Friday, October 16, 2009

Purchase a House Now! Digitalization is Making Houses Cheap!

Those who have a job (92% of all who want a job) should buy a house now! 

The combination of very low mortgage rates and very low...

foreclosure priced homes makes trading up compelling. Fear is keeping many from making a move that would create leveraged profits for themselves. 

If you own a mortgaged home, you should refinance for 30-years and use the per month savings to fund an investment account. Doing so is the equivalent of borrowing money at 5% to make better than 12%! While there are no guarantees, stocks historically average 11% return, and returns revert to mean. The average big stock is selling at the same price today as it did 10 years ago. Stocks were overpriced 10-years ago and are under-priced today. The opportunity is great.

Schumperterian profits are rising up en masse. The old is dying, the new is taking over. One does not have to be a seer to appreciate the great changes in the works. Many of the changes are already long term trends that only had a relapse before cranking up again. The decline in the real price of manufactured goods, part and parcel to the decline in manufacturing workforce, is not new. The digitalization of the world is not new. The speed of digitalization is new.

Digitalization is everywhere driving costs down. Digitalization is driving the cost of virtually everything down. What is not being manufactured, sold or delivered more efficiently as  a result of ditalization? 

Alarmist today suggest there will be a second dip to the recession and other alarmist suggest that our economy is going to leap from deflation to hyper-inflation.  Professor Yield Curve says that real growth is going to be around 3.5% and that inflation is going to come in around 1.5%! 

The bottom line is that businesses will take advantage of lower costs to increase profits. Many businesses have already taken advantage of low interest rates to solidify balance sheets. Businesses are becoming very healthy very quickly. The opportunity for consumers is to buy equity while prices and financing costs are low. That means to buy company shares or to buy real estate or both! 

blog comments powered by Disqus