going on in the market, but I have been provided with updated statistics as of June 2006 from macromavens.com, a company who gets paid to do this research.

First, new homes and existing homes for sale are higher than they have been in at least the last 20 years, at an astounding 4.2 million homes available for sale.

And new homes under construction is the highest it has been in over 20 years at 1,400,000 homes under construction.

So the combination of higher interest rates, more homes for sale, less investors buying real estate will combine to bring the real estate market down.

Q: Is this bubble going to burst or will it deflate slowly or as the media calls it, a 'soft landing'?

A: There is no such thing as a soft landing. The farther a market goes up, the harder it will fall. The real estate market has gone so far up, that only a hard landing, coupled with recession, will work out the excesses in the market.

To put it into perspective, the real estate associations have always had the most bullish outlook on the market, as they must for the sake of their jobs. However, the chief economist of the California association of real realtors has stopped using the term soft landing as she says she is no longer comfortable with that term.

Most professionals with a far longer resume than myself believe there will be no soft landing, especially in relation to how far the real estate market has run up.

Also, the homebuilder D.R. Horton’s Chief Executive Donald Tomnitz was telling analysts that the home builder's sales in June "absolutely fell off the Richter scale."

All this is leading to a hard landing.

Q: Is this downturn going to turn into a recession, or worse, a depression?

A: As I mentioned earlier, this downturn will turn into a recession, and possibly a depression. It depends on how far down the economy has to go to work out it’s excesses.

Currently, we are experiencing an inverted yield curve, which is the number one indicator that a recession is coming.
Normally, when you invest in US government bonds, the longer that you invest your money the higher interest rate you will be paid.  However, what we are experiencing now is an inverted yield curve. This is when you can earn a higher rate in the short term than in the long term. For example, a 6 month US government debt investment will pay you an annual return of 5.19%. But investing your money for 30 years will only pay you only 4.97%! A full 22 basis points less. This is an inverted yield curve.

If the inverted yield curve stays inverted for a month in a row, we should experience a recession in 12 to 18 months, which is what I am predicting. In the eBook I point out a website where you can see the updated daily interest rates for yourself.

Their were many more questions and answers in the hour long interview including:

• What will happen to US banks?
• Will rates continue to rise?
• How is oil going to influence this economy?
• What do I think about gold?

You can listen it in its here: http://www.fantalklive.com/archives/TBF_08182006.mp3
           

August 6, 2006 - The inverted yield curve is coming, recession is imminent
    Please see the graph below showing the inverted yield curve we are experiencing as of Friday.

    In the eBook, and especially the report entitled "Recession, Survive and Thrive" I discuss the most important sign of an impending recession: The inverted yield curve.
    Briefly, an inverted yield curve is where the short term rates are higher than long term rates. Normally, if you invest money for the long term, you would expect to earn more interest than if you invest for the short term.
    However, as you can see from the graph above, this is not the case. I have a feeling this will get worse over the next few days, and when it stays inverted for a month in a row a recession is sure to follow in the next 12 - 18 months.
    In the eBook I discuss the website you should view daily that shows the updated information about the yield curve, and how to prepare yourself for recession and the coming drop in the value of the US dollar.


July 29, 2006 - the eBook received a great review
    I am pleased to say that the ebook received a great review from Joe Baker, Senior Editor of the online newspaper called the The Rock River Times. Here is the link and what Joe said:
    http://www.rockrivertimes.com/index.pl?cmd=printstory&id=13823&cat=2

Book offers plan to weather housing market downturn By Joe Baker, Senior Editor The chief U.S. economist at Deutsche Bank AG in New York recently said: “The housing market’s in trouble. We have become decidedly more cautious on the outlook since the index has started falling,” according to a report by Bloomberg News. Bloomberg said the National Association of Home Builders/Wells Fargo index of builder confidence dropped to 39 from 42 in June; the lowest level since December 1991. It was the eighth straight drop for the index in nine months. If that kind of news is making you nervous as a real estate investor, there’s hope and help. It’s a new book by Louis Hill, MBA, titled How to Prosper in the Changing Real Estate Market. Hill is a real estate professional with many years experience. His publication is an e-book that can be downloaded from www.OutstandingEBooks.com. The work explores how bubbles are created in various markets and how some of them relate to today’s real estate market. The dot-com bubble of the ‘90s, for instance. Hill examines the major bubble markets in California, Florida (Miami), Las Vegas, Washington, D.C., and New York City. He outlines what is happening today in those markets and why, as well as what is going on in real estate markets around the globe. Hill writes: “We are now seeing the signs of the current boom coming to an end, including high-profile condominium projects being cancelled and pre-construction buyers actually backing out of their contracts, giving up their deposits to avoid buying an overpriced home.” The book answers such questions as: “Where is the real estate market going? What is happening in the international real estate market, and is it a sign of what is to come in the United States? What do Warren Buffet, CNN, The Wall Street Journal, billionaire George Soros, Fortune magazine, and the largest real estate investor on the planet, Tom Barrack, have to say about the real estate market today?” Hill talks about the mob psychology that propels bubbles, also known as the “herd mentality.” He says: “This group thinking is also known as the greater fool theory, because one can always sell to another fool. Ultimately, many people end up buying at peak prices while the smart money has already left the market.” He explains how to spot the shift in national sentiment as the housing bubble begins to deflate and how the market shifts from a seller’s to a buyer’s market. “The entire question of manias,” Hill says, “is that people must become investors, not speculators, making smart decisions based on fundamentals and not on emotions.” Hill looks at the Japanese market bubble of the 1980s and how it applies to the U.S. real estate market now. He said the end of the boom came when the Bank of Japan raised interest rates. “Following these interest rate increases,” he writes, “their real estate and stock markets collapsed. Many times through history, markets rise as interest rates fall and then collapse as interest rates go back up. Along with the falling stock prices, real estate prices plummeted by 80 percent between 1991 and 1998.” Hill asks the reader some pertinent questions, such as: “If you had to buy your home today, could you afford to do so?” “If your neighbors had to buy their homes today, could they afford it?” In Manhattan, the average price of real estate is more than $1,000 per foot. He said the U.S. real estate market was estimated to be worth $19.11 trillion at the end of the third quarter of 2005. That outstrips the stock market, which was valued at $15 trillion, and is nearly as large as the bond market that was valued at $23.5 trillion. Hill said: “The growth of the real estate market has driven the economy for several years, and as we begin to see a slow down in the real estate market, we will begin to see the economy decline as people’s consumer spending drops.” So, how does Hill view the real estate market overall? He states: “As we look at many of the nation’s hottest real estate markets, we see a pattern forming of more homes on the market, falling asking prices for homes, a sharp contrast in the cost of renting versus owning, and a growing number of people who stand to lose money on their investments. These bubble markets are simply not sustainable.” Yale economist Dr. Robert Shiller, Hill reports, who wrote a book titled Irrational Exuberance—a phrase we’ve heard from Mr. Greenspan—warns in his latest version of the book that real estate prices could drop 40 percent “in inflation-adjusted terms.” Hill’s book offers a number of facts about the real estate market that potential investors need to know. For one, real estate markets are different from financial markets and why? In the past 18 months, home loan delinquency rates have risen. As interest rates climb, holders of adjustable rate mortgages (ARM) could see their monthly payments rise by 60 percent, Hill said. The book goes on to examine the effect of Greenspan’s economic policies on the market and spells out the latest theories on when the market will crash and how long it will take the economy to recover. The book proceeds to the key questions of the title—how you can prosper and protect yourself in a declining market if you own property and are thinking about selling; or you are looking for hedging options to bolster your portfolio if the market turns down sharply; or you want to sell your home or property for maximum gain; or you want to buy property in a value area and make a good investment. From the July 26-Aug. 1, 2006, issue

Copyright 2002-2006 - The Rock River Times

THANK YOU, JOE!


