Monday 15 August 2011

The Summer Stock Market 15% Discount Sale Continues

The Market Oracle Newsletter
August 14th, 2011            Issue #16 Vol. 5

Commodities Currencies Economics Housing Market Interest Rates Education Personal Finance Stocks / Financials Real Gems

The Summer Stock Market 15% Discount Sale Continues

Stocks Stealth Bull Market 2011 Ebook Direct Download Link (PDF 2.8m/b)

Interest Rate Mega-Trend Ebook Direct Download Link (PDF 2.3m/b)

Inflation Mega-Trend Ebook Direct Download Link (PDF 3.2m/b)

Dear Reader

The stock market managed to make it through to the other end of a wild week having survived the bears repeatedly letting off both barrels at the bulls, throwing everything they had at the market, starting with the downgrading of the US debt from AAA to AA (eventually to junk), intensifying in core eurozone countries such as France itself now also in the a firing line for a downgrade, however by the end of the week the net result was a market that closed higher by about 100 Dow points against last Sunday evenings Dow futures of 11,170.

High volatility became extreme volatility with the Dow yo-yoing by more than 500 points virtually every day, which presented accumulating investors multiple opportunities to buy stocks at deep discounts of more than 15% off recent highs as the Dow retraced to an intra-day low of as deep as -17% off the bull high at which time the usual suspects appeared in the mainstream press, (regurgitated in the blogosfear) to proclaim the end of the "bear market rally" and resumption of the bear market, which as is usually at the precise time that the stock market would reverse direction sharply higher.

The old 1930's charts of the Great Bear Market were again used to justify expectations of what perma bears and deflationistas' had in mind for what was expected to occur next, (for the umpteenth time), though those that spend so long staring at these 1930's charts are missing the most obvious point, which is what?

  • Dow 1929 Peak 381
  • Down 1932 Bottom 41

What is that saying ?

Think about it for a moment, Dow 1929 peak 381, Bottom 1932 41.

Where does the Dow stand today ?

11,270ish.

What's 11,270 divided by 381 ?

What's 11,270 divided by 41 ?

What's the trend trajectories off either the 1929 bull market high or the 1932 low ?

Where do the trend trajectories imply the Dow will be in 5,10, 20, 40, 80 years time ? Significantly Higher or lower ?

If there is a constant battle between Deflation and Inflation then why is this not reflected in the general stock market indices such as the Dow?

It is because the general stock market indices are locked into an inflationary exponential growth spiral, as corporate revenues and earnings (profits) are leveraged to rising commodity and consumer prices (fuelled by perpetual currency debasement) AKA the INFLATION MEGA-TREND, trends of which are further enhanced by expanding profit margins as a consequence of increasing worker productivity as technological advances are taking place exponentially, for instance today's smartphone has more processing power than the whole United States had 50 years ago! And the technological advances over the next 50 years will be exponentially greater!

You may argue that companies go bust thus this cannot be be so ? Yes, companies do go bust, but they get thrown out of the general stock market indices long before they disappear into history and replaced by EARNINGS GROWING companies, a fact that apparently fails to register in the consciousness of deflationistas' who place theory and models of what SHOULD happen over the REAL world of experience what actually takes place in investor portfolios.

The bottom line is that there is no battle between deflation and inflation because deflation only exists in the minds of ivory tower academics or other vested interests that are paid to pump out economic propaganda to keep populations sedated on the consequences of the ever present Inflation Mega-trend, where anything less than 2% annual compounding of official inflation (that is significantly lower than the real rate of inflation that people experience) is deemed to be bad therefore supportive of the fiat currency money printing system that all governments are engaged in utilising to enable then to spend monies they do not have by conjuring it out of thin air.

I'll stop here else I will just be repeating what I have already written at length countless times over the past 2 years and iterated in the Inflation Mega-trend ebook (FREE DOWNLOAD).

