Is the market/economy that bad?
Recently, we have seen the stock and bond markets react negatively to the announcements of all the problems in the sub-prime loan markets. Ben Stein wrote a great article, recently, in the New York Times named: “Chicken Little’s Brethen, on the Trading Floor.” Mr. Stein, an economist, lawyer, and actor (very interesting combination), explains how the markets are reacting to news irrationally.
His argument shows that despite all the new hype and the reactions of Wall Street over the sub-prime problems, only .37% (or $34 billion of $10.4 trillion) of the mortgage market are sub-prime loans that will not be recoverable in foreclosure. This is certainly a large dollar figure, but keep in mind that the value of all stocks listed in the United States is between $15 and $20 trillion (or $15,000 billion).
Even if you are not a Ben Stein fan, this article is a must read for anyone in or thinking about buying investment properties.
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