July 26, 2006 - David Lereah Tells the truth!
    David Lereah, the Chief Economist for the National Association of Realtors and the national cheerleader for the real estate market told the truth on July 25, 2006 when he said:
        Sellers should expect lower prices and then he added that
        he wouldn't be surprised to see single-family home prices fall nationally!!!
The point is that it is not a good time to buy a home, as most of us is aware. This is only the beginning of what will probably be a 5 - 10 year drop and stagnation in home prices. Prepare now while there is still time by purchasing the eBook now.


July 22, 2006 - Developers getting desperate, and the layoffs continue...
    The layoffs are continuing.... A contact of mine informed me that just yesterday Cornerstone developers out of Coral Gables, Florida has laid off 75 people! This developer has built over 16,000 homes over fourteen years and is now feeling the pinch of the bubble bursting.  More layoffs will continue and will lead this country into recession as construction jobs are the highest paying jobs in the workforce. Prepare now with the eBook.
    Also, the latest ploy to get people to buy a newly constructed home is to give them a new Mercedes when they close! It is the base model Mercedes, but it is a new car nonetheless.   
    I suppose if you are buying a $1 million home, the least they could do is throw in a car that costs them $300 a month! hehe 
   

July 21, 2006 - Inflation, War and Gold.

    As long as inflation numbers are above 2% Bernanke will be forced to raise rates again.  And then it will be competely dependent on the continuing statistics on the economy whether rates go higher. But I believe that rising rates will continue and that recession will follow. However recession is actually a good thing:

    Recession is a natural occurrence in the economy whose purpose is to reprice overvalue assets. Recession forces efficiencies back into the economy where there were inefficiencies previously (i.e. the highly inefficient, over-priced real estate market). The upside to this is that the US has always bounced back from recessions.

    The alternative to a recession is far, far worse. If inflation gets away from the Fed, and hyperinflation raises its ugly head such as that     occurred in the 1970's we will be in a much worse position.

    The current leading indicators of the economy are pointing to a job slowdown. Prepare yourself now with my eReport entitled "Recession - How To Survive and Thrive".

    And the war that is emerging in Israel is putting fear in the marketplace and is driving up the price of gold and silver. If you have not got into the metals market, I still recommend at least 10% of your portfolio in the precious metals. Find out more with my eReport on gold.

July 20, 2006 - Internet Radio Talk Show
    I was interviewed on an Internet Radio Talk Show recently. You can listen to the recording at www.brucedcollins.com. The link is towards the bottom of the page.


July 19, 2006 - You can buy the eBook in paperback now!
    If you would like a paperback version of the eBook, you can get the full color paperback copy at: http://www.lulu.com/content/336678


July 3, 2006 - Lawsuits are coming!

• Related Group is being sued by a group of condominium buyers that bought into the cancelled condo project "Icon". The buyers said in the lawsuit that "increased construction costs were not their problem".
• A class action lawsuit against the Vegas Grand Condominium Development for forcing pre-sale purchasers to pay more for their units because of the increase in the value of Las Vegas condos. This was settled in May, 2006.

• As projects begin to cost more than anticipated due to higher construction costs, subcontractors will not be paid and they will sue the developers. These sub conractors will also sue the general contractor for non-payment.
• Developers will sue speculators for flipping properties in violation of their contract rules as they get desperate to sell because they are over-extended financially.
• Mortgage brokers might be sued for selling adjustable mortgages without full disclosure (their documents probably cover this contingency, but in America you can sue anyone for anything)
• Inspectors will be sued for not catching code violations. Condo boards will sue developers for poor work.
• Appraisers will be sued for inflated values. I have heard of many appraisals that are based on neighborhoods only a mile or so away, but of far higher valued homes. There are many other tricks being played with appraisals that have been covered up by increasing real estate prices. As prices stop going up, these infractions will lead to lawsuits.
• Banks will be sued when projects do not get funded.
• Numerous lawsuits for fraud and countersuits will occur as well.

June 26, 2006 - Banks are in trouble!
    This is the article from this week's newsletter, if you haven't subscribed, click here: Subscribe now by clicking here (free)
 
June 21, 2006 - Mortgage broker = "the devil"
    I just spoke with a friend of mine who lives in Boston and is a very successful mortgage broker (earnings of $20,000 per month at age 28).
    We started talking about the bubble in Boston and the increasing foreclosures there.  He said that many of these foreclosures are due to adjustable mortgages resetting.
    He said the scary thing is that it is the banks that give him all the power to sell these extremely risky adjustable mortgages. He sees so many people that have negative equity in their homes immediately upon closing. And that these homebuyer's incomes do not justify these home purchases.
    He called himself "the devil" for putting these people into these mortgages, but if he didn't do it, someone else would! So it might as well be him.
    This system is in big trouble, prepare now!


June 20, 2006 - Real Estate Experts Speak Out!
    This morning I went to a real estate speaker breakfast networking meeting (that will remain nameless). The panel contained three speakers all of whom were highly qualified. The first was the head of a large commercial lender that has personally lent $3 billion to developers; sold $6 billion of commercial real estate; and received his MBA from Wharton. The second gentleman was the head of a commercial lending division of a large bank and went to the University of Florida (clearly the smartest! hehe). The third was the head of a South Florida Branch of a real estate research company who went to Wharton as well. Needless to say, the 75 people in attendence were very interested in their thoughts on the real estate market. Below you will find highlights of their points from today's discussion:
   
    THEIR THOUGHTS ON OPTION ARMS (ADJUSTABLE RATE MORTGAGES):

• 70 percent of borrowers of Option ARMs now have negative equity, meaning they owe more than the property is worth. 70%!!!! This would cause foreclosures to rise.
• The government is trying to regulate option arms as they are seeing that they are more dangerous going forward.
• $80 Billion of option ARMs reset to a higher interest rate in 2005.
• $200 billion of option ARMs will reset in 2006.
• AND $1 TRILLION OF OPTION ARMS WILLL RESET IN 2007!!!
• He went on to say that most of these buyers were counting on appreciation to bail them out and most of them should not have bought homes using ARMs in the first place.

    ON FINANCING

• It is much tougher to get construction financing at this time. Institutions do not want to put as much money out now that the real estate market has softened.  And out-of-state lenders have stopped lending to Florida builders completely. Many banks are now afraid to make loans they would have made only 2 years ago.
• Some development deals are not getting done because of this lack of financing. Buyers are walking away from their hard deposits on land because they cannot get financing.
• Rationality has entered the market on the commercial side, but not on the residential side.
• Banks are requiring much higher amounts of equity put up by the developer, as high as 50% of the budget (it used to be around 25%).
• A lot of residential lenders are actually easing lending requirements! As a result, he is seeing more and more 100% financing of real estate with no income verification and no asset verification!!!
• The residential lending bankers do not really understand how risky these large numbers of residential mortgages are. The secondary market is fueling this poor risk management by continuing to buy these risky loans from the banks and assuming a great deal of risk on behalf of the bank.
• A Federal Reserve Board Member went to the real estate research expert and told him his main concern now is "Concentration Risk". This is the risk of widespread losses because of a concentration in residential mortgages as a major portion of most banks assets. As a result, they are now enforcing stronger due diligence by banks (It doesn't sound like it is happening though!).
  

