Jun

7

Oil and energy prices skyrocketing. Food prices soaring. Home prices tanking. Jobs shrinking. Things are looking pretty bleak. Living through these times can be a real roller coaster ride.

For those of you not saddled with debt there are some potential long and short term opportunities out there.

Energy prices are heading upward. They will likely level out at some time in the future (who knows when), but it is highly unlikely that we will ever see gasoline under 3$, even 4$ again in the good ‘ol USA. It is already over 8$ in many parts of Europe. As I said in a previous post, the answer is to build cars that increase MPG. What is the most popular vehicle? The Prius. Gas hog vehicles sales are plummeting, fuel efficient vehicle sales are on the rise.

US auto dealers are being tight lipped. While their management can be a bit stodgy and slow to react they too can read the tea lives. In fact, it may very well be the energy crisis that cause both GM and Ford to get busy and to emerge again and compete with the likes of Honda and Toyota.

Rising gas prices are going to create a demand in the market (it already is) for fuel efficient cars. In two years time we have gone from an average price of $2.25 to $4.50 a gallon and still climbing. At $5.00 a gallon (not far away) it is going to cost you $3600 a year to drive your 20mpg car 12,000 miles. Compare this with $1350 just two years ago! At $8.00 a gallon the cost will be $4800.00 a year.

Ford is allegedly working on a technology called hydraulic hybrid which could lead the way. There are rumors of an F-150 that can get 60mpg. GM is working on hybrid technology as well. Both stocks are currently in the tank (Ford has been for years).

If you have some patience, and are willing to take some risk this might be a good time to start buying auto stocks. This is bit of a contrarian view. And, there is no guarantee that US Automakers will see the writing on the wall.

 

 

Jan

19

Live Within Your Means

We have created quite the mess with this subprime debacle. We want to blame business,  business wants to blame the government, wall street is reeling.

Happy times

Unfortunately I think the slide has just started. Lets take inventory…

… Absolute Insanity …

I guess since it has been a while since the .COM insantity we needed a new means of losing our minds.

If you really think about it this has been nothing more than the old cliche “if it too good to be true it probably is”. The sad thing though is people actually made a great deal of wealth while many are now losing what little shirt they had to begin with. “I want it now, I’ll deal with the consequences later”.

Fact, is subprime lending has been going on for years. I remember when I was young, poor, and just starting out having a loan with HFC for a stereo and paying 25% interest.

Subprime lending for those of you that only know the buzzword is the market for those with “less than stellar” or “lack of” credit history. In exchange for outrageous interest rates and fees lenders will give money to people that have a poor record of paying it back.

Don’t get me wrong. Anyone, even the most disciplined person, can fall on financial hard times. The subprime market can be a means of re-establishing ones credit. But subprime lending became sheer insanity that now has us heading into the crapper.

The exposure by major financial institutions into the housing subprime market is just staggering. It is hard to identify these institutions until they report staggering losses.

According to CNN state by state going back to 2005 the entire Puget Sound (Greater Seattle/Tacoma/Everett and surrounding suburbs) had a 22% exposure. Much of California (25% statewide) and Florida (30% statewide) deeply buried in a sea of subprime lending.
http://money.cnn.com/magazines/fortune/storysupplement/subprime_statebystate/

And here we stand today in all this chaos. All because people are not willing to live within their means. All because of the greed of business. All because our government turned its head because at the time the alternative was a slowing economy.

I think we should ammend the “if its too good to be true it probably is” to “If you have the means to get in during the bubble and out before the burst you can exploit and profit at the expense of your fellow man”

I think maybe Countrywide and a few others waited too long. Eh?

Jan

19

Payoff your house 7-8 years early the ad proclaims. All you have to do is front $100.00 and pay a monthly fee of $10.00. For this price you get to make 13 mortgage payments a year instead of 12. Here is a newsflash. You can make 13 house payments on your own, save the up front and monthly fee and still accomplish the same thing. Stay away from these programs, they are a waste of your money!

Dec

23

My wife and I recently watched Al Gore’s An Inconvenient Truth . It was quite a sobering movie.

This past week the Puget Sound region (Seattle Metro Area) got hit with a windstorm that knocked out power for half a million+ area residents. Good ‘ol mother nature created some real havoc in our area. A few days after the storm we experienced gas lines that were quite long. This really got me thinking about how fragile our civilized society really is.

You walk through these huge mega supermarkets and on one hand marvel at the abundance, and on the other hand realize how quickly the shelves would be cleared in the event of a catastrophic situation (like Katrina).

About a year earlier I had purchased some food for storage from Walton Feed. It was actually pretty good stuff and quite reasonably priced. These recent events in our weather patterns have really made me wonder if having a weeks of food on-hand is really not such a bad investment after all.

Don’t get me wrong. I am not suggesting that we all buy Bowie knives and take to the woods to live off the land. But, these are some very interesting times and, well, just trying to be prepared.

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