Current business news can often lead to some good investing ideas even if a specific stock is not mentioned. In the video I will go over a specific example of this sort of opportunity by looking at the potential affect of higher interest rates on housing stocks.
First, a little background is needed. Often higher interest rates and rising or stable home sales and prices are correlated with each other. That is because they will both happen during expansionary economic periods. One of the causes of higher rates during expansionary periods is inflation, which also occurs when an economy is growing. The Fed tries to cool inflation by raising rates.
Right now, however, the economy is not heating up and housing is definitely depressed. Unfortunately, at the same time, energy and commodity-driven inflation is becoming a big concern for the Fed. As this situation heats up, inflation is dominating the news more and more every day. This makes a near term rate hike more likely, which would not be good for home sales. What sounds like a dismal picture is actually a very interesting, if speculative, options trading opportunity.
John Jagerson
- Housing - Have you been hurt or helped?
|2008-06-19 10:31:44
Have you been hurt or helped by the current housing issue? I know a lot of buyers getting good deals as well as suffering sellers. What's your experience and how are you dealing with it?
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