Stock market bottoming out : Build a robust portfolio with ONLY "10in3" stocks - Our paid services can provide a lifetime opportunity for you.

Dear Friends,
During last few days I believe we are getting close to bottom levels. How many times have you seen market falling like this, for every scrip there is underlying company with earnings. I do agree that earnings might slow down in future but we have to believe that "company had good earnings and slowdown in earnings is just because of some economical factors not in control of the company".

Lifetime opportunity to build robust portfolio!!!

1. When markets are in uptrend, any stocks going up indicates that the company might be good but in bear market when prices of all the stocks falls, it becomes much more difficult to identify great potential stock from tom-dick & harry stocks!!!
2. Here comes the judgment or wisdome of your and HBJ Capital will help you identify which stock will emerge as star performer in next bull run or which stocks will re-gain their past glory. Be careful about your our own past memory, RNRL stock was up 10 times from Rs 20 to Rs200 and now it is Rs60 soon it will be Rs20 or 10; will these types of stocks ever be able able to touch their old peak, no way!!!
3. Mostly Markets have become erratic, and anxiety has overcome logic. These days we're encountering a real washout where investors are doing fire sales.
4. It's a signal we're reaching the bottom, and once it's done the worst will be over and stability will return to the markets. The months to come will offer ample opportunities for retail investors to build robust portfolio with "10in3" stocks.
5. The space will be less crowded, dislocations are high and markets have become more inefficient again. With stabilizing markets, 2009 will become attractive for you. Stock markets are close to reaching a bottom because fear has overcome rationality.

What next after rescue bill?

1. Now that the US has signed the rescue bill, investors are analyzing ways they can use the bill to help them beat the market. The collapse of housing prices in the United States led directly to the problems with the mortgage securities that are freezing credit markets.
2. Some investors might think that the bottom in the current recession is near and the markets will recover soon. Others are not so sure. In this case, it pays to look at the past to see if you can learn from prior experiences and the trends in the housing market.

Lessons from Japan.....

1. In the early 1990's Japan experienced a real estate bubble fueled by cheap money and liberal financings, similar to what happened in the United States. When the bubble burst, property prices fell, causing defaults on mortgage loans and a drastic cut in bank lending. Sound familiar? What followed was a decade of growth that averaged about 1%.
2. Most analysts do not believe the United States could experience a similar fate. However, there are significant similarities that should give investors pause.
3. Since their peak the price of Japanese homes have fallen 40%. Depending on whom you quote, prices of homes in the U.S. have fallen about 20%. Some analysts expect a further 10 to 15% decline.

Where is the Bottom in Home Prices?

1. The decline in the price of houses needs to find a bottom before the economy can begin to recover. Housing in the United States is a major contributor to the overall economy. One in eight people work in housing or housing related industries from the construction worker who builds the homes to the banker who makes the mortgages to the realtor who markets the property.

Two criteria are necessary for the price of housing to stabilize......

• Home prices need to reach their long-term average price level relative to household income & the excess inventory of homes must fall to normal levels.

[Household income to house value now = 15.9 but the standard value is 21.5%, hence to come back to standard value of income/house of 21.5%, real estate prices has to decline 32% from 2006 level, as of now 20% fall already in place, hence we will see another 12% fall in the housing price in US which might happen over 1 year time frame, hence only after 1 year one can expect some recovery in US]

The ratio of household income to home values begins to decline in 1999. This could be caused by an increase in the value of homes due to appreciation and/or people were buying houses that were more expensive than they had earlier. From 1998 to 2006, the ratio fell from 21.5% to 15.9%, caused by the rapid appreciation in the price of houses and the decline of qualifying criteria to obtain a mortgage to buy a house.

1. A more normal level of household income to house value is in the 21 to 22% level, the range through most of the 1990's. If we could go back further, it is probably higher as standard mortgage to income rules were closely followed.
2. For the purposes of this discussion, the 21.5% level is a reasonable target. In order for the ratio to reach the 21.5% level, the price of houses would have to decline by 32% from 2006.
3. If you accept that home values have declined 20% so far, that means we still have 12% to go before we reach a stable level. While no one can predict how long it will take to reach that stable level, I suspect we can assume it will be up to a year.

-HBJ Capital Team