Stock Market inflation Mega-trend Investing

Stocks of rising divided companies are one of the best long-term inflation mega-trend hedges therefore oscillations around the general stock indices growth spiral should be utilised to both bank profits and accumulate into which means bear markets and market panic events are buying opportunities. Yes, EVERY CRASH and BEAR MARKET without exception has been a buying opportunity for stocks in consistently raising dividends because they hedge your cash against inflation, because deflation does not exist in our fiat currency money printing world.

This is how I invest and grow my stocks portfolio, bank profits when the yields drop, accumulate stocks when the yields rise, a simple yet effective strategy where the yield is far more important than the stock price, because that is what will generate the return and DRIVE the stock price higher over the long-run.

So all I saw this past week was a summer discount sale of as much as 15% on the indices, though the reality is that solid dividend stocks are not only a hedge against the Inflation Mega-trend but also against market panics, which means I was lucky if I was able to secure a discount of 8%, let alone 15% on target stocks, which matches my previous long-term study of such companies that on average can be expected to fall at half the rate of the general stock market indices during market panics and bear markets followed by greater upside on the other side as a consequence of consistently rising earnings and therefore much lower P/E Ratios.

There are countless such dividend stocks such as Tesco, BHP, Vodafone, BATS, Coca Cola, HSBC, Glaxo, Royal Dutch Shell to name just a few. Key metrics to look for are consistent high dividend payers / raisers, good dividend cover and a low P/E.

So, if you get your investing mindset right (psychology) then market panic events such as last week are not times to panic, but rather a time to stock up on higher yields courtesy of lower stock prices of between 5% to 15% compared to where they were barely a few weeks go. Always Keep Yield in Mind, for you only need to know price if you intend on SELLING, after all when you put money in fixed rate savings account / bond do you ever consider the exchange rate of your domestic currency ? No you consider the yield, which is how you should also approach stock market investing.

Now before you run off an buy dividend stocks do remember that investing in the stock market is high risk and for the long-term, if you cannot acknowledge these fundamental facts of stock market investing and are prone to start sweating on every market dip then you should not be considering investing in even safe high dividend yield stocks let alone big name tek stocks that the mainstream media obsesses over.

Look, even if worse comes to the worst and stocks fall say another 20% by the end of the year, that translates into a 10% risk for dividend stocks ( an opportunity to accumulate more at an even higher yield), against which you are hedging against the long-run impact of the Inflation Mega-trend that looks set to deliver year on year rising dividend income ultimately matched by rising stock prices as a consequence of falling P/E's. Though my expectations remain for general stock market indices such as the Dow to make NEW bull market highs by year end.

And don't forget than there is a literal avalanche of scared money sat in the likes of U.S., UK and German bond markets, all it would take is a little stability in the economic data for stocks to spike significantly higher.

Are British Police to Blame for Extent of London Riots and Looting?

Whilst The US was being stripped of its AAA credit rating London high streets were being stripped of their consumer goods. Many thousands of residents and business owners were all saying the same thing, "Where is the Police?"

The spark for the trouble was the shooting on Thursday 4th August of an Afro-carribean male by police in Tottenham (London) under Operation Trident which targets black on black gun crime, with the initial protest at his killing starting in Tottenham on Saturday 6th, then spreading across London on subsequent nights as rioters and looters took advantage of an apparent lack of police response, utilising social media sites such as Twitter, Facebook, and smartphone's such as the Blackberry to quickly organise and target rich pickings for consumer goods on high streets.

Rampaging mobs of looters after clearing high street shops of their goods then took the insane step of setting them alight, destroying many livelihoods and homes.

The rioting / looting spread further across England's inner cities with severe disturbances taking place in at least 6 cities including Birmingham, Bristol and Liverpool which culminated in the killing of 3 asian males (hit and run) in a group of 80 in Birmingham that had sought to protect their homes and business against looters due to the lack of police response. The killings had risked the start of race riots which were prevented by the victims parent's dignified calls for calm.

However unlike the early 1980's, Britain has become the CCTV capital of the world with more cameras than even totalitarian states which ensures that the vast majority of the rioters, looters and arsonists would be be tracked down and brought to justice, which is small comfort to those that are losing everything during each nights rampage.

