Time To Do Something With Your Investments, Markets Nearing Critical Point.

It is now time to rebalance your portfolio or add to your positions if you are a long-term buy and hold investor. Otherwise, if you are more active in your investments and looking for that extra "Alpha", or gain, then it may be time to liquidate your more volatile/risky investments and wait for some direction, maybe even open a hedged position.

Why do we say this?

Our analysis and research puts us in the view that a short-medium term correction and consolidation period is nearly imminent in the markets.

Here is a post that I made on another financial website regarding where the market may be headed on the downside:

On Oct 03 12:41 AM AlphaKing wrote:

Here we are now 3% lower than where I gave a warning signal up at
9850. As suggested in my initial warning comment I believe we still
have at least another 1-2% move lower in the short-term, and then
there is some strong support. If we get a break below 9300-9350 level
it should confirm an even stronger move lower, which is moderately
likely due to the bearish pattern formation with which a solid break
below should confirm. Break below these levels should then bring at
least another 5% drop, but I believe closer to 12-15%
fall technically from there in the medium term.

Today, I have just updated this post on that financial website with:

I am still standing by this scenario developing and a much larger market correction lower if support levels do not hold, although the support levels have of course moved up.

The support levels below that were mentioned (in other post) as 9300-9350 are now at 9650 level. A solid break below that level should bring the markets close to 6-8% lower. Today it seems as if they are trying to test those support levels. For all trend followers and longer term conservative investors now may be a good time to enter long, or add to your position.


Due to major technical levels approaching in the markets, and the current sentiment, I believe that you should be aware of a break of the support levels mentioned above which I believe will be a strong indicator of a larger move lower (near 8% lower).

You should be prepared for next week as it will be the determinant of further, sustained direction and where you will want to put your money in the medium term possibly to capture some gains from the consolidative period that is likely to come.

Short-Medium Term Outlook for the "Black Gold"

What a wild ride it has been for oil over the past 1-2 years. From 75$/barrel up to $145/barrel back down to $35/barrel oil has been unprecendentally volatile. Oil has been greatly affected by the credit crisis, rapid dollar value fluctuations, inflation expectations, federal reserve policy, and the list goes on.

With all that has happened to oil recently one may ask:

• Where is it headed from here, and how can you possibly know?

Well the truth is that the shorter the time-frame the more volatile, and therefore, the harder it is to speculate on where the price will be in the short-term. However, I have proven my ability to accurately forecast oil prices in all time-frames with the combination of several analysis methods which include observing fundamental influences, technical (chart) analysis, and statistical/quantitative methods.

So were do we believe oil is headed in the short-medium term (several days to several months)?

With oil currently at $80/barrel (10/29/09) we can confidently say oil in general is headed up in both the short and medium term time frames from this point.

Short Term - Within several days we have an outlook for oil to hit $85/barrel.

Medium Term - Within several months we have an outlook for oil to hit $95-97/barrel.

Our next post will explain in depth one of the many ways you can take advantage of the coming rise in oil prices. However, one short quick tip we will give you now is to fill up at the gas pump today. In the short and medium term gasoline prices are sure to rise with oil.

Worried About Another Housing Market Slide? Dont Worry Supply Is Your Side

If you did not know, there was a housing data release today. The release was a report on new home sales, and sales fell by 3.6%.

This release today should not have very much significance. Our outlook, shown below or click here, on the housing market remains unchanged. Some financial new reporters and websites are saying the release was a major cause for the drop in the DOW today. We however believe it did not have that much influence on the DOW, and the markets dropped for other reasons.

This release on new home sales did show that they were much worse than what was expected. New home sales were expected to rise by 2.6%, but instead they dropped several percent.

So why is this housing news nothing to worry about?

Put simply, our research has shown and proves that demand is still rising much faster than supply over the last several months, even last month. Our research revealed:

• Over the past 5 months demand for new homes was 5.97% greater than supply,
• Over the past 2 months new home demand has been 4.38% greater than supply,
• Even thought the rate of demand above supply has decreased, demand for new homes is still higher; over the past 1 month demand was .3% greater than supply,

So in the end the fact that supply decreased at a rate much faster than demand last month means supply was on your side. Due to supply not being able to keep up with demand, the amount of home inventories shall continue to fall and continue to put upward pressures on home prices. Currently, there is a 7.5 months supply of new homes, and it has been steadily falling for the past 6 months.

Slight Projection Revisions

Please take another look at the post below titled:

Navigating the Housing Market Maze

We have just updated the post, and have more accurate and in-depth projections for the outlook of the housing market.

Today was the release of the Case-Shiller 20 Index. This housing price index is a weighted mean of home prices value across 20 metropolitan cities.

The Case-Shiller report today was a little better than what was expected by the market. Based on the just released figures for August and factoring them into our models and analysis we were able to slightly increase the accuracy of our projections for the next several months.

