MoneyNews
Tuesday, Aug. 30, 2005

Protecting Yourself From the Coming
Real Estate Crash

Many real estate analysts and most government officials seem to be in denial, but subscribers to NewsMax's Financial Intelligence Report (FIR) have been following the sound advice of Warren Buffett and Sir John Templeton in protecting themselves immediately from the coming real estate crash. Now you can too. 

In this FREE special report from FIR you'll learn why John Templeton is warning that a 50% drop in home values is possible. You'll also discover what experts say will ultimately burst the housing bubble.

PLUS: The 10 actions you must take now to protect yourself from the coming crash, and 53 bubble stocks to sell right away - and much more.  

Get Your Copy Today. Go Here Now.

1. Banking Group: Housing Bubble a Myth

There's an old adage in financial circles.

It says that when it comes to money, there are three kinds of people: spenders, lenders and owners.

It's the latter group that's going to save America from the so-called housing bubble, according to a new study from a national banking group.

A current report from the Washington-based Mortgage Bankers Association says that one in three Americans owns his or her own home free and clear - and the group says that's a key bulwark against any housing price bubble.

"There is no national housing bubble," Doug Duncan, the chief economist of the MBA in Washington, D.C., reiterated in a recent press teleconference.

"Strong economic growth means relative incomes are rising - and rising incomes help people meet their mortgage payment,"

Duncan - the co-author of the association's 30-page report, titled "Housing and Mortgage Markets: An Analysis" - says the study refutes what he refers to as "a crescendo on the issue of house prices" and calls into question whether this constitutes a bubble about to pop and bring the housing market down in the process.

In a Recent FIR Interview Sir John Templeton First Warned Housing Prices Could Crash 50%. Find Out What He Said and Learn How to Protect Yourself and Even Profit from the Coming Storm - Go Here Now.

"Our broad conclusion is that there are risks, but they are far less dramatic" than bubble-backers claim, Duncan said.

The MBA report does acknowledge some points of concern, citing the fact that the average U.S. house price has climbed 50% in five years - much more than the 6% annual average since the 1960s.

But that scenario is counterbalanced by a host of positive housing market influences.

Among the reasons illustrated in the report:

• Since the Great Depression, there has never been a national housing bubble.
• Localized price bubbles are tied to economic downturn, and most of America is enjoying an upturn.
• Mortgage-tracking technology has made it quicker to detect and confront trouble.
• Federal regulators are more sophisticated and vigilant than ever.

AND

• There's no excess of housing inventory.

Consequently, most homeowners should be able to withstand soft market conditions, the analysis found. That's because:

• An estimated 35% of homeowners have no mortgage debt of any type.
• About 51% have a fixed-rate mortgage, which is immune from rising interest rates.
• The remaining 14% have adjustable-rate loans (ARMs) that could veer higher, but about half are held by high-income borrowers or borrowers with years of successful experience paying a varying interest rate.

One potential wrinkle in the national housing fabric is the fact, as the report cites, that 7% of American homeowners have adjustable-rate mortgages and no experience in dealing with suddenly higher payments.

"It's not clear how they'd react," Duncan says.

The MBA report concludes that the United States is in for a slide in housing market growth, predicting that sales will drop 4 to 5%, house appreciation will shrink to less than half its 14.1% annualized July pace and borrowing costs will be higher.

Editor's Note:

• Alan Greenspan Says the Housing Bust Is Here ... Templeton Warns of a 50% Crash! Greenspan and Others are Warning of a Housing Crash.

NewsMax's Financial Intelligence Report Offers Critical Advice on How to Protect Your Portfolio NOW. Learn More Here.

2. Expert: 4 Ways to Maximize 401(k) Performance

Americans are doing well with their 401(k) plans - but they could be doing better.

According to Fidelity Investments' August 2005 annual study of 401(k) plans, last year average 401(k) plan balances hit their highest level in five years, rising about 10% from 2003 to $61,000 on average. In 2003, the average 401(k) balance was $55,000. Average plan participation rates remained steady, with 66% of eligible workers contributing in 2004 and 2003.

But Fidelity's analysis also showed that American workers could be doing more to help achieve their retirement goals.

