Wednesday, December 24, 2008

Take a differing path to wealth. Question the Social Norm.

Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are even incapable of forming such opinions. - Albert Einstein

No mater how I try to explain it ... A stock broker or trader will not understand or "get" what I'm talking about when I say that there is to0 much money in the stock markets chasing to few companies of value. Over capitalized to the extreme. Maybe it is prejudices of the stock market environment or mentality.

Then to compound that failure to get it... The companies that do not pay the owners (no stock dividends paid out now or ever) are (in my opinion) a loosing cause to own. As if to say that if the business does not pay it's owners then why own them. And the Stock guy says "because I can sell the stock for more money in the future." AND I contend that the fact that there is a Next Bigger Fool does not make the company that valuable.

I feel that an asset needs to have a value and a cash flow that leads to the values. If the overhead, weather it be salary for overpaid executives in jets or the costs of a plumber for an apartment building, gets to high then there is little or no profit that year. But if you get the costs down and still get the revenues (rents) then you make money and the owners (or stockholders) get their share.

If a company is "Public" and investors buy those stocks to hold, why does it seem ok for them to pay employees more then they owners? Executive salaries that include stock and perks and golden whatnot's. And the Boards allow this?!? The general populous of America has been duped. We watch "Who Wants to be a Millionaire" and dream of the stock market carrying us off into retirement bliss.

Surprise! It was a House of Cards. House built on Sand.

If you want real security you really need a foundation that stays put. Buy some real Estate that is income producing like an apartment building and treat your tenants well AND they will pay you every month on the first.

If you want my help, call me, I'll show you how to make it pencil out.

Keith L.

Sunday, December 21, 2008

Planning for the future L A City and LAX

In the news:
LAWA/City of LA celebrated its first 40 millionth passenger of the year. The 40 million number is significant because after the 40 millionth passenger of the year was reached, the overflow was supposed to be handled by Palmdale Intercontinental Airport

Palmdale... Are you kidding. All those homes out there are struggling the worst for the economic downturn. The big push never produced the Intercontinental airport.

Orange County had the chance to turn the old base into a good airport.

Long Beach is trying to take some traffic but pilots are forced to do wild maneuvers on takeoff and shut down early in the evening so not to disturb residents to much.

So the LAX situation will remain a divisive point for those who live near it. In Westchester. But for the rest of us Angelinos we are thankful to have one of the best sources of travel into and out of the states on our back doorstep.

The LAX Airport is a vital part of the Los Angeles economy. Needed and used by a lot of business. From international shipping to Hollywood movie stars. And all the other vacationers into and out of Los Angeles and the USA in general.

We are over 40 million passengers and the holiday travel blitz is upon us. Thank goodness the fuel charges are down. Thank goodness those Controllers in the towers keep the pilots sorted out and traffic smoothly flowing into and out of LA. Keep bringing those tourists to Disneyland and Universal Studios and Venice Beach.

Even if we were supposed to get some relief from a neighboring city, it is nice to have all that business helping this local economy. And our Real Estate values. And our rent rolls in our many rental apartment buildings.

It is the Season to be Thankful. I am thankful for LAX and it's big industrious infusion to the Los Angeles economy.

Keith Lambert

Friday, December 19, 2008

Will our American Business' Leaders ever learn?

I found a very good bit that really sums it up. We have produced bad results over and over again by making same mistakes over and over.

Part of that Garbage in get Garbage out type thing. Pay people to produce the wrong result and get the worst case end result. Over and Over and Over again. Planing and thinking must change to be 3 and 5 year and even to 10 year best results. Or go buy some Lotto tickets and try to win on the really short term. With longer goals and better real planning We can be better than the offshore businesses. But if we are only interested in the next quarterly result... Same old bad decisions to get paid.

See "When Will We Ever Learn?"

It is short and covers the topic well. BNet is good stuff.

Keith L.

Tuesday, December 16, 2008

Better loans available ?