Whilst many in the media have focused on the social causes such as economic austerity cuts, social exclusion, lack of jobs for possible reasons why. The truth is that the real reason for 90% of the looting masquerading as rioting was because the Police let it happen.

Britain's extensive 5 million strong CCTV camera's mean that for several years the police has had an apparent policy in action of letting civil disorder / crime take place. Why ? Because then the police are better able to convict with the aid of cctv and other video footage than had they attempted to intervene at the time resulting in lesser charges fewer convictions. In fact elements of the police have been actively engaged in inciting crime and demonstrations to take place so that evidence can be generated enabling convictions to take place as I wrote last February.

The recent highly public case of under cover police infiltration and incitement operations on climate change activists is further evidence of a defacto police state in action where under cover police officers are inciting protesting groups to break the law. How many more hundreds of under cover police operatives are out there who's primary purpose is to incite a group or protesting crowd into a course of action that they would not have otherwise undertaken so that the police can generate evidence for prosecution.

The Police, by standing back and letting riots take place for several days with little action other than filming the perpetrators is just a continuation of this policy of letting rioting / looting fools generate evidence against themselves.

Unfortunately the lack of police response sent the green light to many more people than the usual suspects as students and those in low paid work that were bitten by the looting bug and fell into the police evidence generating trap and in the process have now likely wrecked their futures as the Police have already arrested near 3000 rioters / looters based on video footage evidence as homes are raided for evidence and suspects arrested.

Off course those that broke the law are nothing more than common criminals that deserve everything that is thrown at them as they are brought to justice, but the Police did take several steps back and allow the Riots / Looting / Arson to take place for several days which resulted in far more crime than would have occurred had the police acted following the initial disturbances in Tottenham and failure to respond to subsequent disturbances. One could speculate that this could have been part of a collective message from the Police to the government as to what it can expect to happen more often if the planned Police cuts are implemented.

Another point to consider is that the frenzy of looting activity was probably further fuelled by the mainstream broadcast press as it pumped out blanket 24 hour coverage of looting across London's high streets without any police presence for hours at end.

Your bloated analyst having gorged himself on high yielding stocks during the week.

Source and Comments: http://www.marketoracle.co.uk/Article29886.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2011 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of three ebook's - The Inflation Mega-Trend; The Interest Rate Mega-Trend and The Stocks Stealth Bull Market Update 2011 that can be downloaded for Free.

Stocks Stealth Bull Market Ebook DownloadThe Interest Rate Mega-Trend Ebook DownloadThe Inflation Mega-Trend Ebook Download

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive
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The Market Oracle is a FREE Financial Markets Forecasting & Analysis Newsletter and online publication.
(c) 2005-2011 MarketOracle.co.uk (Market Oracle Ltd) - The Market Oracle asserts copyright on all articles authored by our editorial team. Any and all information provided within this newsletter is for general information purposes only and Market Oracle do not warrant the accuracy, timeliness or suitability of any information provided in this newsletter. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We recommend that independent professional advice is obtained before you make any investment or trading decisions. ( Market Oracle Ltd , Registered in England and Wales, Company no 6387055. Registered office: 226 Darnall Road, Sheffield S9 5AN , UK )

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Copyright 2011 MarketOracle.co.uk


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Monday 8 August 2011

Stock Markets Panic Crash Continuing, Is the Stealth Bull Market Over?

The Market Oracle Newsletter
August 7th, 2011            Issue #15 Vol. 5

Commodities Currencies Economics Housing Market Interest Rates Education Personal Finance Stocks / Financials Real Gems

Stock Markets Panic Crash Continuing, Is the Stealth Bull Market Over?

Stocks Stealth Bull Market 2011 Ebook Direct Download Link (PDF 2.8m/b)

Interest Rate Mega-Trend Ebook Direct Download Link (PDF 2.3m/b)

Inflation Mega-Trend Ebook Direct Download Link (PDF 3.2m/b)

Dear Reader

Investors and Traders are reeling after a week of plunging stock prices and high market volatility as the worlds major stock indices fought to and then failed to hold support sending the Dow down to an extreme intra-day low Friday of 11,139, before recovering to close up marginally on the day at 11,444, as of writing asia is sharply lower with Dow futures trading over 270 points lower at 11,170 suggesting a continuation of a downtrend early week to below Dow 11,200.

