Monday money roundup
Posted on July 16th, 2007 – 12:03 PMBy Kara McGuire
If you have as many things to do today as I do, you’ll understand and appreciate this brief multi-topic post.
On 30 big stocks: The Dow is within reach of 14,000 points. A story in today’s Wall Street Journal used a phrase that caught my eye to describe the market’s recent highs: climbing on a “wall of worry.” Do you think the market is poised for a correction? If so, doing anything about it or staying the course?
On banking: The Office of the Comptroller of the Currency now has a consumer banking advice portal: www.helpwithmybank.gov, which addresses everything from how to fix errors on credit reports to banking fees and interest rates.
On mortgages: A Harris Interactive poll found two-thirds of Americans surveyed find mortgage advertising and marketing non-credible. You mean, if it sounds too good to be true it usually is?
Of the 2,383 adults surveyed, here’s what type of mortgage they owned:
No mortgage: 54%
Fixed rate: 33%
Home equity loan: 16%
ARM: 7%
interest only: 5%
No $ down: 4%
Balloon 2%
Reverse 2%
On bonds: I wrote last week’s column on the role bonds should play in a young person’s portfolio. A reader named David emailed me these interesting thoughts:
I consider my home equity to be a bond - with the dividend being what [Wall Street Journal columnist] Jonathan Clements describes as the tax-free enjoyment of living in my home. Similar to a bond, there is a downside and the upside is limited to 3-5% per year appreciation.In addition, I would also consider Pensions to be similar to a bond as well. In particular, defined-contribution pensions (I get 5% of my gross dumped into a bond fund that pays 3-5%) are almost always invested in bond funds.
Do you own any “bonds” not bonds?
11 Responses to "Monday money roundup"
I think yes, the market is heading for a correction. I hope it does, that way I can swoop in and buy cheap shares for my retirement accounts (which I won’t be cashing in for another 20+ years).
The market may have small corrections here and there, but nothing like we saw with the “dot com” corrections 6-7 years ago. Any corrections that the US markets should go through are going to be offset from the huge profits large US companines are making in the consumer markets in China.
1. Already took nice profits, so bring on the correction.
2. Anything the OCC can do to help educate the wayward average joe has gotta be good.
3. With so many folks drowning in bad mortgage debt did Harris survey the choir and not the congregation?
4. No “bonds” and very little bonds.
I beleive a major correction is coming, but a crash is unlikely.
The key piece of information which was omitted from the Sunday articles in StarTribune was valuations. Stocks have been on a long upward trend recently accelerating in a way that often presages a fall.
But something like 15 consecutive quarters of strong profit growth support this run up and they make stocks seem reasonably valued. A reasonably valued market is unlikely to crash.
However, a correction seems imminent.
Private equity buyouts are one part of the story, but corporate profits are really the bigger part over the 4 1/2 year period in the article this weekend.
Watch corporate profits in the second half of the year.
I sold short the Nasdaq 100 last week.
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