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For the average investor you can’t, and shouldn’t, think like a day trader. I am a youngish guy. I have a lot of time before I retire so my investing outlook is extremely long term. I put the majority of my funds into my 401k and my wifes Roth IRA as long term investments for our future. i am not a day trader, or really an investor by any means. I have only recently opened my first non-tax advantaged investment account. Even this one account is still a long term investment in my mind, I am not trying to turn a quick buck it is still a relatively long term investment for me.

What gets me is these huge swings in the market. Don’t get me wrong, they are real bad but how do they really affect your outlook. I had a conversation with a relative the other day about that crazy drop in the market that seemed to scare the pants off of everyone. He and I looked at it the same way. 1.) it was a fluke and 2.) we both missed out on an opportunity to make some quick money. While that was an exception this recent recession fits the same play for me.

Like I said I am still youngish so at this point it is actually beneficial for me to have the markets hitting new lows. Last time I checked it is better to buy things when they are cheaper an sell them when they are higher. Right? Sure you may have bought some of it back when prices were high but now they aren’t and you are still buying. At the height of the markets we saw the DOW reach 14,000+ which then dropped to 6,600ish. We all bled a lot during those months but for those of us who didn’t give up we were buying into a market valued at half of what it was. My confidence in the US economy is pretty high so to me this kind of situation is an unfortunate occurrence the presents unprecedented opportunity.

I know there is probably some people out there who disagree with my though process. They are probably much closer to retirement and lost a ton of money. That is why general wisdom is that the older you get the safer you make your investments. Moving more and more away from stocks and more and more into bonds. The idea here is to keep your money safe as it gets closer to time to need it. I won’t say I buy 100% into it but it makes good sense right. You don’t just want that money to be there when you retire, you need it to be there. The people whose retirements were hurt the most by the recession were those people closest to retirement who were riding the high of the market and not thinking of the possibilities. The biggest thing to remember about investing, saving, living, working, and any decision you make is to remember.. it depends. Everyone’s situation is different so don’t buy into the hype, or think because my neighbor is doing it it must be right. You need to do what is right for and comfortable for you.

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Back in August I wrote bank failures by the numbers at that time there had been a total of 69 banks fail in the US during 2009. Unfortunately it is time to update those stats a little and provide a little more details on what the FDIC has been up to.

To date the FDIC has taken over 123 failed banking instutions representing approximately $115 billion in deposits. The takeovers typically happen on a Friday evening and the banks are hopefully reopened on Monday as part of whatever bank agreed to purchase the assets of the failed bank. Out of the 123 banks that have failed this year the FDIC board has on had to approve payout of insured deposits for 6 of the failed banks. What this means is the FDIC was able to find other banks willing to take on the deposits from the other 117 failed banks.

There has now been a bank failure in 31 states with some states like Georgia (21), Illinois (19), and California (15) experiencing multiple failures. The following table lists each state and the number failed banks within that state.

State Num Failed
GA 21
IL 19
CA 15
FL 11
MN 6
TX 5
AZ 4
CO 3
MI 3
MO 3
NV 3
OR 3
WA 3
AL 2
KS 2
MD 2
NC 2
NJ 2
UT 2
IA 1
ID 1
IN 1
KY 1
NE 1
NY 1
OH 1
OK 1
PA 1
SD 1
WI 1
WY 1

The total dollar value of deposits, however, doesn’t coorelate 1 to 1 with the number of failed banks. When looking at the total amount of deposits at the failed instiutions California takes the top spot with $26,350,300,000.00 followed by Alabama with $20,546,000,000.00. You can see from the table above that Alabama has only had two total banks fail. Colonial bank, which was taken over on August 14, 2009 had total deposits of approximately $20 billion which were luckily assumed by BB&T. This single failure was almost twice as large as the next biggest bank, in terms of deposits, Guaranty Bank in Austin, TX which had $12 billion in deposits. The following chart shows the states witht the highest dollar value of deposits. Notice Georgia with the most closed banks is only 6th in terms of total deposit dollars.

Top States

Last Friday November 13, 2009 saw the closing of three more banks, what this Friday holds we can’t be sure but I am willing to bet the unfortunate tide of bank closures isn’t going to end anytime soon. Has your bank been shutdown by the FDIC? I would love to hear about it.

You can find the complete list of failed banks including the official FDIC press releases and other details at the FDIC website.

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I have been lucky and so far the recession itself hasn’t hit me personally but I have certainly seen it hit all around me. With two foreclosures in my neighborhood I am reminded everyday of what the current economic situation has meant for many people.

The U.S. Government has tried to stem the tide of foreclosures and break the fall of real estate prices with their First Time Homebuyer Tax Credit. Many people speculate the failure to extend or otherwise expand this credit could result in a secondary fall in real estate prices. I am no economist but I think that is a pretty good bet. In spite of this people still seem to be throwing around the idea that the recession is over and we are on the upswing.

While it may be the case that the recession is over in some areas of the country, many are painfully reminded that it still isn’t over for the areas of the country hit hardest by the recession. A recent article I read over at Yahoo! News shows just how painful it has been for the city of Detroit. The settings was a ballroom where 9,000 abandoned properties were up for sale.  According to the article the homes were “in various states of abandonment and decay from the tidy owner-occupied to the burned-out shell claimed by squatters.” They further put the properties in perspective:

Taken together, the properties seized by tax collectors for arrears and put up for sale last week represented an area the size of New York’s Central Park. Total vacant land in Detroit now occupies an area almost the size of Boston, according to a Detroit Free Press estimate.

That is a lot of land up for grabs, the craziest thing about it was the price some of these properties were up for:

Despite a minimum bid of $500, less than a fifth of the Detroit land was sold after four days.

Less than 1/5th. Now they don’t talk much in the article about how many of the homes were actually habitable. What they did say was the habitable homes were snatched up by investors and bankers instead of real people trying to find a place to live. The investor owned properties aren’t going to help the run down areas as much as an occupied home by a proud owner.

A soldier trying to buy a home before heading back out to war summed it up:

Why am I competing against a bank?” he said later. “It would be common sense to have a separate process for people who want to move back to the city or it’s going to stay empty.

The process itself lends to investors being the prime purchasers of these types of properties which leaves a lot of people wondering where the benefit is? I am not a fan of speculators in any market. Look at what oil speculators did to the price of oil not that long ago. Of course homeowners would love it if the real estate market would rise like that, but I don’t see that happening. I think the quickest way to recovery is through the people. The people that built this country are going to be the people responsible for effecting a real recovery.

What are your thoughts on real estate speculators, are they good or bad for these faltering areas of the country?

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Review of Dave Ramsey’s Town Hall For Hope

April 24, 2009

Last night I attended the Town Hall for Hope, a telecast by Dave Ramsey held at churches and gathering places around the country and broadcast on the Fox Business Network. The goal of the “Town Hall” was to abate peoples fears and to give a better understanding of all of this gloom and doom being […]

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Dave Ramsey’s Town Hall for Hope

April 17, 2009

Dave Ramsey, the man behind Financial Peace, Total Money Makeover, and The Dave Ramsey show is hosting a live event on April 23, 2009 at 8:00pm EDT and on delay at 7pm PDT. Dave Ramsey is the mastermind of the Baby Step process of getting out of debt and a firm believer in not taking […]

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