The BlogosFear is claiming victory though many of whom conveniently forget that if they had followed their own advice they would have already gone broke several thousand Dow points ago on the way up, meanwhile the mainstream press yo-yo's with every market gyration to explain what is beyond their capability to interpret, each bounce is followed by good news explanations such as agreement on the debt ceiling, each plunge is followed by a bad news explanations such as Italy and Spain teetering on the edge of default bailouts.

The relatively mild summer correction has clearly morphed into a market panic event. However unlike many investors, I don't tend to panic, instead see opportunity in every crisis. Therefore my focus this weekend has been to update my buy list that will aim to capitalise on the ongoing panic as the Dow futures suggests.

U.S. Credit Downgrade, Bankrupting Eurozone, Double Dipping Economies

S&P puts another nail into the U.S. economies coffin with its credit rating downgrade, the eurozone continues to trend towards default of PIIGS and sharply higher interest rates on issuance of eurobonds (as euro-zone interest rates get averaged between bankrupting PIIGS and core Eurozone), with economic data increasing the odds of a double dip recession manifesting.

So all of the bad news is true, but ultimately all that they will do is to ACCELERATE the INFLATION MEGA-TREND, which is the primary driver of prices be they consumer, commodity or assets.

So if you really want to know how to preserve and grow your capital you need to know to keep on the right side of the Inflation mega-trend as covered at length over 18 months ago in the Inflation Mega-trend Ebook (FREE DOWNLOAD), following which little has actually changed in respect of the key drivers of the inflation mega-trend.

Investing For Capital Protection and Profit in the Inflation Mega-trend

Investing is HIGH risk even if one picks low risk large cap dividing paying and growing stocks, there still is a significant risk involved which is why investments have to be accumulated into target stocks with a view to long-term holdings that span many years if not decades, for that is how you actually beat real inflation, not from jumping in and out of holdings on the latest scare or market panic that takes all stocks lower regardless of each stocks differing fundamentals. Whilst short-term term speculators focus on the gyration of stock price charts, what they may be forgetting is the long-term impact of growing dividends that is the real key to profiting from stock market investments, therefore in my view dividends are more important than what the stock price does, as long as dividends are growing then the investment is safe because whilst companies can and do lie as to the actual state of their balance sheets, but the dividend does not lie, remember that!

The strategy is simple in that the Inflation Mega-trend driven by the sovereign debt mega-trend as countries seek to default on their debts by means of high real inflation results in corporations raising prices which raises revenues which raises profits in nominal terms and thus raises dividends and hence constant dividend paying and raising stocks are a hedge against in inflation which should over the long-run be reflected in the stock prices as stocks are compared to one another in terms of price divided by earnings (P/E) and dividend divided by price (yield). So my long-run stock market investing strategy is simple which relies on the fact that democracies will always stealth default on their debts by means of high inflation as the primary driver of economies, for in democracies politicians seek to buy votes to get elected with money the country does not have, which is why you are not going to get price deflation as deflation runs counter to politicians objective to get elected by buying votes. Even in austerity Britain, the coalition government is STILL buying votes with money the country does not have to the tune of about £120 billion a year or about 9% of GDP.

This is the real price of democracy in that wealth is systematically stolen from the haves and distributed to the have not's where only the super rich (top 0.5%) can escape the democratic wealth destroying cycle.

You hear a lot of talk about the lost decade for stock market investors, what these commentators fail to consider is the performance of stocks with consistently rising dividends that one could easily during a panic event collect yields on as as high as 6% which then COMPOUNDS as the dividend is raised, resulting in a 10 year return of as much as 100% on the initial investment BEFORE stock price capital appreciation is even considered.

