Looking at the sub-prime crisis, writing down billions of dollars by big banks like Citibank and Morgan Stanley, Fed bailing out Bear Sterns and still so many houses in the market for sale the title of this article might sound crazy to you and you would want to get back to some other stories. But if you like someone who doesn't go with the herd and who thinks independently then read on as you will see that stocks of great companies at at sale.
- Financial Market - Financial market is in very bad shape. We can divide this market into two categoies:
(A). companies that took very high risks causing subprime crises and
(B) Those who respected the tightness of lending criteria and avoided the mess.
Citibank and Morgan Stanley falls in category (A). But bank like Wachovia never took that much risk. JP Morgan is another such bank. But the latest sub-prime crises hasn't left any financial stock untouched. The damage caused is way too much than deserved by these high quality banks like Wachovia, Morgan Stanley and JP Morgan.
There are many other regional banks that have avoided the credit mess but couldn't avoid going down with entire financial sector. You might consider buying these high quality stocks and regional banks ETF.
- REIT - Sub-prime crisis has also hit REIT. Usually REITs are priced at around 4% premium but lately they are at a more than 20% discount. But considering the complexity involved in analyzing REIT it's good to buy a diversified fund tile
Third Avenue Real Estate Fund. This fund is down right now from it's high a few months ago but because of its investing into domestic as well as international properties it is well poised to come. Whereas REIT and other real estate funds are down more than 20% this fund is down only around 15%. It's a good value if you have patience to walk through the storm.
- Home Builders - Home builders constructed with unprecedented pace in recent years. That caused their inventories to swell and falling demand of houses have left their stocks in dirt. But after a year of waiting and their cutting down on new construction home builders are hoping to get back into profitability in late 2008 or early 2009. Not to say that housing market is in very good shape. Toll Brother's CEO is not quite optimistic about the housing market. But these stocks definitely present an opportunity as they have been beaten down very badly. Many bargain hunters have already started buying these stocks as in last 3 months the home builder stock index has gone up more than 30%. You might consider buying and ETF for diversification.
Thing twice before you go along with herd. Values are found when you go against the crowd.
When the time comes to go
When the time comes to go shopping for a home, some buyers know exactly what they want. Some have a vague idea. There are many factors to consider and one factor is the age of the home. Do you go for the new property? Or opt for a previously owned house? There are benefits and drawbacks to both.
According to Scottsdale home builder, a benefit to buying a pre-owned, or re-sale home, is that most buyers don’t have to worry about costs involving window coverings, landscaping and the like. Many resale homes are considered “move in ready.” A buyer just needs to close on the deal and then move right in – with no immediate need to buy appliances, blinds for the windows or plants for the yard.