The April 30th Newsletter Briefing is posted to the newsletter portion of the website. To access the newsletter, simply click on the "Subscribe Now" tab, establish a username and password, and you'll have full access to the Dynamic Growth newsletter and portfolio. This free trial will end on June 1, 2007.
The stock market continues to climb despite deteriorating economic conditions. Here are some comments I made in this weeks newsletter breifing;
A little over a year ago, investors were told that the market was going to continue to go higher because the economy was strong, double digit earnings growth was here to stay, corporate profits were strong, gas prices were declining, the housing market was going to rebound, and inflation was not a problem.
Today, we are told the stock market is going to go higher with the economy slowing, double digit earnings growth ending, corporate profits declining, gas prices at post Katrina highs, the housing market getting worse, and inflation running out of control.
Frankly, somebody is clearly pulling our chain and somebody is buying S&P futures to keep this market from collapsing. Two or even three years ago if the stock market had to face the same economic conditions as we are facing today, the Dow Jones Industrials would be 2000 points lower.
As I have sifted through the daily activity of insider buys and sells on every exchange for the past 6 months, I have seen very few insider purchases with any substance. With insider selling ratios of 17:1, 19:1, 28:1, 30:1 almost daily, I have a hard time rationalizing putting the majority of my family’s nest egg in the stock market because Cramer or S&P says so. Sorry, this I cannot do.
As I look at the sectors with the best performance, I have a hard time believing we are in a rip roaring bull market with Utilities, Bonds, Consumer Staples, and sector nations that benefit from our outsourcing leading the way.
This weekend, I receieved a solicitation letter from Countrywide Home Loans encouraging me to consolidate my debt with a "40 year home loan". Do you believe this crap, a 40 year mortgage?
First of all, I am happy to announce I have no debt, and I burned my mortgage several years ago. But Joe Six Pack, and Molly Martini, who are hell bent on the appearance of wealth are not as fortunate. I am not bragging, but simply pointing out that appearing to have wealth is more important to people than actually having it.
Here are the first two paragraphs of the letter I received from Countrywide Home Loans. As you will see, they have no interest in helping people become wealthy, they want consumers to continue their trend of wealth appearance, rather than wealth accumulation.
I have highlighted the hooks that will surely keep people in the debt pool, as well as the poor-house.
Dear John,
Wouldn't you like to have extra cash at the end of every month? At Countrywide Home Loans we know how hard you work for your money and that's why we are inviting you to apply for a 40 year loan that offers one of the lowest monthly payments available.
With a 40 year home loan, you could possibly have lower, more affordable monthly mortgage than a traditional 15 or 30 year loans, as well as the extra cash you need, even if you have less than perfect credit. Call Countrywide today and our Home Loan Specialists will help you apply for a refinance loan to consolidate your debt and get the extra cash you need to help you do the things you want- like make home improvements, pay for college tuition or pay off high-interest credit card debt.
First of all, anyone who as studied an amortization schedule knows that a consumer gets screwed during the first 15 years of a 30 year loan. Those that get suckered into a 40 year loan get screwed even worse. Why? The majority of each monthly payment is mostly interest and not principal. After making mortage payments for 15 years, a consumer has very little, if any equity in their home.
Check out this loan amortization schedule for $200,000.00 at 6% for 30 years. It does not include payments for property taxes and insurance.
30 year mortgage- Yahoo Finance
As you can see, after making a monthly payment of $1199.10/ month for 15 years, you would have paid in a total of $215,838, of which $57,902 went to principal, and $157,936 was interest. Tell me someone isn't getting screwed here.
If you think this is bad, try and compare this to a 40 year mortgage.