As the PIIGS crisis illustrates that risks posed by many stocks can turn out to be lower than that of government bonds. Those holding PIIGS debt are sitting on capital loses of between 30% and 50% on so called low risk investments!

So in my opinion panics ALWAYS breed opportunities to accumulate into high yield stocks and country and commodity ETFS as covered at length in the Inflation Mega-Trend Ebook.

So whilst you read the rest of this article in terms of shorter term trend expectations, do remember that in terms of the long-run the current panic action is just noise, that is giving me and many other investors discounts on stocks of between 10% to 15% compared to where they we were trading just a few weeks ago.

U.S. Addicted to Debt Gets Downgrade

Growing sovereign Debt is a mega-trend that afflicts ALL democracies that manifests itself in INFLATION as countries are forced to default ont heir debt my beans of high inflation.

The Inflation Megatrend Focus

Regardless of the what the debt deleveraging deflationistas have been continuously stating for many years now, stay focused on the inflation mega-trend as the primary driver for asset prices as a consequence of the megatrend's of sovereign debt default through high inflation, population growth impact on commodity price inflation, demographic changes in emerging markets on consumer and asset prices, and the inflation inducing climate change mega-trend.

The academic economists may be blind for obvious vested interest reasons to the inflation mega-trend but it is real and powerful and will continue for the whole of this decade by which time rear view mirror looking economists that populate the mainstream press will say how did we miss the great inflation of 2010 to 2020?

My investing focus as iterated at length in the Jan 2010 Inflation Mega-trend ebook remains the same to accumulate into this decade long mega-trend in which respect panics present opportunities.

My focus is to invest in commodity, internationals and emerging markets for emerging markets growth will far out perform the west for the whole of this decade. Look it is not because emerging market people are smarter or cleverer than those in the west for they on an average basis are not, because of several; factors such as lack of freedom of thought in China, or lack of educational opportunities or poor infrastructure in places such as India. What is driving the emerging markets mega-trend as illustrated in the Inflation Megatrend ebook is the convergence of GDP's as the below graph illustrates (Jan 2010).

Therefore the GDP of countries such as China and India can double but STILL lag far behind the west which illustrates how far they have yet to grow with all of the implications for commodity and asset prices given the billion plus populations of each of these countries.

Stay focused on the Inflation mega-trend and you will preserve your capital and grow your wealth. Fall for the deflation propaganda and you will lose at least 50% of the value of your capital over the next 10 years for this is what so called deflation looks like for the UK in terms of prices -

Inflation Mega-trend Investing

The Inflation Mega-trend ebook broke down where one could be investing to protect ones wealth which I can summarise as in stocks , commodities and the corporate bonds of low risk stocks. Now some 18 months on my analysis is also converging towards holding housing (UK), therefore if I were to break an ideal portfolio down today it would comprise 30% stocks and commodities, 10% cash, 40% housing, and 20% index linked / corporate bonds. My own portfolio currently stands at 28% stocks & commodities, 52% cash, and 20% index linked / corporate bonds so clearly the focus of my analysis is more on protecting cash from bankrupting banks and the UK housing over other markets.

Stock Market Quick Technical Outlook

Volatility is high, markets are yo-yoing all over the place every few hours as illustrated by Fridays price action, asia is sharply lower and so are the futures, nevertheless here is my quick take.

Technical State of the Bull Market - The Dow's last bull market high of 12,876 against the last close of 11,460 represents a 11% drop, so still well within that for a normal correction of between 5% and 15%.

Credit Crisis Lehman's Event - The last bear market was intensified by the unexpected Lehman's bankruptcy, whilst the unexpected is well unexpected, the banking sector is far less likely to produce a Lehman's event now than in late 2008. Off course the focus is on the European PIIGS producing a Lehman event. However the Euro-zone has repeatedly shown that it WILL step in to prevent such an event by bailing out and buying government bonds, which means even the too big to save such as Italy, will at the final moment be saved though the process could be painful in terms of market volatility however the ultimate bailouts would result in a stocks rally.

Price Patterns - The head and shoulders pattern is back - My take is that it is always visible just before it gets busted! The H&S pattern is less reliable than a coin toss !

