Tag Archive for: Warren Buffett

Thinking of throwing in the towel?

With all that has been happening in the financial markets these past few weeks, I would not blame you if that is what you have been thinking. However don’t do it, and here is why. 

1) Boom always follows the bust. As corny as it sounds, hard times never last, but good people do. My favorite investor Warren Buffet has a saying that rings true ” Be greedy when others are fearful and fearful when other are greedy”. There is no better time than now to prepare for your best financial future.

2) Have a plan. Your life may not be perfect right now, but you should know where you are going. You would not get in your car to go on a vacation with out a destination in mind. However many people go through life with out any clear objective. Begin with your end in mind, so get off your rear end and develop a plan and see your objective.

3) Clean your house. By that I mean your financial house. If you are to get out of this financial crisis smelling like roses, then you need to get your finances in order. Trim the fat and cut out any unnecessary expenses. Systematically eliminate all of your debt and start building true wealth.

I would be honored to help you develop your plan to eliminate your debts. Please feel free to contact me at my office so we can get you on the road to true financial freedom.

Cheers,

Pat

Another one bites the dust!

If you enjoy a good train wreck, then watching the financial markets of the past few days should have given you plenty to watch. For those of you who have not kept a roll call then here is a brief summary, Lehman Brothers the large brokerage house has filed for Bankruptcy protection, Merrill Lynch brokerage house was bought out by Bank of America, and it was just in time or they might have suffered the same fate as Lehman. Now it seems that the straw that will break the camel’s back is what is currently happening to AIG ( American International Group). CNBC announced last night that they need to raise 75 BILLION by the end of Sept 16th to stave off bankruptcy, and now it seems like that may not happen.

Now the question that you may be asking your self is how does all this matter to me, the individual investor. Well you think that because you did not have direct investment in AIG, Lehaman’s or Merrill that it does not effect you. Guess again, it probably does. These companies raised capital for investors and sold it off in the form of debt which many of our local financial institutions bought and packaged and sold back to us in the form of bond and other investments. Normally bonds are one of the safest places to put your hard earned cash and get a return.  However, bonds are basically debt instruments, where by we are given an income until the debt is paid. Now what do you think happens to your returns when they can not make their debt payments? Here is another great resource for you to check out.

If you are also wondering how this all relates to mortgages, well remember the sub prime crisis? AIG over valued their mortgage backed securities 1.7 to 2 times what Lehman did, and look what happened to them. In plain english, they bought ABCP ( asset backed commercial paper) or pools of mortgages and they issued securities on them ( claims of the principal and interest payments) and valued them higher than what they were actually worth. Now it needs to cover up the shortfall in the valuation and it can not seem to come up with the cash.

This effects us all. If our banks and mortgage lenders can not sell their pools of mortgages to investors then we are left with limited options. Not everyone has squeaky clean credit, can prove their income and has loads of cash to make their purchase. Thankfully we still have lenders who have their finances in order. Call me so we can put them to work for you.

Cheers,

Pat

p.s Maybe the example we should all follow is that of Warren Buffet, click here to get his biography.

Sub-prime lender Wells Fargo beats expectations!

Reuters

July 16, 2008 at 8:27 AM EDT

NEW YORK — — Wells Fargo & Co. [WFC-N], the fifth-largest U.S. bank, reported better-than-expected quarterly results on Wednesday and raised its dividend despite a 23 per cent decline in profit caused by deteriorating credit.

You may be wondering why is this important? Well let me tell you. Wells Fargo is largely an Alt-A or Sub prime lender here in Canada. We need options and Wells Fargo provides that. I have been a broker for over 5 years and many sub prime and Alt-A lenders have come and gone. Wells Fargo has stayed the course. “A” lenders are a dime a dozen, and many offer similar products. 

Let me give you some examples, say you have less than perfect credit, we can most likely find something for you at Wells Fargo, well what if you are self employed and can’t prove your income the traditional way, well there is a program for you at Wells Fargo, want a longer amortization ( they still have 40 year amortization’s), have higher debt load( over 40TDS%) or have no down payment (they will do 100% financing)  then Well Fargo again. 

So let me end by saying having options are good, and Wells Fargo gives us options as not everyone fits the same mold. If it’s good for Warren Buffett of Berkshire Hathaway ( he own’s 8.8% of the company) then it is good enough for me.

Cheers,

Pat