In general our projections are still the same, just very slightly increased by about .25%

How To Take Advantage Of The Housing Market BEFORE Prices Turn Around

After yesterday's post explaining our position and outlook for the housing/real-estate market, you need a way to benefit from that outlook. We would like to explain to you one great way you can take advantage of a long-term housing market turnaround.

So what are we talking about? What investment is there you can make in housing that can and usually rises in value BEFORE overall housing prices even make a comeback?

This investment we are speaking of is a REIT, Real Estate Investment Trust. REIT's typically comeback and rise in value usually several month's to a few years before housing prices actually turn-around. This is a multi-decade trend that has been occurring since the start of tracking house prices and the first REIT, nearly 100 years.

So what are REIT's, and why should you ultimately invest in REIT's adding them as part of your total portfolio?

REIT's are simply shares of companies which own, invest in, and maintain very diverse holding's of real-estate. REIT's are required by law to distribute a minimum of 90% of their profits to shareholders, due to a special tax designation they are given which reduces their corporate tax rate. Here are REIT requirements:

• Be structured as corporation, trust, or association


• Be managed by a board of directors or trustees


• Have transferable shares or transferable certificates of interest


• Otherwise be taxable as a domestic corporation


• Not be a financial institution or an insurance company


• Be jointly owned by 100 persons or more


• Have 95 percent of its income derived from dividends, interest, and property income


• Pay dividends of at least 90% of the REIT's taxable income


• No more than 50% of the shares can be held by five or fewer individuals during the last half of each taxable year (5/50 rule)


• At least 75% of total investment assets must be in real estate


• Derive at least 75% of gross income from rents or mortgage interest


• No more than 20% of its assets may consist of stocks in taxable REIT subsidiaries.

Now that you have some understanding of what a REIT actually is, we will explain why you should invest in them and what to look for when choosing a REIT.

So why invest in REIT's?

• Leader of the pack, REIT's historically gain BEFORE real-estate/housing stocks, direct housing/real estate prices, and real-estate indexes,


• Historically on average they are the highest performer, above real estate/housing stocks, real estate/housing indexes, and direct investment real estate/housing prices, also they outperform all three market indexes (gained 1% more annually than the best performing index, the S&P500, REIT's gained on average 13.8% a year while the S&P gained 12.7%),


• Provide high dividends on top of their share value growth,


• Relatively LOW correlation to market indexes, real-estate sectors, and individual real-estate stocks, which means when added to a portfolio with a certain weighting REIT's can actually DECREASE volatility(risk) while INCREASING returns,


• Since REIT's are required to distribute such a large portion of their profits as dividends, when the share price drops REIT's on average increase their dividend yield more than individual real estate stocks, providing better down side protection than other real-estate investments,

So now that you have most of the reasons why you should invest in REIT's we will explain how you choose one and what is an ample weighting or exposure to REIT's.

How do you choose a REIT?

1. Learn what specific REIT's invest in and have as holdings, this can be done through their website or a financial website such as Yahoo Finance or MoneyCentral,
2. Management – it's always important when buying into a trust or managed pool of assets to understand and know the track record of the managers and their team. Profitability and asset appreciation are closely associated to the manager's ability to pick the right investments and decide upon the best strategies. When choosing what REIT to invest in, make sure you know the management team and their track record. Check to see how they are compensated. If it's based upon performance, chances are that they are looking out for your best interests as well.
3. Diversification – REITs are trusts focused upon the ownership of property. As real estate markets fluctuate by location and property type, it's crucial that the REIT you decide to buy is properly diversified. If the REIT is heavily invested in commercial real estate and there is a drop in occupancy rates, then you will experience major problems. Diversification also means the trust has sufficient access to capital to fund future growth initiatives and properly leverage itself for the increased returns.
4. Earnings – the final item that you should consider before buying into a specific REIT is its funds from operations and cash available for distribution. These numbers are important as they measure the overall performance of the REIT, which in turn translates to the money being transferred to investors. Be careful that you don't use the regular income numbers generated by the REIT as they will include any property depreciation and thus alter the numbers. These numbers are only useful if you have already looked carefully at the other two signs, since it's possible that the REIT may be experiencing anomalous returns due to real estate market conditions or management's luck in picking investments.

So remember you should look at:

• Holdings
• Management
• Diversification
• Earnings
• Net Asset Value (NAV)
• Adjusted fund from operations
• Cash available for distribution

It may seem like a lot, but choosing a REIT should not be a daunting and hard task. All of the above information is readily available on the REIT's website, or on almost any other financial website. A moderate portfolio should have close to 10% of it's holding's in REIT's and another several percent in other real-estate investments. This 10% weighting will decrease for more conservative portfolio's since exposure above 10-15% REIT's will on average begin to increase volatility of a portfolio instead of decrease the volatility.

If you are interested in making a REIT investment the REIT way then you should call us at 262-939-8885 and we can help you choose a REIT to fit your portfolio objectives.