Technical Analysis - A measuring move of the decline to A, from the break of support point suggests that a low is imminent around Dow 11k. However the severity of the current downswing suggests that an imminent low will be revisited / tested after a bounce.

The lower high at B suggest the stock market is now in a down sloping channel, which further suggests an imminent low is likely to be tested and probably broken before the Dow targets a break of the down sloping resistance line.

MACD - Very oversold and has hit the support channel line which suggests further downside is very limited and a bounce is imminent that targets the higher down sloping channel line.

Elliott Wave Theory - May 2nd is clearly a major 5th wave peak which initially suggested an ABC correction which given the severity of recent price action suggests a further wave lower is likely.

Volatility - VIX has spiked sharply higher virtually touching 40 from an early July low of 15. Similar VIX spikes usually coincide with major lows though need several days of price action to be confirmed, as 40 could spike further to 50.

Conclusion

Clearly the stock markets remain immersed in panic mode so not in any state to make a new bull market high any time soon, I see the likes of Dr Doom Marc Faber, AFTER the event claiming that stocks are in a bear market as of 2nd of May 2011 and won't make a new high. WRONG. The only question mark is how long will the current volatility extend before the bull market in stocks RESUMES. That is not clear, the stock market is oversold and set to bounce, but after the bounce it could make another lower low. It is not clear, which is fine because the market is not always predictable. My best guess is for an imminent bounce to resolve in a retest of the lows, stocks historically tend to make major lows in September and October.

The Bottom Line - The stocks bull market is not over, the current correction extends to about 11%. Therefore I have an on going opportunity to accumulate target stocks and will likely get another bite at the cherry after a bounce and plunge into Sept/Oct, after which the future prospects for stocks for the balance of the year will become much clearer.

Your analyst disappointed that his target stocks are not dropping as much as the indices!

Source and Comments: http://www.marketoracle.co.uk/Article29734.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2011 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of three ebook's - The Inflation Mega-Trend; The Interest Rate Mega-Trend and The Stocks Stealth Bull Market Update 2011 that can be downloaded for Free.

Stocks Stealth Bull Market Ebook DownloadThe Interest Rate Mega-Trend Ebook DownloadThe Inflation Mega-Trend Ebook Download

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive
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The Market Oracle is a FREE Financial Markets Forecasting & Analysis Newsletter and online publication.
(c) 2005-2011 MarketOracle.co.uk (Market Oracle Ltd) - The Market Oracle asserts copyright on all articles authored by our editorial team. Any and all information provided within this newsletter is for general information purposes only and Market Oracle do not warrant the accuracy, timeliness or suitability of any information provided in this newsletter. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We recommend that independent professional advice is obtained before you make any investment or trading decisions. ( Market Oracle Ltd , Registered in England and Wales, Company no 6387055. Registered office: 226 Darnall Road, Sheffield S9 5AN , UK )

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Monday 1 August 2011

August Home Buyer's Newsletter

To unsubscribe, do not hit reply. See instructions
at the end of the newsletter.

+++++++++++ August 1, 2011 +++++++++++++++++++

CONTENTS:

Introduction: Existing and New Sales Decline
Mortgage Rate Update: Mortgage Rates Steady
This Month's Tip: Utilize a Pro
++++++++++++++++++++++++++++++++++++++++++++

Introduction: Existing and New Sales Decline

Welcome to the August edition of the Home Buyer's Newsletter.
Existing-home sales eased in June as contract cancellations spiked
unexpectedly, although prices were up slightly, according to the
National Association of Realtors®.

Sales gains in the Midwest and South were offset by declines in
the Northeast and West. Single-family home sales were stable while
the condo sector weakened.

Total existing-home sales, which are completed transactions that
include single-family, townhomes, condominiums and co-ops, declined
0.8 percent to a seasonally adjusted annual rate of 4.77 million in
June from 4.81 million in May, and remain 8.8 percent below the 5.23
million unit level in June 2010, which was the scheduled closing
deadline for the home buyer tax credit.