    ON FLORIDA REAL ESTATE

• People are afraid to move in Florida because they will lose their favorable tax basis on their current home and could see their taxes quadruple.
• Insurance in Florida is a killer. One panelist said that one of his secretaries was almost crying last week to him because her homeowners insurance on her home worth $189,000 went up 80% this year to $7,800!!! She has no idea how she can afford that, and the bank forces her to have the insurance.!
• Another client of his owns 300 properties in Palm Beach and insures his windstorm insurance through Lloyds of London. His premiums when from $250,000 last year to $2,000,000 this year! As a result he is going to pay off his entire bank loan so he can self-insure this risk! He might have the capital to do that, but this real estate owner said that he feels insurance will be the biggest real estate killer, more than mortgage rates. This is because people will not be able to afford the huge jump in premium and will be forced to give the home back to the bank.
• Florida real estate is in the perfect storm of real estate prices going down, income only increasing by 4% a year, interest rates rising, construction costs rising, and people being afraid of hurricanes. It is this fear, this changing market psychology that is really affecting the market.
• Sales traffic in sales centers for new construction is down 85% this year of last year.

LISTEN TO THESE EXPERTS AND PREPARE NOW BY BUYING THE EBOOK AND SPECIAL EREPORTS WHILE THERE IS STILL TIME!
June 19, 2006 - A question from my Aunt
    After sending out this week's newsletter, I received a question from my Aunt. She said:

"Great read.
Thanks.
Prices in Mammoth are still on the rise.
Do you think Ocean front and resort homes will be less affected by your bubble theory?"

To which I replied:

"There will always be rich people buying homes, however, if prices come down dramatically on condos and suburban homes this creates a relatively-speaking 'cheaper alternative' to expensive oceanfront and would drive ocean front prices sown as well.

And then you have many people who bought these expensive homes with adjustable mortgages and as these rates get reset and mortgage payments go up, foreclosures will increase, leading to lower prices as the banks are forced to sell them cheaply. Lastly, higher mortgage interest rates mean overall prices should be pushed down as well.

At this point in time only 20% of Californians can afford the median priced home in California. That is a recipe for disaster.

I hope it does not happen, but I believe the writing is already on the wall. Make sure some of your money is in Gold as this should go up in value as the economy worsens. I like gold between $530 and $580 an ounce as a long term buy. If it goes lower, I will keep buying and averaging down as I believe in it that much.

Love,"

and she replied:

"It’s nice to have a genius in the family.
Thanks.
Love, "

Isn't family great! (especially when they BS you!) :-) 

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June 18, 2006 - Melbourne, Florida's real estate market is dead!
    This weekend, I went to my friend's wedding in Melbourne, Florida. It was a lot of fun to see old friends. And one thing I like about Melbourne versus South Beach is the fact that a rum and coke costs only $4.00 in Melbourne versus $12.00 on South Beach (It's true).
    At the wedding I met a nice couple who are realtors. What a surprise. I am not sure if I  always seem to attract people in real estate, or if real estate is so prevalent in South Florida that it's like shooting fish in a barrel.
    So I ask them the question I ask everyone in real estate, "How's business?". And usually the reply I always here is the same "It's slowed down dramatically". But this time, I got an even worse response: "Melbourne real estate is dead."
    They might have been a bit overdramatic, but then they went on to blame the newspapers talking about overpriced housing! At this point, I realized they did not want to hear about my eBook as I was another person warning people about the obvious, just like the newspapers. I really enjoyed their company so I didn't mention it!
    The wife told me that she was getting calls from angry clients who were outraged that they have already lost 15% of their home's value (read the next article about buying at the top).
    The last interesting point in our conversation was I asked why she didn't have her picture on her business card even though it had a nice full color picture of a sunset beach. She said she had girlfriends who had pictures of themselves on their card and some of them were almost ra.p-ed or se.xua-lly assau.lted due to their pictures.
    It turns out men would go to the realty office, pick up the card based upon the looks of the realtor, invite the female realtor to an empty house and attempt to r.a-pe or assaul.t them. Crazy. Just wanted to remind female realtors to be careful when dealing with new clients, and to be aware of what other realtors have already experienced.


June 17, 2006 - Buying at the top - Wachovia's Mistake
    The real estate market has truly boomed over the last five years with the biggest shift happening in the past three years. All good things must come to an end, and unfortunately this real estate boom is over. People who have bought in the past six months have been buying at the top, and even large companies have made this mistake. One company in particular is Wachovia Bank. Its recent purchase of Golden West Financial for $26 billion is a prime example of buying at the top of the real estate market.
    Two of the primary drivers of this real estate market mania have been people’s belief that they must own real estate coupled with a second factor of low interest rate mortgages.
    The first driver is people’s fervent belief that they must buy real estate, but this ‘herd mentality’ is beginning to change. Speculators buy homes as investments and these investors have been a large source of the demand for real estate in the past few years. Now, not only have speculators stopped buying but they are also selling the properties they own. As a result, inventory of homes for sale are at astronomical levels.
    The second driver of the real estate market has been low interest rate mortgages. Interest rates bottomed out in June of 2003 and have been rising ever since. As a result interest rates are substantially higher than they were only 12 months ago and they only have one way to go – up. Higher interest rates are needed to help slow down inflation. Inflation has recently caused consumers to really begin feeling a pinch in their wallets.
    In order to cope with higher interest rates and high real estate prices, banks have thrust adjustable rate mortgages onto the American public. Since March 2004, there has been a 59% increase in one-year adjustable rate mortgages. These mortgages start out with a low interest rate, but quickly rise after the one-year introductory period is over. Moody’s has reported that an astounding $2 trillion of adjustable mortgages will reset between 2006 and 2007 and this will really cause foreclosures to rise like never before.
    Rise they have as mortgage foreclosures nationwide increased 38% as reported by RealtyTrac Inc. Mortgage defaults will only worsen with higher interest rates and more adjustable mortgage rate resets. What bank is infamous for specializing in adjustable mortgage loans? The answer is Golden West Financial bank.
    Adjustable mortgages will be the primary cause of the coming mortgage meltdown and ground zero for this will be overpriced areas such as California, Florida, and New York. Golden West Financial concentrated their adjustable mortgages in California, one of the most overpriced real estate areas in the country. Wachovia was so absorbed by the real estate bubble it paid the highest price ever per share for Golden West.
    So what happens when many of Golden West’s clients foreclose on their properties because they cannot afford a 50% jump in monthly mortgage payments? Wachovia will feel the pain as they are forced to sell these mortgages to investors for pennies on the dollar. Do not make the same mistake; learn all about the markets and economy. It is important to know there is still time to prepare yourself for the real estate bubble bursting and the coming recession. Go to www.MyRealEstateBubble.com for more information.   


