How to profitsafely and handsomely from the subprime mortgage mess through smartand timely investment moves.
What a mess thefinancial geniuses of this country have created through their'miracle loans' to struggling families who dreamed of owning theirown home.
Through their corporate greed, many of the country'smortgage loan companies and Wall Street banks have not only causedmillions to lose their homes through foreclosure, but they haveharmed the U.
S.
economy as well.
Isn't satisfying tosee these mortgage companies and banks - villains and perpetratorsall - nowthemselves sufferfrom plummeting stock prices and evenbankruptcies?They are now reaping what they have sown.
The root problem isthat millions of home buyers used 'too good to be true' home loans tobuy homes they really couldn't afford.
The mortgage companies andbanks offered these loans, often with deceptive and tricky terms, tomake millions off the loan fees.
The loans were hard for buyers toresist because they had low or no interest charged for the firstyears.
But nowthe loans are 'exploding' with dramatically higherinterest rates and these home buyers find themselves unable to makethe monthly payments.
For years all waswell while home prices skyrocketed with the fuel of low interestrates and easy credit.
But now the party has ended.
Home pricesfirst plateaued and then began falling, millions of buyers aredefaulting, Wall Street is losing billions, and the nation teeters atthe brink of a recession.
How can you profitfrom this?Of course you want a safe method.
Want a sure firemethod?What is it?Hint, it's not buying distressed homes - it'slikely to be years before the real estate markets recovers.
Furthermore, the only safe way to invest is through diversification,and you'd have to buy multiple homes in each of 5-10 disparatehousing markets across the country to be safely diversified.
The road to safesuper riches is instead to identify and invest systematically in themajor sectors of the U.
S.
economy that currently have dramaticallylower stock prices because of the subprime mess.
Here are some of thestock sectors you can consider:home loan companies (only choose thestrongest, yes, they will recover), Wall Street banks, home builders,home supply companies such as Home Depot & Lowes, and,surprisingly, department stores.
Why department stores?Becausetheir stocks are down by a third or more this year, since investorsbelieve that consumer spending will be crimped for 6 months or morebecause of tighter credit and lowered home equity.
Wait, don't gobuying stocks just yet.
First, arm yourself with the 'safe' method: diversify by sector, diversify by stock, and diversify by time.
Diversify by sectormeans buy into 4-6 different sectors, such as the ones listed above.
Diversify bystock means don't buy individual stocks, instead buy2-4 in each sector, or, better yet a mutual fund or index fund thatfocuses on that sector.
Diversify by time means don't buy intothese sectors all at once, instead invest an even amount every monthover the next 6-12 months.
For instance, put 1/6 of your money innow and 1/6 in each of the following 5 months.
No one cantime the market.
It's very possible the market and these sectorswill have some more downs in the next 6 months.
But by buying in adisciplined fashion over the coming months you'll be 'dollar costaveraging' and building a strong and safe investment position.
Sold?Implementingthe plan?Now is the time to be patient.
The sectors will recoverat various times, but the one thing you can be sure of is they will recover.
And the best part is that stock prices are a leading indicator, meaning their stock prices will recover and appreciatehandsomely, before the sector actually fully recovers.
Everybody wants to get in on the next hot sector.
But the only sureway to do it is when the sector is hurting and no one wants in andthe prices are depressed.
Thanks to the subprime mess, that's youropportunity today.