Bonds and home loan rates spent last week testing their previous best levels of 2008, and finally rallied on Friday to reach their best levels not just of 2008 but of the last five years. Stocks, meanwhile, were under pressure throughout the week waiting to see whether Congress would approve emergency loans for GM and Chrysler. While the House of Representatives approved the measure Wednesday evening, the Senate rejected the $14 billion bailout for the US automakers on Thursday evening, citing a lack of wage concessions by the United Auto Workers (UAW). Friday, the White House announced that the government may be willing to use Troubled Assets Relief Program (TARP) funds to prevent an immediate collapse of the auto industry. One thing we can be sure of in this matter is that the volatility for both Stocks and Bonds will continue while this issue remains unresolved.
There were other important happenings in Washington to note last week. Five members of the House Financial Services Committee are sponsoring a bill that would force the SEC to reinstate the uptick rule. The uptick rule is a former rule established by the SEC that requires every short sale transaction to be entered at a price that is higher than the price of the previous trade. So what would the reinstatement of the uptick rule mean for Bonds and home loan rates? The reinstatement of the uptick rule would do a lot to quiet the excessive volatility in both Stocks and Bonds.
In other important news to note last week, the Retail Sales report for November showed that retail sales fell for a fifth straight month. Meanwhile, Initial Jobless Claims reached their highest level in 26 years. Both of these reports are indicative of the current economic climate, and given the events of the week in Washington, they had minimal impact on Bonds and home loan rates.
As mentioned above, Bonds and home loan rates rallied Friday afternoon to reach their best levels of the year. As a result, they ended the week .25 percent better than where they began. There may be an opportunity for you to reduce your home loan payments if you were looking to Refinance.

Let me know if you need a referral to a great Loan Broker who can get you the best rates.


Tuesday, December 09, 2008

Market Forces... Moving for the better on some fronts

The Fed has indicated that they would like to be a buyer of Mortgage Bonds, which has resulted in attractive, lower rates right now. But as stated above, the trading environment is extremely volatile, and opportunities to capitalize on lower rates that make sense should be taken advantage of. There have been recent rumors of interest rates being brought down towards 4.5% by the Treasury. This irresponsible release included no definitive plan, no indication of who might qualify, or what the restrictions would be. Like many other recent legislative "solutions", the restrictions might be very tight, with income limits set very low, and as a result, helping very few people. Remember, it may make sense for you to act now, and take advantage of current historically low rates...with the possibility of refinancing should rates decline further.

In other news to note from last week, the Bank of England and the European Central Bank both cut their key benchmark interest rates in an effort to revive their sagging economies. The reduction in rates was expected as part of a global coordinated effort, and our Fed is widely expected to cut its benchmark rate during its meeting on December 16. While a cut by the Fed often causes home loan rates to rise - because a Fed rate cut can lead to inflation, which is the arch enemy of Bonds and home loan rates - the deflationary environment we are currently in may prevent home loan rates from worsening significantly after the Fed cut. This is going to bode well for all those apartment building loans tied to the LIBOR rates. Personally I'm Loving this.

Bonds and home loan rates tested their best levels of 2008 throughout last week, but could not improve beyond them. As a result, Bonds and home loan rates ended the week slightly worse than where they began... even in the midst of rumors of rates declining as mentioned above.

GAS PRICES SURE HIT A RECORD EARLIER THIS YEAR, BUT NOW THAT THEY HAVE IMPROVED! I have seen multiple stations here in Los Angeles with all 3 prices under $2.00. I did not think I would see these prices again in my lifetime. I thought for sure that once the consumer public had gotten used to $3.00 plus gas that it would never come down.

So what market forces are making me feel better today? Gas at a reasonable price & the loans on some apartment buildings some clients have are about to become cheaper and more affordable for their operating budgets. (and I manage some of those)

Those are very good things.

Think of all the handymen and service guys like plumbers who service apartments and homes all across America... Cheaper gas means they may afford better holiday gifts for their kids and wives this month!

Very good things.

Keith L.

Thursday, December 04, 2008

Hot news on the market conditions today… See these story headlines!

Treasury mulls plan to lower mortgage rates to 4.5%
Move would help homeowners and buyers with good credit, but would do little for troubled borrowers

How long will the recession last?
Longer than past downturns, and Wall Street's meltdown will slow the recovery…

The details include:
…the fact that the recession is now already 12 months old, and clearly not approaching its trough yet, raises the distinct prospect that it will exceed the length of the 1973-75 and 1981-82 recessions (both at 16 months), making it the longest since the Great Depression (43 months, from August 1929 to March 1933). The crowd fond of making comparisons to the Great Depression will be quick to declare some kind of victory on this one.
Second, the prediction that this recession may end around the middle of 2009 is not unreasonable, but even if accurate it disguises the critical question: What kind of a recovery is likely to follow? The answer is: probably a gradual one, unlike the more typical (but not universal) pattern of the economy coming out of most past recessions roaring ahead, propelled by pent-up consumer demand.
The healing process of a deeply wounded banking system, that has already led to nearly $1 trillion of write-downs, will act as a weight around the neck of any economic recovery in the latter part of 2009. Banks will likely continue the slow process of recapitalization and cleaning up…

So a Gradual Recovery is what to expect. Do not look for a specific marker to show you the bottom of the market. There will not be one. Pull your Cash together and let’s buy you an income producing property.

Call me to review your financial options in dependable Los Angeles residential income properties.

Keith Lambert