For example, about one-third of eligible workers have yet to enroll in their workplace plan, and of those who do participate, a significant number aren't saving at rates considered adequate to achieve retirement readiness.

Scott Revare, CEO of Smart401k.com, has some ideas on how Americans can get more out of their 401(k) plans.

One way for employees to improve 401(k) performance is to gain a better understanding of the hidden gems within their retirement plan.

"Taking advantage of simple and often unknown options can dramatically improve performance," says Revare.  

Here are some performance boosters: 

1. Look for a self-directed brokerage account option.
For a small fee, some plans offer the option to open a brokerage account for your 401(k), allowing participants to invest in almost any stock or mutual fund. For those that have the expertise or access to an adviser to help select funds, it's an option that can provide an opportunity to maximize returns. 

2. Utilize your plan's "auto-rebalance" option.
One of the biggest mistakes investors make is forgetting to periodically rebalance their investments to the allocation percentages they originally chose. Many plans now offer an online option to automatically rebalance individual 401(k) plans on a quarterly basis. 

3. Take advantage of new fund options.
Employers are required by law to offer solid-performing funds, which means funds that perform poorly are eventually replaced by new better performing ones. The new offerings introduced to plans are usually added for a reason - because they are solid investments.   

4. Take advantage of educational and advisory resources provided.
All plans are required to provide access to educational material to help a plan participant improve their investing acumen. Some plans offer resources that advise participants on exactly how to invest in their particular 401(k) plan.

Editor's Note:

• In a Recent Issue of Financial Intelligence Report, Editor Jarret Wollstein Shows You Everything You Need to Know About Investing in Dividend Stocks - Including the Top Stocks We are Advising Subscribers to Buy Today.

For More Info on This Report Go Here Now.

3. Protect Your Portfolio From Drug Company Disaster

Legal theorists have the luxury of debating whether the $253 million verdict awarded to a Texas plaintiff in the Merck case earlier this month is fair or not. But investors don't.

In the Texas Superior Court decision, plaintiff Carol Ernst won her lawsuit against the pharmaceutical giant, blaming the company's drug Vioxx for the 2001 death of her husband, Robert Ernst, a 59-year-old marathon runner and Wal-Mart worker who was taking the arthritis painkiller at the time of his death. Ernst died of a heart attack.

The verdict held Merck liable for the death. Jurors voted 10-2 in favor of Ernst. Merck said it would appeal the decision. The news sent Merck's stock price spiraling downward, as shares closed down nearly 8% the day of the decision.

Consequently, investors in Merck and their peer companies had reason to be more than queasy about what might happen next to the pharmaceuticals industry.

But still, there is reason for hope.

The bad news for Merck doesn't mean that investors have to abandon their health care investments altogether, says Adam Bold, founder and chief investment officer at The Mutual Fund Store.

"Investors need to re-evaluate their holdings in health care funds and look for mutual funds that have little or no exposure to pharmaceuticals,"
Bold asserts.

"Much of the rest of the health care industry is poised for strength as the Baby Boomers age, but pharmaceuticals will be the next tobacco industry as it will be forced to fight off lawsuits for years to come."

So what is an example of a health care fund that Bold is recommending to his clients?

"The ICON Healthcare Fund (ICHCX) is managed by J.C. Waller, a
manager who has recognized the raft of potential issues with pharmaceuticals and has allocated his assets to limit his exposure to them," says Bold.

Editor's Note:

• Learn Why Even America's Greatest Stock Investor Warren Buffett Recently Sold His California Home and Warned of Dark Clouds in the Real Estate Market.

Get Your Free Copy of  "Protecting Yourself From the Coming Real Estate Crash" - a FREE Special Report from NewsMax's Financial Intelligence Report – Go Here Now.

Editor's Notes:

• Alan Greenspan Says the Housing Bust Is Here ... Templeton Warns of a 50% Crash! Greenspan and Others are Warning of a Housing Crash. NewsMax's Financial Intelligence Report Offers Critical Advice on How to Protect Your Portfolio NOW. Learn More Now.

• In a Recent Issue of Financial Intelligence Report, Editor Jarret Wollstein Shows You Everything You Need to Know About Investing in Dividend Stocks - Including the Top Stocks We are Advising Subscribers to Buy Today.

For More Info on This Report Go Here Now.