So, is it time to buy American equities and assets yet?

So, is it time to buy American equities and assets yet? Seems like there are some saviours out there: Barclays, Nomura, Warren Buffet(!) and the US government. Is this a good time to step in and purchase US Equities now before they start heading back up again. Or.... is the worst still yet to come? In English we say: Are we waiting for the other shoe to drop?

My Canadian shares are doing - alright. They've dropped, but not as much as much as my US shares, though Starbucks is still hanging in there.

So, where to invest?

US Financial services? Could be quite risky still. We don't know (nobody knows) the extent of the damage in this industry. The whole sector is "iffy". There is much to be revealed. However, once the news is out, then it is too late.

Gold? The precious metal is used as a hedge in times of uncertainty. There is a seasonal increase in demand due to the wedding season in India. Likely this seasonal variation is understood and, given the amount of gold bullion that is produced, it should not have a big impact on the price. You can "hold" gold in several ways: 1) coins (I recommend Canadian Maple Leaf coins) Did you know that Canada is the #2 producer of gold? 2) bullion - these are gold bars sold by the ounce - not much difference from coins 3) Certificates - I don't know too much about these. This enables you to purchase gold but you do not take delivery of it in bullion. 4) Shares in gold producing companies.

Find some broadly traded shares that have been oversold and are undervalued? Due to margin calls and investors having to sell off their positions to cover other debts, the broadly held companies may have been oversold and are trading below their true market value. ID these, invest and reap the rewards once the markets recover in due time.

Which companies and industries are least affected by this credit crunch?

If we are headed toward a recession - it is indicated - then which sectors and companies will be least affected by a downturn in the economy: which companies are recession-proof?

What countries are attractive for their equities and their currency?
Will the US dollar trend lower? They'll have to print more and more money just to solve the credit problem. They've also go their original (and growing) national debt, trade deficit, budget deficit and a couple of wars to finance. Printing more currency dilutes the currency, thus, lowering it's value and increasing inflation. A weaker dollar makes it more costly to buy foreign goods and cheaper for foreign countries to buy American goods. This can help build the domestic economy. However, with such a strong reliance on foreign oil, gas and energy costs will be higher for American with a weaker dollar.

How about the Japanese economy and the yen?

Or the European Union and the Euro?

I am interested in your thoughts. There is certainly more to follow.

Euros and Gold

In light of the US investment banking meltdown, is it time to move your investments and assets into gold and convert your currency into Euros?

Is the US Dollar safe? There are many indicators that say: NO.
=Growing budget deficits
=Growing consumer debt
=Growing balance of trade deficit
=Countries switching to the Euro to settle oil transactions
=The sub-prime mortgage debacle - property prices have yet to stablize
=A meltdown in the investment banking sector and the bail out of Fannie Mae and Freddie Mac
=A war in Iraq (and elsewhere) with no end in sight
=The US Federal reserve keeps printing money to pay for it all - this will cause inflation - too many under valued US dollars will dilute the currency

Anything good coming out of the US?

Oh....and the Arctic icecap is melting much faster than expected. Greenland is soon to be green again.

Do you sit tight or get out? Do you buy low - equities and real estate - or do you wait for it to drop lower?

Where there is turmoil and uncertainty there is opportunity.

I am interested in your ideas, insight and perspective.

Dire Straits - What's going on in America?!

There is major trouble and strife in the US financial sector. Major.
First it was Bear, Stearns.
Recently it was Fannie Mae & Freddie Mac.
Now Lehman Brothers and Merrill Lynch as in trouble.

BBC News: Lehman set to go into insolvency


There is major cause for concern. These are major, well establish American financial institutions who are facing dire straits - including bankruptcy. The US media is downplaying the severity.

This is not on par with the savings and loan fiasco that plagued regions of the US back in the 1980s and 1990s. This is national and it is big. The full impact is yet to be felt but, in my opinion, it will be a significant impact to the US financial sector, the US economy and the US dollar as a world currency.

The impact of the bail out

It is suggested that the take over of Fannie Mae and Freddie Mac will result in lower borrowing costs and easier access to credit. The US Government seized the ailing lenders last week. Lower rates can mean a lower US Dollar vis-a-vis the Canadian dollar, British pound and Euro.

Are you going to rush in to borrow in a housing market in a major slump? This is great if you are preparing to re-finance your mortgage. If you are investing in real estate or considering buying, when is a good time? Will prices continue to decline? I am not expert. However, I observe that real estate, like all markets, move in cycles. Real estate in many North American markets is presently in a downward cycle. If you are buying a home to live in for a long time (7-10 years), it's always a good time. If you are awaiting a better price - wait a while. If you are look for a "fire sale" - they appear to be on now in many US markets. More will come as the North American economy - also in a cycle - slumps downward.

What rescue means for mortgage rates
Bailout of mortgage giants should result in lower mortgage costs and make credit more available. But lending standards will stay tight and risky borrowers will still pay extra fees.