Just wanted to give you a link to the FICO article I mentioned in the story below. This just went up on Money & Markets this morning, and I think it's worth reading. Of course, I'm biased. =^)
Click here for the story!
Tuesday, June 30, 2009
Thursday, June 25, 2009
Credit Card Companies Slashing Available Credit
This story from BusinessWeek (via Yahoo! Finance) shows just how unfair consumers are getting treated nowadays.
Basically, card companies are slashing people's limits, often without good reason. And because of the way FICO scores are calculated, the end result can be a lowered score through no fault of your own.
It's ridiculous ... in fact, the entire system is ridiculous. It simply proves just how far the pendulum swings from one side to the other.
I'm planning on writing extensively on this topic for my next Money & Markets column so stay tuned!
Basically, card companies are slashing people's limits, often without good reason. And because of the way FICO scores are calculated, the end result can be a lowered score through no fault of your own.
It's ridiculous ... in fact, the entire system is ridiculous. It simply proves just how far the pendulum swings from one side to the other.
I'm planning on writing extensively on this topic for my next Money & Markets column so stay tuned!
Wednesday, June 17, 2009
Foreigners Want Less U.S. Bonds ...
More news in the "why Treasury yields will rise" department. According to Washington, net purchases of stocks, notes and bonds purchased by foreigners dropped to $11.2 billion in April from $55.4 billion in March.
Dude, that's an 80% drop!
Do you think foreigners might be worried about the dollar ... the pathetic interest rates they're receiving ... and a host of other systemic problems we have?
I sure do ...
Dude, that's an 80% drop!
Do you think foreigners might be worried about the dollar ... the pathetic interest rates they're receiving ... and a host of other systemic problems we have?
I sure do ...
Tuesday, June 16, 2009
Today's Money & Markets column ...
I decided to take that little nugget I posted below and expand on it quite considerably for my newest column in Money & Markets.
And the activity over on my Money & Markets blog has been absolutely tremendous. I encourage you to stop over there and read the column/share your thoughts. The insights and feedback have been tremendously valuable, and I'm having a load of fun responding to everyone ...
Nilus
And the activity over on my Money & Markets blog has been absolutely tremendous. I encourage you to stop over there and read the column/share your thoughts. The insights and feedback have been tremendously valuable, and I'm having a load of fun responding to everyone ...
Nilus
Wednesday, June 10, 2009
Why Housing Has Much More Downside
I don't care what your local realtor might have to say ... real estate remains largely overpriced just about anywhere I look -- whether it's South Florida, California, or more "stable" areas like Pennsylvania, Delaware and New York.
Look, the basic numbers just don't make sense ...
According to a 2005 Census economic survey:
Only 5% of individuals had six figure incomes and the top 10% got paid more than $75,000.
On a household level, the top 5% (75% had two earners) had incomes of $166,200 or more .
The top 1.5% of households raked in more than $250,000.
Meanwhile, nearly everywhere I look any house that a middle-class person would consider buying (meaning reasonably attractive, in a decent school district, in good condition, etc.) is easily pushing $400,000 or $500,000.
How does that add up? If the fifth percentile household makes about $160,000 that means a $400,000 house is marginally "affordable" in my book. Unlike most people, I'm factoring in taxes, insurance, car payments (two BMWs, I'm sure), and all the other everyday necessities that an affluent household simply must have. And I'm -- gasp! -- actually assuming that they might want to save some money for retirement and their kids' college funds.
So call me crazy, but I simply do not see how -- given falling prices, recently rising rates, and ultratight credit conditions -- that housing at the higher end has any chance in hell of rebounding or even stabilizing anytime soon!
Full disclosure: I have been renting throughout the madness ... in Manhattan, then South Florida, and now in the Brandywine Valley of DE/PA.
Look, the basic numbers just don't make sense ...
According to a 2005 Census economic survey:
Only 5% of individuals had six figure incomes and the top 10% got paid more than $75,000.
