As analysts are continually evaluating banks and commercial lenders, the investment community is dealing with fears of the mortgage foreclosure fiasco causing ripples through wall street. Ed Butowsky explains that stock prices are a function of projected earnings for these companies/banks. These very same analysts are evaluating these banks and trying to assess the impact. In light of the foreclosure mess at hand, Ed’s big concern, as shared with many analysts, is that there isn’t a lot of clarity into these earning projections by these banks. For this reason many investors are selling off their positions in this sector.
However, should investors be worried about the long term impact on the market? Ed Butowsky emphatically states that the markets long term will be heading higher, much higher in the couple of years to come.
These various banking challenges have made investors thing twice about how much money they would want invested in this sector. Hence the reason why many of them have been selling off their positions.
Another important question is how does this administration keep these foreclosures from impacting economic recovery? Ed begins with a hard-line against homeowners. If you can’t afford the mortgage you should not be in that house. The rules of paying on a mortgage are simple, and no one else should be handed over the responsibility of that mortgage other than those who own it. Ultimately, this administration should not stand in the way of these foreclosures.
What is the message to homeowners who are surviving; what do they do in terms of investing for the future? Certainly the current economic climate is not helping in making decisions; however, Ed explains that you need to stay away from bonds and be invested in equities (14%-18% undervalued). These investments help offset taxes and inflation.
Dow Jones Industrial Average Facts:
- DOW stocks have risen in 6 of the last 7 weeks
- DOW has gained 14% from its 2010 lows
- DOW Industrials have added 6% in 2010 so far
- The DOW has climbed 69% from its 12 year low in March 2009
- last month marked the best September the DOW has posted in over 70 years