June 13, 2006 - The Market Teaches George Clooney a Lesson!
    Just last week, it was announced that Oscar award-winning actor George Clooney and his Hollywood friends have been beaten by the real estate market. Their famous project "Las Ramblas", a $3 Billion condo/casino complex planned for the Vegas Strip has been scrapped and the land sold. This is the latest development cancelled in Las Vegas.
    Luckily, Clooney was bailed out by another developer to the tune of twice what Clooney's team paid for the land only one year ago. There was a "greater fool" out there who will now take the immense risk of paying $202 million for the 25 acre plot of land. That is $8 million an acre! Just what Vegas needs, another casino hotel strip built just as the economy will be slowing down. Brilliant! And how about the bank that financed this genius purchase, another brilliant move! I guess Clooney used his charm to make that deal happen. hehe
    As you may know, I was a professional trader in the stock market for several years, and watched the stock market bubble burst. One of the lessons the stock market taught me is that you must not let your ego get involved when trading, or you will lose money as a trader.
    The point is that as much respect as I have for Clooney as an actor, I think he should stick to acting. He is the poster-boy for being late to the real estate party, and letting his ego get in the way of seeing the big picture in the stock market. But he will do fine, I am sure!
    The developer who bought the land from George Clooney is the one who wil have a difficult time ahead with rising construction costs, a saturated market, and higher interest rates. Good Luck!


June 7, 2006 - Great review of my eBook

“If you have ever doubted that we are in a real estate bubble, read this book! Louis Hill does a great job of laying out the facts and preparing you for what is going to be an inevitable burst in real estate.”

Emanuel Balarie
Senior Market Strategist
Wisdom Financial, Inc.
www.wisdomfinancialinc.com

THANK YOU EMANUEL


June 6, 2006 - Recession eReport is Complete!
    I am pleased to say that the third free bonus eReport included with the purchase of the eBook is complete! Everyone who previously bought the eBook received their eReport last night.
    I am really glad with the way the eReport came out. It is 40 pages, full of powerful information and great advice. Not to brag, but I feel the advice in this eReport is worth the price of the eBook alone. However, I offer a 90 day money back guarantee if you feel otherwise!
    To complete the eReport, I drew on my personal experience; ideas learned when attaining my MBA; and I read and researched numerous books and dozens of articles and featured the most important ideas from them (I referenced my sources if you want further information).    
    Please find below the Table Of Contents:

                    RECESSION REPORT TABLE OF CONTENTS
1. Introduction
* Quote on the Coming Financial Crisis by Paul Volker in 2004

PART I - WHAT YOU NEED TO KNOW ABOUT RECESSION
2. Phases of the Business Cycle
3. History Of Recessions
4. Expert Commentary: Billionaire George Soros speaks about the recession
* Quote on Markets Moving Up and Down by Marc Faber in 2006
5. Recession - What You Need To Know Now
* Quote about the Crisis That Comes after a Credit Expansion by Friedrich Hayek in 1933
6. The Most important signal of an Impending Recession - The Inverted Yield Curve
* Quote on the loss of One's Savings due to Inflation by Alan Greenspan in 1967
7. The Coming Collapse of the US Dollar

PART II - HOW TO SURVIVE AND THRIVE A RECESSION
* Quote on Being Happy by Adam Smith in 1763
8. How To Survive and Thrive a Recession
9. How a Busines can Survive Inflation and Hyperinflation
10. Conclusion

11. Works Cited

Chapter 8, "How To Survive and Thrive a Recession" covers the following topics:
- Seeing the big picture of your financial situation
- Setting Goals
- Creating a budget
- Ways to cut your expenses and start saving more
- Other strategies to save more
- Ways to have job security and thrive in your job, even during a recession
- Ways to invest before and during a recession
- Techniques for entrepreneurs to weather a recession

I am clear that you will benefit from it!


June 1, 2006 - Real estate scam! and a Great review of my eBook!
    This is perhaps the greatest story about the coming real estate bubble bust:
    So I am at dinner tonight with my friends and they invite an acquaintance, let's call her Jane. And this is the story of Jane's real estate scam:
    Jane and her partner (both under age 30) decide to buy a condominium in Las Vegas which they closed on a month ago.

Here are the facts of the story of the condominium purchase:

• One bedroom condominium.
• Condo last sold in May 2005 for $300,000.00.
• They bought it for $425,000.00 a month ago (April 30, 2006).
• They went to a hard money lender and borrowed the $425,000.00 for a short term.
• They then went to a bank to get a regular mortgage.
• They lie about their income to get the loan and also have a friend loan them $30,000.00 so it appears as if they have a healthy bank account.
• The bank has the unit appraised for $630,000.00!!!!! YES, $630,000.00!!!!
• The bank lends them $600,000.00 in cash!!
• They pay off the hard money lender with $425,000.00.
• They put the rest of the money into escrow and are using it to pay the $5,000.00 a month in total costs (mortgage, condo fees, and taxes).
• They rent the unit out for only $1,200.00 a month, which they are looking to invest in some get rich quick scheme.
  

    So their plan is to hope they sell this unit for over $600,000.00 within a year and a half before Jane and her partner run out of money (her calculation of how long they have - they must have spent some of it). And they talked about gambling the money they have left! And if worse comes to worse, Jane said that they can both live in the one bedroom unit on bunk-beds! --> Her quotes from dinner! Do they realize that if they did live in the condominium, and had to pay $5,000.00 a month in costs, it means that they would have to earn at least $80,000.00 in income a year between them just to pay for the condo! That doesn't include living expenses or anything else. $40,000.00 a year in earnings, each, just to pay for their one bedroom condo!
    I was just sitting there laughing, trying not to be mean. But this is out of control. This is what our financial system is based on: unrealistic appraisals, over-extended borrowers, an ocean of abundant credit, gamblers, and people brain-washed into thinking they need to own real estate! It is unbelievable.
    Does anyone believe that in one and a half years this condo will be worth twice as much as it was worth 12 months ago? Are you kidding me? 
    I couldn't wait to share this story with you! This real estate tale, coupled with the other young real estate investors I meet who see only big dollars in front of them, makes it clear that a crash is coming. I feel sorry for them, but they put themselves in this situation. And what is done is done. Don't make similar mistakes, read the eBook now and be prepared.

    On a more positive note, my eBook got a very nice review from an experienced financial expert, Rick Ackerman. He said some nice things on his website under "Rick's Picks" - you can see what he said by clicking here.
   

May 30, 2006 - Mortgage Interest rates are rising   

May 27, 2006 - Buying at the Top - Wachovia's mistake
    Previously, I discussed herd mentality and how there are less and less 'greater fools' willing to buy real estate at high prices coupled with higher interest rates. The 'greater fools' who are buying now are buying at the top of the market.
    Last weekend, I had two conversations with new real estate investors and they both said that they "just want to hold on to their real estate for two more years". Every day, I am more convinced that there will not be 'two more years' available for all of the reasons discussed in the eBook. Their is an old saying in any market that says that pigs get slaughtered, meaning, if you are making money and get greedy like a pig you will be in trouble. Lest you think this real estate mania has only affected people, large companies make mistakes too, for example Wachovia Bank.

    Wachovia Bank last week made the mistake of buying at the top when they purchased Golden West Financial for $26 billion. Barron's Magazine (May 15) describes Golden West best: "Concentrated in California, Golden West focuses on floating-rate home mortgages that offer the option of deferring interest payments."
    These floating rate, adjustable mortgages are more than likely going to be a primary cause for the coming mortgage meltdown. So not only did Wachovia buy at the top, they paid the highest price ever for Golden West's stock.
    Business that worked in the past will not necessarily work in the future, especially as rates increase and the housing market slows. Wachovia made a strategic mistake that will come back to haunt them over the next few years. For example, Ameriquest on May 3rd, 2006 announced they were laying off 1/3 of their mortgage broker workforce.  
    Moody's has said that $2 trillion of adjustable mortgages, or 25% of total outstanding mortgages, will have their interest rates reset up in 2006 and 2007. This will lead to increased foreclosures and lower home prices. Protect yourself now.