On a household level, the top 5% (75% had two earners) had incomes of $166,200 or more .
The top 1.5% of households raked in more than $250,000.
Meanwhile, nearly everywhere I look any house that a middle-class person would consider buying (meaning reasonably attractive, in a decent school district, in good condition, etc.) is easily pushing $400,000 or $500,000.
How does that add up? If the fifth percentile household makes about $160,000 that means a $400,000 house is marginally "affordable" in my book. Unlike most people, I'm factoring in taxes, insurance, car payments (two BMWs, I'm sure), and all the other everyday necessities that an affluent household simply must have. And I'm -- gasp! -- actually assuming that they might want to save some money for retirement and their kids' college funds.
So call me crazy, but I simply do not see how -- given falling prices, recently rising rates, and ultratight credit conditions -- that housing at the higher end has any chance in hell of rebounding or even stabilizing anytime soon!
Full disclosure: I have been renting throughout the madness ... in Manhattan, then South Florida, and now in the Brandywine Valley of DE/PA.
Tuesday, June 9, 2009
Why I Said Sell Southern Copper, Texas Instruments, and More ...
As I look at my trading screens today, I see that a couple of recent Dividend Superstars recommendations are rising yet again -- including Texas Instruments (TXN) and Southern Copper (PCU).
Now, my subscribers should already be out of those positions with very nice gains. And while I hate to see any money left on the table, in this market I still think selling into strength makes sense on some of the higher-beta stocks and industries.
For all the reasons why, see my latest story over at Money & Markets.
Now, my subscribers should already be out of those positions with very nice gains. And while I hate to see any money left on the table, in this market I still think selling into strength makes sense on some of the higher-beta stocks and industries.
For all the reasons why, see my latest story over at Money & Markets.
Friday, June 5, 2009
A Follow-Up on the Treasury Bond Post ...
I also wanted to note that Professor Jeremy Siegel (who I tend to agree with quite often) very clearly spelled out the situation regarding Treasuries in this Yahoo Finance column.
Personally, I feel much better about TIPS, despite the supposed long-shot default risk. Again, that's because I believe inflation is both baked into our current system and especially because of our country's current fiscal policies.
It is also interesting to note the idea of a government defaulting on its debt held by foreigners while honoring obligations to its citizens. I don't believe the U.S. would pursue such a self-destructive strategy, but in many ways we are already pursuing a similar -- albeit less overt -- form of this by continuing to flood the market with bonds that must be begrudgingly bought by countries such as China who already hold massive amounts of our debt in their reserves.
It's certainly an uncomfortable Catch-22 ... and how it will play out remains to be seen.
Personally, I feel much better about TIPS, despite the supposed long-shot default risk. Again, that's because I believe inflation is both baked into our current system and especially because of our country's current fiscal policies.
It is also interesting to note the idea of a government defaulting on its debt held by foreigners while honoring obligations to its citizens. I don't believe the U.S. would pursue such a self-destructive strategy, but in many ways we are already pursuing a similar -- albeit less overt -- form of this by continuing to flood the market with bonds that must be begrudgingly bought by countries such as China who already hold massive amounts of our debt in their reserves.
It's certainly an uncomfortable Catch-22 ... and how it will play out remains to be seen.
Treasury Bonds Are Still a Bad Bet ...
Before I go any further, I want to clarify something ... when I say Treasury bonds, I'm talking about longer-term notes and bonds not the shorter-term notes and bills.
Okay, with that out of the way, I have been fairly vocal about the risk associated with longer-dated Treasuries. And despite a respectable sell-off, I continue to believe that it does not make sense to buy massive amounts of these investments for your income portfolio right now.
No, I am not worried about the U.S. government losing its AAA rating (though that is a small possibility at some point in the future). Instead, I simply believe that the Fed will end up behind the curve regarding inflation and will ultimately have to jack up rates significantly.