Lawrence Yun, NAR chief economist, said this is an uneven recovery.
"Home sales had been trending up without a tax stimulus, but a variety
of issues are weighing on the market including an unusual spike in
contract cancellations in the past month," he said. "The underlying
reason for elevated cancellations is unclear, but with problems
including tight credit and low appraisals, 16 percent of NAR members
report a sales contract was cancelled in June, up from 4 percent in May,
which stands out in contrast with the pattern over the past year."

Yun cited other factors in the sales performance. "Pending home sales
were down in April but up in May, so we may be seeing some of that mix
in closed sales for June. However, economic uncertainty and the federal
budget debacle may be causing hesitation among some consumers or lenders."

In new home activity, sales of new single-family houses in June 2011 were
at a seasonally adjusted annual rate of 312,000, according to
estimates released jointly on July 26th by the U.S. Census Bureau and the
Department of Housing and Urban Development.

This is 1.0 percent (±12.5%) below the revised May rate of 315,000, but
is 1.6 percent (±14.1%) above the June 2010 estimate of 307,000.

The median sales price of new houses sold in June 2011 was $235,200;
the average sales price was $269,000. The seasonally adjusted estimate of
new houses for sale at the end of June was 164,000. This represents a supply of
6.3 months at the current sales rate.

+++++++++++++++++++++++++++++++++++++++++++++

Mortgage Rate Update: Mortgage Rates Steady

Mortgage rates remained fairly stable during the month of July even with
a good deal of economic uncertainty swirling around the market. 30-year
fixed-rate mortgages averaged 4.55% at the end of the month according to
mortage company Freddie Mac. These rates began the month at an average of
4.51%. In 15-year fixed-rate mortgages, the averages eased slightly, from
3.69% at the onset of the month to 3.66% in the period that ended July 28th.

For current average mortgage rates, see:
<A HREF="http://www.ourfamilyplace.com/homebuyer/rates.html">Mortgage Rates</A>
For an extensive discussion of all aspects of mortgages, see the section on the
site devoted to this subject. <A HREF="http://www.ourfamilyplace.com/homebuyer/mortgage.html">Mortgages</A>

++++++++++++++++++++++++++++++++++++++++++++++

Sponsor: Looking to Compare Agents? Try HomeGain.com

The most important part of your team for buying a home should be
your real estate Agent. Want to anonymously (and without obligation)
compare Agents? You can compare experience, background and
much more at HomeGain.com.

<A HREF="http://www.homegain.com/sp/ae_intro.html?entryid=2267&ht=houseclicksAE">Compare Agents</A>

++++++++++++++++++++++++++++++++++++++++++++++

This Month's Tip: Utilize a Pro

One thing that purchasing a home is NOT is a solitary experience.
Even those who purchase a home without an Agent and pay cash
cannot do the whole process alone. For the vast majority of us
that will use an Agent and need a mortgage, building a strong
team of professionals not only smooths the process but can also
save money. And, the stronger your team, the more likely
that your home buying experience will a successful one.

REAL ESTATE AGENTS

Probably the most important team member--and the one
that will have the most effect--is your Agent. Not only
will the Agent be your conduit to available properties
and your aide in negotiation, they can also coordinate
the activites of other team members such as the home
inspector and the closing or settlement agent. A good
Agent can be worth their weight in gold, but a bad Agent
can create more problems than they solve.

If this is not your first home purchase, you may consider
attempting the transaction on your own, but for first time
buyers it is highly recommended by most experts that
you find a capable Agent and use them fully. Not only
will you have access to many more properties (those
who do it "on their own" are limited to those homes for
sale by owner--generally less than 20% of the market)
you'll have someown who can help guide you in the
right direction. In the vast majority of cases, the cost to
you will be nothing--since you will be looking at homes
listed by other Agents, the commission is paid by the
seller of the property you buy. With an effective Agent,
it is not a bad price to pay (nothing) for someone who
can assist you at almost every step of the transaction,
especially in selection of properties and negotiation of
selling prices.