May 25, 2006 - Real estate sales #'s are deceiving
    The website's home page has finally been updated, so please let me know what you think.
    I have been having an ongoing email conversation with someone who doesn't believe there is a bubble (someone in California no less!). Let's call him Jim. I think that Jim believes he is a "cheerleader" for the economy and that sending positive emails to people like myself will have me put on rose-colored glasses and think everything is swell - I don't think so.
    Often, I just ignore his emails but occasionally I take the time to respond. He often ignores my compelling arguments and simply replies to one particular point and then goes on to make generalizations. For example, I asked him if it makes sense for my friend to have 95% of his assets in real estate, as I discuss below on May 14 and he ignored that - does that make sense to any of you???
    Recently, I got a great email from him saying the bubble worriers are losing because April's new home sales were unexpectedly higher. Well, the fact is that while the April sales were a bit higher than expected, the March new home sales number was revised and actually decreased!     The government overestimated March's sales numbers, and I am willing to take a guess that they probably have overestimated April's sales numbers as well - we will see next month.
    For those of us who like numbers, April's new homes sales rose to 1.198 million units, and the forecast was for 1.15 million units. Thus it was 5% higher than expected.
    However, there was a substantial downward revision to March sales. The March figures were revised to 1.142 million units from the previously reported 1.213 million rate. That is an 8% drop! And the markets rallied last month from these incorrectly reported March sales numbers.
    So bubble worriers, keep worrying! And continue preparing your portfolio and making smart decisions.


May 18, 2006 - Developers get desperate!
    It has been awhile since I have posted a blog, but I have been very busy redesigning the website (almost done!).
    The advertisement below was sent to me by a good friend, and it shows just how desperate developers are becoming when attempting to sell real estate, especially in a once-hot, now ice-cold market such as Las Vegas:

    Their newest gimmick is no mortgage payments for a year! And paying realtors the full 6% commission + 2% more if the realtors buy the property themselves!
    This follows on the heels of California builders offering $100,000.00 discounts on homes. How would you feel if you just bought one, and now they are $100,000.00 less??
    Developers are trying to cope with slower sales, and an increase in people walking away from their deposits to avoid losing more money by closing on bubble properties.
    In South Florida, our builder clients and other builders have had to offer many discounts or free upgrades to get buyers to commit.
    It is a changing market, protect yourself before it is too late.


May 14, 2006 - The herd mentality personified, Part II
    Another good friend of mine, we will call her Mary, is another victim of the "herd mentality" believing that real estate is the best investment to own.
    She is another friend who has bought real estate in Miami and has made excellent "paper profits". As a result, she feels it is the best investment she could make, as she recently bought another downtown Miami condo just last week.
    Mary paid $189,000.00 for a studio apartment on Brickell Avenue, probably around 600 square feet. She justifies it because it is the cheapest in the area with a nice view. Okay, so she paid $315 a foot, which I know for many people reading this out in the midwest you might think she is crazy, but there are condos that go for over $1,000 a foot in the area (AKA bubble condos).
    But the bottom line on whether it was smart purchase is this: her expenses are probably about $1,800.00 a month and she will probably be able to rent it out for around $1,000.00 a month. This means a net loss of $800 a month, perhaps around $500 after taxes.
    In my eBook I describe 2 ways to determine if it is bubble property, so lets briefly look at one of them. A good buy on this condo, based upon one of the formulas for investment property, would be a purchase price of anything less than 10 times annual rental income. This means if he had paid less than $120,000.00 it would have been value property. However, she paid 50% more than that only because she believes that the value of the property will go up. I don't think it will, for the reasons mentioned in the eBook.
    But most indicative of the herd mentality, is that I said that she should be really concerned about having all her eggs in one basket (I meant having too much of her personal net worth tied up in real estate).
    Her herd mentality answer was that she does not have all her eggs in one basket, she owns 2 cars that are paid for, and has an IRA with 18K, and she owns 2 acres of land in Orlando besides her 3 condos.
    So this is a person who believes she does not have all her eggs in one basket, okay, let's really analyze this by adding up the numbers: 2 cars worth $22,000.00, IRA with $18,000.00 and the rest of her assets are land and condos with perhaps $800,000.00 in net value after paying off the mortgages (land and condo both being in the category of real estate, but I don't think she sees that). I am a visual guy, so see the graph below showing her net worth of $840,000.00:


May 12, 2006 - Gold and Inflation  
    Gold today hit $730 a share! I know I said it looked overbought at $685 but wow! It has gone very far, very fast. Now there are many reasons that gold is going up including higher oil prices, a weaker dollar, and political uncertainty, but it is looking a little bubbly as well. Speculators are doing great! We will see if there is a shakeout, might not happen though.
    One rule of thumb in investing in gold is to pick a level $25 above and $25 below the current price. If it goes up $25 buy then, if it goes down $25 buy then. This way you will be in the market somewhat. Just be sure and pick a point where you will get out if the price goes against you.
    Many want you to believe that inflation is in check, but yesterday I went to Costco and spent $220 on food! For myself! Now I don't know about you, but gas prices are up, food prices are up, airline prices are up, and it will be getting worse.
    Bernanke raised the Fed Fund interest rate again this week to 5.0% from 4.75%. He hinted they would try to stop raising rates, unless the data says inflation is too high. Specifically they said that growth is likely to "moderate to a more sustainable pace, reflecting a gradual cooling of the housing market and lagging effects of increases in interest rates and energy prices." So the housing market is cooling, and prices are going up.
    Bernanke is being cautious in his tones, but I believe that rates are going to be forced to go higher when the inflation data keeps coming in and shows inflation is worse than we think.    
    Higher interest rates = higher monthly payments for adjustable mortgages & higher rates on new home loans = more defaults & home buying for lower prices = housing bubble bursting = recession. Got it?
    Read the eBook now to be prepared, including receiving the soon-to-be-released report on how to thrive in a recession.

May 10, 2006 - Recession, Part II
    I hate to be a doom and gloomer, but sometimes you gotta call a spade a spade. All signs are pointing to recession, and my current eBook report on recession and how to survive it is coming soon to discuss this.
    The history of all fiat money (paper money) is that all currencies became worthless (except for historical value), whether we are talking about Roman money, German money after WW I, most of the currencies in South America and more.  Below you can see pictures of a 1,000,000 German Mark bill that was issued by germany after WWI to deal with their hyperinflation:
                   
    The reason that gold is going up is that it is one of the true retainers of value, and in times of concern it becomes even more valuable.
    Many South American currencies became worthless in the 1980s and 1990s including Brazil's, Argentina's and Bolivia's. The reason that this happened is the governments ran budget deficits (like the US) and accumulated large amounts of debt (like the US). The general rule is that when you buy more than you sell you are heading for trouble.
    The deficit spending in these countries lead to more of their currencies being pumped into the economy. This additional currency fueled inflation in all of these countries. Inflation quickly spiraled into hyperinflation. For example, there was a time when Argentina and Brazil had 20 to 25% inflation PER MONTH!
    In the US, the only force that has been keeping inflation in check thus far is the vast amounts of assets that foreign countries have been buying. The reality is that they have been buying enough assets, such as government bonds, to cover our deficit spending. As a result, the amount of US dollars in circulation has gone up dramatically.
    This only works as long as other countries believe in the US dollar. Lately, it appears they are starting to lose faith. Most immediately, the US dollar has gone down in value about 5% in the last few weeks. This is a trend that will get much worse.
    When the faith in the dollar disappears, I believe inflation will get much worse in this country. The weakened dollar, coupled with a recession after the housing bubble fully bursts, could set us up for hyperinflation. (I am already planning for a lucrative career in the event this happens, more on that later).
    The world of recession and hyperinflation is one that the US has not experienced, but it unfortunately looks like we are heading there now. For those who buy the eBook, they will receive the special report on recession when it is complete so they can be prepared before it is too late. More to follow....


