Roller Coaster Ride - Equities on Board
Ok, I’ll admit it. My crystal ball isn’t very clear. At the end of February when the Dow dipped, I started to get nervous. Reading all these bearish articles on housing and stocks made me think, “Oh crap, these guys were right!” I’m old enough to remember the great stock crash of ‘87 and I also remember stocks rebounded then. After February, the Dow crashed hard before recently setting some new records.
Now, after three days of large sell-offs, the hesitancy could be returning. Not really. I sold my shares of PG on Tuesday, fortunately after they reached this year’s high. It was a year over year return over 20%. Since Tuesday, it has sunk. Oh well, it will come back. Yesterday’s 100 point loss brought me a $100 gain. I was hating it today.
Am I going to freak out this
time because of three days of large drops? No! Buy low, sell high folks. (The same goes with real estate) After the drop in February, many analysts counseled not to worry. The same applies now.
Unemployment is still doing well, however one economic indicator is beginning to make me think. Mortgage rates and the 10 year bond are up quite a bit. However, the current mortgage rates are mirroring those of last August and as we know, those rates came down quite a bit over the past year.
The 10 year bond has been on a slow motion roller coaster. Since I’ve been following it closely from 2003 at 3.98 it’s been all over the place. Big dips and big rises have been part of the ride. Today’s 17 bps rise in yields has to rank as one of the widest changes in a single day. However, I know it can easily rebound the other direction. So long as the Fed hold rates steady to combat inflation, the 10 year bond should revert back a bit to previous levels. High amounts of media speculation are sending all the markets all over the place and days like today are what we get. A correction back to previous levels should soon be in the cards.
Programming note: I’ve received a few comments and emails from visitors who would like to see more posts specifically about Salt Lake real estate. I appreciate the feedback and will try to accommodate. I will point out that many national trends do impact to a certain extent what happens in SLC, so these posts are necessary, but I certainly would like to indulge readers with more local info.