Some Tips on Selecting an Agent:
* Choose someone who is very familiar with the housing
areas (both location and price) in which you are interested.
* Concentrate on Agents who do a large percentage of
their business with buyers, rather than sellers.
More information on the site:
<A HREF="http://www.ourfamilyplace.com/homebuyer/realtor.html">Finding and Evaluating Agents</A>


MORTGAGE LENDERS

Your satisfaction (or your aggravation) in the whole
process of buying a home has a great deal to do with
your relationship with your lender. If the application,
processing and underwriting (the final approval) go
smoothly, it can be a wonderful and exciting process.
Hit some snags and bumps in the road, though, and
it can quickly become a stressfull nightmare!

Whether you handle the mortgage process online or
offline, there are a few qualities that make the lender
a strong and effective member of your team:
* Up-to-date on the latest programs and rates
* Easy to contact
* Busy enough to be sucessful but not too busy to
keep in touch with you
* On top of their game-plan: Quick to answer questions
and handle problems

You can help your lender be effective if you quickly follow
up on the items and documentation they will need--pay
stubs, letters, verifications and the such. The best
mortgage lender in the world can't be an asset if they
don't have the tools they need from you.
More information on the site:
<A HREF="http://www.ourfamilyplace.com/homebuyer/mortgagehints.html">Mortgage Hints and Tips</A>


HOME INSPECTORS

The right home inspector can save you from buying
a defective house, point out potential problems in
the future and even give you valuable maintenance
hints. The wrong home inspector can make your life
miserable, let alone cost you a bundle of money.

Don't be cheap: A $250 inspection that looks at 40
components of a house is a much better value than a
$195 one that inspects only 10 items.

Don't let an amateur handle it: A "friend of a friend who
used to be a contractor" is probably an awful choice.
Hire a professional home inspector.

Look for experience: An inspector that does 200
inspections a year just naturally is more experienced
than one who does 25. They've seen more variables.

Ask for certifications: A home inspector should be
affiliated with a professional organization such as ASHI
(The American Society of Home Inspectors). If you are
using a contractor (be careful that they are not inspecting
to find themselves contracting work) they should be
Class A (or its equivalent) certified.
More information on the site:
<A HREF="http://www.ourfamilyplace.com/homebuyer/proinspect.html">Finding and Evaluating Inspectors</A>


CLOSING AGENTS

Closing and settlement procedures will vary a good deal,
depending on what is customary in your area. You'll find
that even the terminology will differ--in some areas the
procedure of finalizing a home purchase is a closing,
in others, settlement and in others, escrow. In some
states in the U.S., closings must be handled by
Attorneys while in other areas, title companies handle
the transaction.

No matter what it is called or what specifics are required,
the closing agent is the last (and extremely important)
member of the team. Sometimes it seems as though
all closings have snafus and delays, but an ineffective
closing agent can create a real quagmire for a buyer,
severly delaying or even torpedoing a closing.

Get good, solid information before you choose a closing
agent. A couple of sources for recommendations for a
closing agent would be friends and relatives who have
recently closed on a home, as well as your Real Estate
Agent, who will likely have a list of several closing
agents in the area.

SUMMING UP

The little time you may spend evaluating and choosing
the members of your team can save you an enormous
amount of time, and, perhaps, a considerable amount of
money. Many of the mistakes made when buying a home
can be directly attributed to bad choices in the selection
of those who can give you assitance.

Next Month's Tip: Take Advantage

++++++++++++++++++++++++++++++++++++++++++++++

The Home Buying Checklist

Many of our visitors have said that one of the most valuable
aspects of the Home Buyer's Information Center is the
Buying Checklist, where they can make sure that all
the bases have been touched. You can find the checklist
here: <A HREF="http://www.ourfamilyplace.com/homebuyer/checklist.html">Home Buyer's Checklist</A>

A special thanks to all those who have written to let us know
that they have found the Home Buyer's Information Center a
helpful resource in their buying process.

Have a great month and good luck in all your endeavors!

The Team at the Home Buyer's Information Center

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