When will it happen? Who knows. But if you think long-term yields aren't going to ever get back to 6% and ultimately to 10% or higher, I think you're failing to understand just how much money is being pumped into our economy right now ... and just how "Fed up" foreign investors are becoming with the massive amounts of debt our government is issuing.
If you want to hold "safe" government-backed bonds, I strongly urge you to consider Treaasury Inflation-Protected Securities (TIPS) or I-bonds instead of plain vanilla Treasuries right now ...
Okay, with that out of the way, I have been fairly vocal about the risk associated with longer-dated Treasuries. And despite a respectable sell-off, I continue to believe that it does not make sense to buy massive amounts of these investments for your income portfolio right now.
No, I am not worried about the U.S. government losing its AAA rating (though that is a small possibility at some point in the future). Instead, I simply believe that the Fed will end up behind the curve regarding inflation and will ultimately have to jack up rates significantly.
When will it happen? Who knows. But if you think long-term yields aren't going to ever get back to 6% and ultimately to 10% or higher, I think you're failing to understand just how much money is being pumped into our economy right now ... and just how "Fed up" foreign investors are becoming with the massive amounts of debt our government is issuing.
If you want to hold "safe" government-backed bonds, I strongly urge you to consider Treaasury Inflation-Protected Securities (TIPS) or I-bonds instead of plain vanilla Treasuries right now ...
Why Are Investors Cheering So Loudly?
It's interesting to watch the market's rally continue throughout some absolutely horrible news items. Just in the last few days ...
General Motors, one of our nation's most storied companies, filed for bankruptcy. (Hot on the heels of Chrysler, another major U.S. industrial concern).
We learned that our nation's jobless rate hit 9.4% in May, the highest level in more than 25 frickin' years!
The SEC is charging yet another finance figure (Anthony Mozilla from Countrywide) with fraud.
Oil prices hit $70 a barrel, implying that despite deflationary forces at work, consumers are still going to get absolutely creamed at gas pumps.
And May retail sales fell 4.8%, more than economists expected.
Sure, stocks must climb a wall of worry ...
Yes, there are some "green shoots" out there ...
And I absolutely continue to advocate buying and holding quality dividend-paying stocks ...
But I fail to see why investors are SO upbeat right now, and I think 1,000 on the S&P 500 is going to present major psychological resistance throughout the summer.
As such, you should expect the volatility to continue from here on out. And that's why I think both income-producing assets and other more advanced strategies (such as covered call writing) are the bets ways to play this market.
General Motors, one of our nation's most storied companies, filed for bankruptcy. (Hot on the heels of Chrysler, another major U.S. industrial concern).
We learned that our nation's jobless rate hit 9.4% in May, the highest level in more than 25 frickin' years!
The SEC is charging yet another finance figure (Anthony Mozilla from Countrywide) with fraud.
Oil prices hit $70 a barrel, implying that despite deflationary forces at work, consumers are still going to get absolutely creamed at gas pumps.
And May retail sales fell 4.8%, more than economists expected.
Sure, stocks must climb a wall of worry ...
Yes, there are some "green shoots" out there ...
And I absolutely continue to advocate buying and holding quality dividend-paying stocks ...
But I fail to see why investors are SO upbeat right now, and I think 1,000 on the S&P 500 is going to present major psychological resistance throughout the summer.
As such, you should expect the volatility to continue from here on out. And that's why I think both income-producing assets and other more advanced strategies (such as covered call writing) are the bets ways to play this market.
Reviving this blog!
Hey, everyone. I decided to bring this blog back from the dead just as a way to communicate with all the dividend-hungry, yield-seeking investors who may not be visiting my other blog on Money & Markets.
If there's one gift I was born with, it's the ability to talk a lot! (Just ask my wife).
So I plan on posting tons of dividend news here in copious amounts going forward. It should be fun for all of us!
Nilus
If there's one gift I was born with, it's the ability to talk a lot! (Just ask my wife).
So I plan on posting tons of dividend news here in copious amounts going forward. It should be fun for all of us!
Nilus
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