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michael
ParticipantI’m curios about North San Diego County in general. My wife and I currently live in LA County and are considering a move to North San Diego County. Cities like Oceanside, Carlsbad, Vista and San Marcos have come to mind. Any thoughts?
March 16, 2007 at 5:03 PM in reply to: In California, Perris is at the epicenter of mortgage problems. #47852Participant“Perris is the armpit of the IE”
Funny… the armpit within the armpit.
March 16, 2007 at 5:03 PM in reply to: In California, Perris is at the epicenter of mortgage problems. #47851Participant“Perris is the armpit of the IE”
Funny… the armpit within the armpit.
ParticipantThe executive branch of goverment has nothing to do with monetary policy – only fiscal policy. Even if the Bush administration wanted to, they couldn’t print a single dollar. The Federal Reserve is reponsible for that function. Get your facts straight. The Bush administration had nothing to do with this housing bubble.
And yes, I do support the Bush Administration wholeheartedly!
ParticipantInterest earned from investments in taxable bonds (Mortgage backed securities, Corporate Bonds, Treasury Bonds, etc) is taxed as ordinary income. Treasury bond interest is exempt from State Tax.
Municipal bond interest is federal tax exempt and depending on the issuer, specifically the state where the issuer is located, the interest may be state tax free.
Keep in mind that if the price of the bond appreciates and you sell it prior to maturity, capital gains taxes apply. Holding period for less than a year results in short term capital gain, longer than a year, long term capital gain. Capital gains also apply when you purchase a bond at a discount to par and it matures at par.
Interest from mutual funds receive the same treatment depending on the type of interest generated from the fund. Capital gain applies to an increase in NAV at time of sale.
Also, keep in mind that certain Municipal Bond interest is subject to AMT.
Hope this helps.
ParticipantDumbest post I’ve ever seen!
ParticipantDumbest post I’ve ever seen!
ParticipantI would highly discourage you from using an annuity product. As mentioned in the previous post, your funds are already in a tax-deffered vehicle. Annuities also have additional fees. The most common fee is an M&E (Mortality and Expense) charge. The M&E can run anywhere from 1.2% to 1.7% of total assets. And although it may not sound like much, the compounded effect of the extra fees can be significant over an extended period of time.
Annuities are also sold with differing surrender periods. A shares have lengthly surrender periods – usually about 7 years. L shares usually have 4 year surrender periods and C shares have a 1 year surrender period. Each share class has differing M&E charges. The “advisor” gets paid the highest upfront commission on the A shares. Usually about 5%.
You also should be weary of “Index” annuities. Allianz offers these annuities and they are BAD. Index annuities claim they track an index but in reality the formula used to calculate the return on investment differs greatly from the actual performance of the index, even before fees. The surrender periods are usually 10 years. The annuity pusher usually gets an upfront pop that can be as high as 8%. Index annuities are not registered products and therefore any person that can fog up a mirror and pass an insurance exam (anybody) can sell these products.
My advice is to stay away from annuities. Talk to a Certified Financial Planner and explore different options.
Good luck.
ParticipantI love it!
ParticipantThe falling knife expression has been around for a long time. It is commonly used to refer to a falling stock price. As helpful as this website is I’d be careful to assume that anyone that uses a particular phrase learned it here.
ParticipantPowaySeller – I work for one of the wirehouses. Our structured product desk in New York is constantly creating new products. Last year they came out with an 18 month “Bear Note” that shorted the HGX (Home Builder Index). There is currently a note that is long Asian currencies – short US dollar. I share your views on housing. I also am a firm believer in Modern Portfolio Theory. I recommend you call a couple of wirehouses and ask about their structured products. I have worked with the structured product desk to create custom investments for clients with at least $1mm to invest in structured products.
ParticipantYes, interest rates on the long end of the yield curve have come down a bit over the last couple of weeks. There are numerous factors contributing to the drop in yields including a shift to safe quality assets in the face of poor economic data (job growth, GDP, inflation, etc).
However, I don’t thing the long end of the yield curve will have an impact on SoCal housing depreciation. The SoCal market has relied extensively on the short end of the yield curve through the use of ARMs. The yield on the 10 year hasn’t moved nearly as much as the short end – driven by the FOMC’s two year tightening campaign. Look at some historical data for US Treasury rates and you’ll find that in the years following 1989, the 10 year actually dropped. But that didn’t save SoCal.
The long end of the curve will probably not move dramatically in any direction. Japan reported lower inflation data and that could have an impact on the BOJ not raising interest rates – therefore prolonging the Japanese Carry Trade and maintaining demand for the Long Treasury.
Investor psychology has already been impacted, the downturn is underway and interest rates will not help. Remember, Japan dropped rates to zero and that couldn’t stop their real estate troubles….
ParticipantI encourage you to read the above linked article written by Bill Gross. Page 3 references a Fed study dated September 2005.
The yield on the 10 year treasury may have peaked. Friday’s 4.99% yield broke the 5% support level. However, don’t count on lower long term rates to save housing. (Especially in areas such as SoCal that are now, as a result of the recent run up, dependent on the short end of the yield curve.
Notice the chart in the article on the history of 10 year rates back to 1988. It appears that the peak of the 10 year was in 1989 – right before the end of the Fed’s tightening campaign. I don’t think I have to remind anybody as to what happened in 1989 with respect to the housing market in SoCal.
Also notice that rates dropped considerably over the next years. Didn’t help housing one bit!
Reversion to the mean is real. Not even interest rates will help in this case.
Thanks for the comments Powayseller.
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