May 9, 2006 - EzineArticles.com Expert Author
    I am pleased to say that I am now an EzineArticles.com Expert Author. They made me an Expert Author when they published my article "3 of the top 9 reasons the bubble is bursting" here.
    Here is my Expert Author logo that links to my page on the site:


May 8, 2006 - My Real Estate Bubble.com newsletter #1
    I have published my first newsletter, and here it is! If you want to receive this directly, sign up for the free newsletter by clicking here



May 7, 2006 - Warren Buffet on the bubble
    Billionaire Warren Buffet, the oracle of Omaha, spoke at his annual shareholders meeting yesterday.   
    He said that he sees a real estate slowdown ahead. His residential brokerage business, the second largest in the United States, has seen a slowdown of business everywhere. But ground zero has been my hometown, South Florida.
    He said that the day traders of Internet stocks moved into trading condos and that this speculation moved the real estate values up greatly.
    His second in command, Charles Munger, said that there is a lot of "dumb credit" being issued in the US housing market (something I discuss in the eBook and its implications). Buffett added that when he studied recent bank balance sheets he sees a growing number of loan defaults on their books. The link to the article can be found on the May 7 articles page.
    In January, 2006 Buffett discussed the housing situation further. He said that the US housing bubble has already reached its peak and is in the process of deflating. He feels that decreasing US consumption coupled with a falling US dollar will lead the US into recession in 2007.
    I agree with him on recession coming in 2007.  Recessions come about after a bubble bursts when that bubble was created because it was financed by large amounts of debt. This debt during the stock market bubble was the debt that funded the internet buildout and the credit used to buy stock at overinflated values. The recession following the bursting of the stock market bubble should have lasted longer but Alan Greenspan lowered interest rates so far that he merely replaced the stock market bubble recession with a housing bubble.
    The aftermath of the real estate bubble bursting, with the massive amounts of debt-fueled overgrowth that has occurred will take years to work out. I mention below that Japan has experienced 14 years of real estate weakness following its bubble bursting.
    This topic is discussed more in the next blog article entitled "3 of the top 9 reasons the real estate bubble is bursting".

   
May 7, 2006 - 3 of the top 9 reasons the real estate bubble is bursting
I wrote this article have submitted to about 100 newspapers around the country and around 75 Internet news websites. If you have any contacts with newspapers or Internet news websites and can help me get this article published I would greatly appreciate it. Contact me at Info@MyRealEstateBubble.com.

3 of the top 9 reasons that the real estate bubble is bursting

If you own real estate or are thinking of buying real estate then you better pay attention, because this could be the most important message you receive this year regarding real estate and your financial future.

The last five years have seen explosive growth in the real estate market and as a result many people believe that real estate is the safest investment you can make. Well, that is no longer true. Rapidly increasing real estate prices have caused the real estate market to be at price levels never before seen in history when adjusted for inflation! The growing number of people concerned about the real estate bubble means there are less available real estate buyers. Fewer buyers mean that prices are coming down.

On May 4, 2006, Federal Reserve Board Governor Susan Blies stated that "Housing has really sort of peaked". This follows on the heels of the new Fed Chairman Ben Bernanke saying that he was concerned that the "softening" of the real estate market would hurt the economy. And former Fed Chairman Alan Greenspan previously described the real estate market as frothy. All of these top financial experts agree that there is already a viable downturn in the market, so clearly there is a need to know the reasons behind this change.

3 of the top 9 reasons that the real estate bubble will burst include:
1. Interest rates are rising - foreclosures are up 72%!
2. First time homebuyers are priced out of the market - the real estate market is a pyramid and the base is crumbling
3. The psychology of the market has changed so that now people are afraid of the bubble bursting - the mania over real estate is over!

The first reason that the real estate bubble is bursting is rising interest rates. Under Alan Greenspan, interest rates were at historic lows from June 2003 to June 2004. These low interest rates allowed people to buy homes that were more expensive then what they could normally afford but at the same monthly cost, essentially creating "free money". However, the time of low interest rates has ended as interest rates have been rising and will continue to rise further. Interest rates must rise to combat inflation, partly due to high gasoline and food costs. Higher interest rates make owning a home more expensive, thus driving existing home values down.

Higher interest rates are also affecting people who bought adjustable mortgages (ARMs). Adjustable mortgages have very low interest rates and low monthly payments for the first two to three years but afterwards the low interest rate disappears and the monthly mortgage payment jumps dramatically. As a result of adjustable mortgage rate resets, home foreclosures for the 1st quarter of 2006 are up 72% over the 1st quarter of 2005.

The foreclosure situation will only worsen as interest rates continue to rise and more adjustable mortgage payments are adjusted to a higher interest rate and higher mortgage payment. Moody's stated that 25% of all outstanding mortgages are coming up for interest rate resets during 2006 and 2007. That is $2 trillion of U.S. mortgage debt! When the payments increase, it will be quite a hit to the pocketbook. A study done by one of the country's largest title insurers concluded that 1.4 million households will face a payment jump of 50% or more once the introductory payment period is over.

The second reason that the real estate bubble is bursting is that new homebuyers are no longer able to buy homes due to high prices and higher interest rates. The real estate market is basically a pyramid scheme and as long as the number of buyers is growing everything is fine. As homes are bought by first time home buyers at the bottom of the pyramid, the new money for that $100,000.00 home goes all the way up the pyramid to the seller and buyer of a $1,000,000.00 home as people sell one home and buy a more expensive home. This double-edged sword of high real estate prices and higher interest rates has priced many new buyers out of the market, and now we are starting to feel the effects on the overall real estate market. Sales are slowing and inventories of homes available for sale are rising quickly. The latest report on the housing market showed new home sales fell 10.5% for February 2006. This is the largest one-month drop in nine years.

The third reason that the real estate bubble is bursting is that the psychology of the real estate market has changed. For the last five years the real estate market has risen dramatically and if you bought real estate you more than likely made money. This positive return for so many investors fueled the market higher as more people saw this and decided to also invest in real estate before they 'missed out'.

The psychology of any bubble market, whether we are talking about the stock market or the real estate market is known as 'herd mentality', where everyone follows the herd. This herd mentality is at the heart of any bubble and it has happened numerous times in the past including during the US stock market bubble of the late 1990's, the Japanese real estate bubble of the 1980's, and even as far back as the US railroad bubble of the 1870's. The herd mentality had completely taken over the real estate market until recently.

The bubble continues to rise as long as there is a "greater fool" to buy at a higher price. As there are less and less "greater fools" available or willing to buy homes, the mania disappears. When the hysteria passes, the excessive inventory that was built during the boom time causes prices to plummet. This is true for all three of the historical bubbles mentioned above and many other historical examples. Also of importance to note is that when all three of these historical bubbles burst the US was thrown into recession.

