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Strategies & Market Trends : Trader J's Inner Circle -- Ignore unavailable to you. Want to Upgrade?

To: LTK007 who wrote (45281)	7/29/2001 3:02:58 PM
From: Londo	Read Replies (1) \| Respond to of 56535

re: housing/remortgage Can anybody say "leverage"? This reminds me of one of the causes of Japan's downfall: businesses valuing real estate property higher than they should have, except they used those 'assets' as collateral to buy more garbage.. If one of the "Herr" family loses their source of income, they are HOSED. No other way of explaining it.. Plus this statement: "It's no different than if I was putting $200 a month into an IRA or a mutual fund. It's more like an investment than an expenditure, because I fully expect a return on it." -- IS THIS GUY ON CRACK? If this is the mentality of the average american consumer, better stay away from those financial firms.. Assets = Liabilities + Equity The difference is obviously one of liability: If you blow your $200 of your IRA on Boston Chicken or 360Networks, you've just blown $200 of cash and (therefore) equity. That's all you lose (and a little pride I guess). However, if you blow your $200 that you got from your re-mortgage, that liability is still not going away! If you suddenly forget to pay $200 to your banker, I hope you enjoy cardboard residences.. You work at a job, and make money. So cash = assets, and it gets reflected as 'retained earnings' on your personal equity statement. What the illusion here is that people want to jack up their "assets" column as quickly as possible. So they take out an extra mortgage based on the value of the home.. so effectively they increase their liabilities, and not EQUITY.. what a scam. Talk about a 'get-rich scheme'. Except these ones are legal.

To: LTK007 who wrote (45281)	7/29/2001 3:37:39 PM
From: Canuck Dave	Respond to of 56535

Short term, market may have a nice bull run. You don't think that some of those refinancing and tax refund dollars won't find their way into the markets? If capital spending shows even a glimmer of recovery, we could be off to the races. For a while. Longer term, I've got my eye on 3 things to indicate the party is about to come to a crashing end; long bond rates, gold prices, and inflation statistics, even though the latter is obviously massaged beyond belief. Any signs of real recovery will be a signal to companies to raise their prices aggressively. Failing both scenarios, look for the tug of war to continue. CD