Roger Schlesinger

The stock market isn't even recognizable, let alone similar, to the way it was designed. The idea of buying stocks, classically, was to get a dividend that would give you a return on your money. "Growth stocks" were more expensive, higher price/earnings ratio, because they would most likely yield a higher dividend in the years to come. Dividends were what companies strive for to keep their investors happy. I dare say that the younger generations couldn't tell what a dividend is, where it comes from and why it is important. People buy stocks to get price appreciation and investors buy stocks to get capital gains through price appreciation. That sums up the first 10 reasons to buy stocks. Bonds were debt instruments issued by companies usually to expand their infrastructure or purchase capital equipment. The government got into the bond game to finance the ever-expanding ideas of the leaders of our country: good or bad ideas. The interest provided a yield to the bond holders. Because interest is now a market of its own, many buy bonds for capital gains. If you can buy a bond (includes bills and notes which are also debt instruments) under the face value, especially those offered by the government, then your return is enhanced when the bond is repaid. This works especially well on the two year treasury note when interest rates are higher than the note rate.

Why are people surprised that others invest in houses? Yes, houses were designed to be a place "to hang your hat" and while an investment is going on it is used that way, for the most part. That doesn't stop it from being an investment. Today with the “drop off a cliff" scenario (a stock market term used for real estate) of the stock market they are advertising it as a better time to buy than ever before. Guess what? This holds for real estate as well. The only difference is real estate has a built in price escalator that the stock market probably can't match. Prices of raw materials keep rising, land, especially desirable land, is in short supply with nothing on the horizon, new energy laws are adding to the cost and government is always figuring out ways to increase the fees. When building of homes begins again in earnest, probably six months to a year away, in the better areas you will either see prices the same and house sizes 1/2 to 3/4 of what they were or 25% to 50% higher prices on the same size home. If you think they won't sell to us they will sell to foreigners who have a huge price advantage based on the currency of their country.

Roger Schlesinger

Roger Schlesinger's Mortgage Minute is heard on hundreds of radio stations and daily on the Hugh Hewitt radio show and Michael Medved shows. Roger interacts with his hosts and explores the complicated financial markets in order to enlighten his listeners and direct them along their own unique road to financial freedom.


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