With the changing in mindset related to the real estate market, investors and speculators are getting scared that they will be left holding real estate that will lose money. As a result, not only are they buying less real estate, but they are simultaneously selling their investment properties as well. This is producing huge numbers of homes available for sale on the market at the same time that record new home construction floods the market. These two increasing supply forces, the increasing supply of existing homes for sale coupled with the increasing supply of new homes for sale will further exacerbate the problem and drive all real estate values down.

A recent survey showed that 7 out of 10 people think the real estate bubble will burst before April 2007. This change in the market psychology from 'must own real estate at any cost' to a healthy concern that real estate is overpriced is causing the end of the real estate market boom.

The aftershock of the bubble bursting will be enormous and it will affect the global economy tremendously. Billionaire investor George Soros has said that in 2007 the US will be in recession and I agree with him.  I think we will be in a recession because as the real estate bubble bursts, jobs will be lost, Americans will no longer be able to cash out money from their homes, and the entire economy will slow down dramatically thus leading to recession.

In conclusion, the three reasons the real estate bubble is bursting are higher interest rates; first-time buyers being priced out of the market; and the psychology about the real estate market is changing. The recently published eBook "How To Prosper In The Changing Real Estate Market. Protect Yourself From The Bubble Now!" discusses these items in more detail. For more information visit www.MyRealEstateBubble.com

What do you think of the article? Let me know at: Info@MyRealEstateBubble.com


May 4, 2006 - a title company president speaks out
    I was at a party last night (yes, there is a lot to do in Miami and I am not complaining in the least). The party was a client appreciation night thrown by a major bank that we do business with. I sat at a table where the president of a title company was also sitting.
    I asked him how business has been since he started 6 years ago. He told me that business has been great, but it had recently slowed down dramatically.
    Then I asked him what he thought of business going foreward. He said "foreclosure business should increase and keep him very busy".
    Straight from the horse's mouth. --  Prepare now with the powerful information found in the eBook.

May 3, 2006 - my eBook reviewed
    I am very excited to say that my eBook was reviewed on the popular website www.oftwominds.com.
    In the review, author Charles Hugh Smith states that my eBook is one of 2 works on the housing bubble that he recommends.
    What is really exciting to me is that the other book he recommends is Irrational Exuberance by Dr. Robert Shiller. Dr. Shiller is well known because his first book predicted that the stock market bubble would burst shortly before it actually did. And his new book predicts the real estate bubble will burst. Dr. Shiller is a person I really admire (Yes, I am an economics nerd!).
    Ironically, when I was writing my eBook I contacted Dr. Shiller (through his very nice and helpful assistant Carol) and asked him if he would write the introduction to my eBook. He declined, which is okay - as Charles correctly stated the unknown author is a tough sell.
    However, it has been a personal honor for me to be positively recommended alongside Dr. Shiller's book.


May 3, 2006 - The herd mentality personified
    One of my best friends, let's call her Cathy, has been a big supporter of me and my eBook, but she has not read it. This recently cost her over $7,000.00!
    Cathy is a perfect example of the "herd mentality". In my eBook I discuss what the herd mentality is, but in a nutshell it is when people 'follow the herd' buying an asset like real estate even at very high prices (relative to it's true value). The asset goes up in value until there are no more "greater fools" to buy the asset, and the entire market drops (think Yahoo at $250 a share or Nasdaq 5,000).
    My friend has done very well for herself in buying a condo on Miami Beach that has gone up tremendously in value over the last few years, and I applaud her for that. However, the herd mentality has taken over her mindset completely and she refuses to see the big picture of the real estate market. She continues to buy more bubble real estate or is looking to buy more real estate.
    A few weeks ago she told me that she did not want to sell her first condo now because the Miami real estate market was too "saturated" with homes and condos for sale. I asked her who she thought was going to sweep in and buy the over 17K condos on the market or the roughly 80K condos under construction? Especially at these high prices and higher interest rates.
    Thankfully, she finally decided to sell her condo and told me about that on Sunday night. She said she did 'what I did' and got a service to put it on the MLS (the Multiple Listings Service where realtors find real estate for sale). Unfortunately, the service charges $400 and 2% of the sales price and is not even a full service realtor!
    Now, if she had read the eBook, she would have read about the service that I actually used to sell my bubble condo - at a price of under $200 and 0% commission! Not reading my eBook cost her at least $7,000.00 in commissions and higher upfront costs on her $386K condo. Not to mention some of the ideas in the eBook on how to maximize the value of your home before it sells. (For example, I just found out that one of the most successful realtors in the US, who sells $500 million a year in real estate, uses vanilla scent in the homes before she shows them to help increase sales).
    When I informed her of this, she said she was sick to her stomach. I feel bad for her, but one of the most important things we are here to do is to grow and face challenges and in doing so we must be open to new ideas and change.


May 3, 2006 - The layoffs continue
    The layoffs continue... Ameriquest is laying off 1/3 of its mortgage brokers: 3,800 workers and 229 offices will be closed in total. This is in response to higher interest rates and thus lower demand for new mortgages.
    This is just the beginning of the layoffs that will occur in the real estate industry. You can read the entire article by the link on my "updated real estate articles" page. I feel for these people, however, the writing is on the wall for real estate jobs in general (see realtors not earning money below).
    Many of my friends in the Miami area are in real estate, in all areas of real estate careers including developers, architects and real estate flippers all the way to secretaries and HR people in the real estate industry. As these jobs disappear along with the "paper wealth" that the real estate market has created, the regional and then the national economy will be affected greatly. As this happens, the global economy will slow down because the US will no longer be buying everything the rest of the world makes at the pace we have been doing. 


May 2, 2006 - Realtors not earning money in 2006
    A realtor that works in Miami at one of the bigger real estate companies recently confided that up until the end of 2005 he was making over $100,000.00 a year. However, he hasn't made any money in 2006!!!
    He said that many of the other realtors he works with haven't made any money this year either and some are already planning to get new jobs.
    It was the same way during the late 1990's through 2001 where many people were stockbrokers, or somehow had jobs related to the stock market bubble. They fled that market when the bubble burst.
    The coming job loss is real, but the true job loss statistics probably won't show up until after the summer as the data lags and it will be ugly. 1 out of 4 new jobs created in the last 5 years have been in the real estate industry. As the market is slowing now and then turns down, many of these newly created jobs will be in jeopardy. In China recently, 3,000 realty offices were closed down as their real estate market softened. I mention these job losses and more in my eBook. Check it out.


May 1, 2006 - Recession, Part I
    Alot of people nowadays are concerned about recession, and they should be! Billionaire George Soros says that he believes recession will be coming in 2007, and I agree with him.
    This recession is the part of the economic cycle that is necessary to work out the excesses of the current economic boom (that has been driven by the real estate market). I am currently writing an additional special bonus report on recession entitled How to prepare for recession and how to thrive during a recession that will be given out to those who buy my eBook.
    Don't worry, if you buy the eBook before the recession report is ready I will email it directly to you when the it is done.
    I will write further about recession at a later time, as it is a topic people are very interested about.