Navigating the Housing Market Maze

ALERT: Existing home sales surge 9.4% in September.

Why is this happening?

This implies that the current housing inventory is being bought up much faster than anticipated, which also this strengthens my belief that housing prices will turn around sooner than expected.

Maybe the surge has something to with the tax credit incentive to buy ending soon next month, or maybe something to do with the cyclical nature of the housing market tending to pick up in the Summer and Fall months.

This is a result of a combination of factors. The dollar's beating of the past several months is one of those factors, the dollars decreasing strength is creating higher demand from foreign buyers for our real estate, at an extra premium to the already discounted home prices from the real estate crisis.

The home-buyer tax credit coming to an end soon, a double-digit year-over-year home price decline, and slightly increasing consumer confidence in the housing market are all also contributing factors to the nice increase in existing home sales. Also, personal income in February of this year (nearly exactly when existing home sales started rising from their triple bottom base) hit its highest level since 1995, and personal income has been steadily rising since.

So where are we headed from here?

After analyzing some data, news, and a variety of other housing market conditions, we believe the housing market is headed:

• Up from here for quite some time; our projections are for an increase of 1.6% in September for the Case-Shiller 20 Index.
• Nationally we expect 3'rd quarter home prices to rise 7.03%, for an increase to 142.67 in the national Case-Shiller index.
• More importantly our 4'th quarter 2009 projections are for an increase of 5.6% in the national Case-Shiller home price index.
• In general, you can expect a 5-8% increase in national home price values over the next several months. (call us for more information on where the best performing areas of the country are, and the areas where the outlooks are the best)

Why do we believe this?

After analyzing the housing market in late 2008, I called a bottom in home prices to come in Spring, 2009; as it did. For those same reasons that I called the bottom to come as it did, we still hold our belief that the bottom is in. We believe this for many reasons, here are just a few of them:

1. Interest rates and mortgage rates at their lowest in decades,
2. Housing starts and building permits down 30% and 32% year-over-year, which will help spur demand for the excess inventory rather quickly,
3. Steadily rising personal income projections for the rest of 2009 and all of 2010,
4. While observing the correlation between existing home sales, new home sales, inflation, and home prices we found that:

• Home prices turn around several months after existing home sales increase and develop an uptrend. Our current uptrend in existing home sales started in February, 2009 which suggests a turn around in prices, according to this historical trend for the last several decades, around April, 2009- June, 2009.

      5. Using statistics, probability, quantitative financial methods, and factoring in macro-economic conditions that should affect the housing market in the near term.

There are a variety of other reasons we believe the housing market outlook is good from here, and there has been extensive research put behind those reasons. However, I do not want to write a book here, but want to give you a little guidance day-by-day and help you have a greater understanding of current market conditions and forecasts. Also, after posting market analysis, research, and outlooks I would like to give you some advice on how you can take advantage of those conditions.

I hope this brief overview and post of the housing market can help you gain more confidence when considering a real-estate investment for this time. At least for the medium-long term we suggest this is a great time for you to seize the opportunities that are out there currently in real-estate. On the next post we will discuss one investment you can make which is usually the leader of the pack in real-estate, hands-free, low-fees, and you virtually have others working for you.

A Seedling In the Wind

Why did we choose to describe our advice, or blog as "Seedlings To Your Healthiest Money Tree"?

Investing is very similar to life, every minute choice you make has a great effect on your future. With investing and your finances it is the same. Anything you do with your finances, whether you buy something, invest in something, save for something, it ALL has some influence on your financial position in the long-run. This is why you must strive to do your best when it comes to your finances, so you can reach those goals of yours.

However, the majority of us do not do our best, because it just becomes to easy to veer off the path, and do not realize how the extra latte, beer, shirt, or burger, really affects ourselves financially in the long-run.

So how can be sure that you are doing your best to achieve your future financial goals?

Well, like a seedling needs proper care and nurture to develop into a healthy tree, your investing and finances deserve the proper treatment. Our financial and investment advice on this blog are the seedlings. We are providing you with some paths you can take, the seedlings, that will have great capability to develop into your financial goal.

However, our advice can not and will not develop in to anything of benefit for you unless you take action, the proper action your finances deserve:

• Set a goal

• Set a budget, or make an investment that will help you reach that goal,

• Have financial/investment commitment and persistence,

• Stay adaptable and be aware.

On this blog we will try to help you with all of these. Mainly though, we will be providing you with number 2 above, the investment and financial ideas. You are the only one that can set your goals, stay committed to your plan, and be aware of all of your financial conditions that might cause you to have to adapt your plan to achieve your financial goals.

Like a seedling in the wind that has the possibility to develop in to a very healthy, gargantuan tree, the investment advice on here can be of great benefit to you. In the end you must take action and be the one that "waters" the advice, and provide the care and commitment to our "seedlings" once you have the idea from us.