Dow going to 14000???

Dow expected to hit 14,000 within 2 months.

In a surprise announcement, President Obama announced that he plans to widen the bailout to include the Dow Jones and all major American stock indices. European leaders are outraged ahead of the G20 meeting, calling the move "the worst protectionism since a bunch of ragtag colonials declared independence from their betters in 1776."

Ok, so maybe this is not all true, or even partly true...in fact not one word of it is true...but hey, it's April Fool's Day. Besides, with the money being printed up and spread around these days, would it really surprise you if it WERE true?

Job-losses up

The private sector lost more than 700,000 jobs in March, according to payroll-processing firm Automatic Data Processing, even though a separate report released Wednesday suggested the pace of job cuts may be slowing. The ADP report, based on payroll data from 500,000 U.S. businesses, said the private sector eliminated 742,000 jobs on a seasonally adjusted basis in March. That's up 36,000 from last month's revised figure of 706,000. Joel Prakken, an ADP spokesman and chairman of Macroeconomic Advisers, LLC, wasn't very optimistic about the future: "We don't see anything in the data that we examined that suggests a glimmer of hope." The Labor Department's monthly jobs report is due Friday, and according to a consensus estimate of economists complied by Briefing.com, is expected to show that the economy shed 656,000 jobs in March, more than the 651,000 reported for February. The unemployment rate is forecasted to rise to 8.5% from 8.1%.

Where are job cuts the worst?

The sharpest declines were among small and medium-sized businesses, but the financial industry accounted for 8,651 job cuts, down 36% from February. I didn't know there were any more financial jobs left to lose, but John Challenger, chief executive officer of Challenger, Gray & Christmas, says, "The good news is that job cuts appear to be stabilizing in the financial sector." Just to make sure we don't get too excited, he adds, "Unfortunately, other sectors are seeing an increase in cuts as the recession works its way through the economy."

GM bankruptcy?

President Obama gave General Motors 60 days to come up with a more aggressive plan to cut costs and debt, but new GM CEO Fritz Henderson said the company might be in bankruptcy even quicker than that if negotiations with creditors and the United Auto Workers union don't go well. Under one of the restructuring plans being considered for bankruptcy, GM would try to move its most profitable units into a new company, dropping unprofitable units like Saturn and Hummer. But even if the company goes into bankruptcy, it ain't over yet: consumers, auto workers, investors, dealerships, suppliers, and taxpayers would be in for a world of trouble. Taxpayers, you ask? Yep -- GM has estimated that it would need $45 billion in additional federal help for even a quick trip in and out of bankruptcy.

Madoff madness

Massachusetts Secretary of State William Galvin is charging the Fairfield Greenwich Group -- a feeder fund that put billions of dollars into Bernie Madoff's Ponzi scheme -- with fraud. Not because it knowingly committed fraud, but because it misled its investors about the level of diligence it did on Madoff. The state's Sentry Funds had placed about 95 percent of assets totaling $7.2 billion into Madoff's Investment Securities. This action comes a day after Madoff's two sons and top executives who ran portfolios that funneled money to Madoff were prohibited from selling houses or moving their money around.

These pesky money changers...Now on to our real estate investing education section...Can a Mortgage Be an Asset? The Hierarchy of ReturnsWhile most real estate and short sale investors simply think of a mortgage as a necessary evil that requires mounds of paperwork and documentation, there are a few savvy investment types with a different perspective. In their minds, a mortgage is actually a major asset! Think it sounds a bit "over the top"? Well, may you are right and maybe not. In the past it was typical to hear of "good debt" versus "bad debt" when discussing the financing of productive or income generating investments versus non-revenue generating assets (or worse, depreciating assets!). This leads to the first consideration - the Hierarchy of Returns:

Top Tier - Revenue Generating Assets with Strong Appreciation Value

2nd Tier - Revenue Generating Assets (remember the present net value of money)

3rd Tier - Appreciation Value

4th Tier - Preservation Value (essentially saves money but does not make money over time)

5th Tier - Depreciating ValueOnce you identify the proper purpose of the mortgage it is time to compare the anticipated return (including revenue and appreciation or other applicable level) against the current and/or future value of money. Given today's ultra-low interest rates combined with drastically reduced selling prices, a mortgage used to fund the purchase of short sale real estate may indeed be a major asset once all calculations are concluded.

Consider this, how did the bank make the loan in the first place? They borrowed money....whether from the deposits on hand or from the Federal Reserve, the bank is using OPM (other people's money) while profiting from the "spread" or difference in the rate they charge you for the loan versus what they paid.

During periods of economic upheaval, asset classes change. Value changes. The value of money itself changes. Learn to use it to your advantage the same way bankers, brokers and money lenders have throughout modern history. Yes, a mortgage can be an asset if you understand how to use it wisely. Remain liquid, keep enough operational cash on hand to meet unexpected emergencies and carefully crunch the numbers to determine the maximum use of available cash - today, not tomorrow. The current cash value of $1 today is worth far more than it will be at some pre-determined time in the future...including the mortgage itself.

See you at the top!