April 29, 2006 - Exercise!
    I know this is completely off topic, but this is something that is important to a lot of people and if you are busy like I am it is probably difficult for you to find the time to exercise. Well, that was true for me too until I found the best workout program I have ever done, and one that takes only 15 minutes a day (and no drive to the gym!).
    For the past year I have been doing Matt Furey's Combat Conditioning, whose core routine is made up of 3 of the best bodyweight exercises that you can do, & do so from the comfort of your own home. This is a completely unsolicited testimonial for Matt's program - I am only writing about it because it works for me, it is easy, and it is relatively inexpensive.
    If you are looking for a great workout then go to Matt's site by clicking here, the  Combat Conditioning book is only $29.95 and it is well worth it. I am in the best shape of my life from these exercises, and can do them in the morning before going to work, leaving the rest of the day free! Let me know how it works for you!


April 29, 2006 - Bernanke Part II
The Dean of the Columbia Business School did not get the job as Fed Chairman, but Bernanke did, so his students made a video showing he is not a fan of Bernanke! It is hilarious! Click here to see it!


April 28, 2006 - Bernanke speaks, but what did he really say about the bubble?
    Bernanke, the Fed Chairman spoke today, and what he said is disconcerting. He said that he was concerned that the "softening" of the real estate market would hurt the economy.
    This is as strong a statement that a Fed Chairman can make without completely undermining the confidence of all real estate investors. When you read between the lines, this is a clear signal to prepare now before it is too late. I discuss ways to do so in the eBook.
    He also mentioned his concern that wages have not increased as much in the past few years as he would have liked to see.
    I will discuss more on Helicopter Ben Bernanke at another time. Ben will definitely have challenging times ahead after Alan Greenspan's ultra low interest rate strategy that fueled the real estate bubble to dizzying heights. Greenspan merely replaced the bursting of the stock market bubble with the coming bigger burst of the real estate bubble.
    In the eBook I discuss a study that tells you when a real estate bubble will burst after a period of ultra low interest rates such as we experienced.


April 28, 2006 - Japanese Real Estate Market Comparison
    I saw a chart recently that compared our real estate market's rise to Japan's real estate market rise and eventual fall. Japan's market went up dramatically in the 1980's and then dropped for 14 years in a row. I discuss this in more detail in the eBook.
    So this chart shows the US real estate market peaking in the Fall of 2005, and the US market being just past the peak in early 2006, and I agree wholeheartedly with this. The chart overlays the US real estate market's rise with Japan's and then shows that Japan's drop is where we are heading.
    The interesting part about this graphic is that as the Japanese real estate market went down, realtors would say that "you'll never see prices this good". Then as prices went down farther, they would say it again, and again! This is what is going to happen here in the US market.
    What's ironic is that even at the end of 2005 when the market was getting weaker the realtors were saying there is no bubble, now in early 2006 they say that the market is softening. Well, markets don't go sideways, they go up and they go down, especially after the runup in prices we have seen. The next thing they will say is you'll never see prices this good as prices start falling. And they will keep saying that until the reality hits that the "good prices" are not so good any more.
    I am not faulting realtors, they have to believe in the real estate market to be able to go to work every day. It's the classic story of not being able to see the forest from the trees - they are so caught up in real estate they cannot see the big picture of what is going on.
    Also, I am not saying that there are no good real estate purchases out there. In the eBook I describe 2 easy to use techniques to determine if a property is a bubble property or a value property. Check it out.


April 27, 2006 - The last of the Condo Parties???
    Last night I attended a party in Miami for a new real estate condominium being developed on the Miami River. For those of you not familiar with the area, the river is only about 10 minutes from downtown Miami, due West of downtown. However, it is currently not in the "good" part of town. I had to drive through some sketchy areas to get to the site where they plan to build the condo. I am not a snob, but this just goes to show you the lengths that people have to go to nowadays to build a building in Miami. There are so many projects already going up all over the place that there aren't many open sites available.
    I heard recently that 1/4th of America's constuction cranes are in Miami, which I find hard to believe, but they are definitely everywhere I look all over Miami!
    But I digress, so the planners of this party knew it would be challenging to find the location so they put up a lot of signs along the route, which I applaud, as most people never would have gotten there without the signs.
    So I get there, and they have free valet, a policeman acting as security, and a sales center set up with pretty girls at the front asking for your business card, which I supplied.
    I have been to many of these condo parties over the last few years in Miami - sometimes as often as once a week. They are usually very upbeat events, with lots of free food, models on hand, free alcohol and a gift bag on your way out. There are worse ways to spend an evening, I can tell you!
    So back to last night's event, this event was not as upbeat as the past events. Maybe it was just me, but it seemed like there was a tension in the air, like people could feel that the end of the real estate good times are here. It was not a good party, and I didn't stay too long. 
    I don't think the project will get completed, even though they had a giant crane on the location. My guess is that they will start construction, and in a year or so the company will go bankrupt and the project will be left unfinished until construction picks up again, probably in around 7 - 12 years.
    This happened in the early 90's, when many Miami builders went bankrupt and the buildings weren't finished until someone bought out the project many years later.
    We will probably see this cycle occur again as we have record construction, combined with record # of homes for sale as speculators get out of the market and people get scared. I discuss this in much more detail in my eBook.


April 26, 2006 - I sold my bubble condo!
    I am pleased to say that I sold my Miami Beach condo, and made a nice return on it! I thankfully caught the last year of the real estate bubble. I bought it in early 2005 and sold it on April 21, 2006. I put a lot of time and energy into the condo over that time, and it was a good experience for me, but felt like it was the best time to cash out.
    Now, what determines the price of any asset, like a home, is simply that one person agrees to sell it for that price, and another person agrees to buy it for that price. What it is worth tomorrow, next week, or next year is irrelevant to todays price. It is a case of where perception is reality.
    As long as the buyer holds the condo for at least 10 years, he can probably make money on it. I did not want to hold that long through the uncertainty that is coming.
    After donating 10% of my gains to charities, the rest of the money will be invested in a defensive portfolio including gold, foreign currencies, sugar, and oil.
    I now rent a condo on South Beach (the heart of Miami Beach) that would have cost me 3 times as much to own! Clearly a bubble condo - ideal for renting! In my eBook I discuss ways to determine if now is the right time to sell for a real estate owner as well and ways to sell your home inexpensively.

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"Louis Hill's eBook and his special reports on gold and currency were a fast and easy read, educational, and of practical use to me. A pleasure to recommend" - Norman Cressy, PHD

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This eBook answers these questions and more:

• What are the strategies to protect yourself and prosper in a down real estate market?
• How can you sell your real estate for the most money?
• How can you maximize the value of your home for the lowest cost?
• How can you identify value real estate versus bubble real estate?

Act now for this limited time special offer...

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"I have read your reports and feel that your bubble report is an excellent summary and well-supported by charts and footnotes. It's well worth the $12 you're asking. Congratulations on a fine bit of writing on complex topics!" - Charles Hugh Smith, published author and creator of the website www.oftwominds.com.

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P.S. Don't Delay! Order the eBook "How To Prosper In The Changing Real Estate Market" today at our limited time price of $11.88 so you can protect yourself and prosper from the real estate bubble before it is too late. Also, receive the 3 free bonus reports on how gold and foreign currencies should be part of your portfolio and how to survive and thrive a Recession. Order safely now with our secure checkout and you will receive the eBook immediately after purchase. I want you to be totally happy with your purchase, so there is 90 day no-questions-asked money-back guarantee. Use our secure shopping cart to buy the eBook by clicking here now. Thank you.