Retail Sales Fall & Much More!

Retail sales fall

The US Commerce Department said total retail sales fell 1.1% last month, even though Economists surveyed by Briefing.com had been expecting an increase of 0.3% in March, compared with February's revised gain of 0.3%. Even without auto sales included, sales fell a surprising 0.9% compared to a revised 1% increase in the measure for February. February ex-auto sales were originally reported to have increased 0.7%. Scott Hoyt, senior director of consumer economics for Moody's Economy.com said economists are surprised: improving sales both in January and February "gave us reason to believe that retail sales were starting to head in a positive direction...we're not sure yet how much of the [sales] weakness is real and how much is based on the Easter shift. There are still lots of weights on consumer spending. The housing market is still weak and we're losing 600,000 or more jobs every month."

Deflation?

The Producer Price Index (PPI), which tracks the changes in selling prices for domestic producers, decreased 1.2% last month - more than expected. A consensus estimate of economists surveyed by Briefing.com had forecast that the index would remain flat on the month. The main driver pushing down the PPI number was the decrease in food and energy prices. The index that measures energy prices plunged 5.5% in March, on the heels of a 1.3% increase in energy prices in February and a 3.7% increase in January. Applying a bit of lipstick to the pig, Anika Khan, economist at Wachovia Economics says, "This report does not put us firmly in the deflation camp. This was a huge drop, clearly, but one month does not necessarily make a trend. What it does tell us is that inflation is not a near-term worry." That sounds to me a bit like the captain on a sinking ship pointing out that he won't have to worry about low flying aircraft anymore.

Economy bottoming out this year?

White House adviser Christina Romer said today that the economy will probably bottom out this year, when the stimulus package starts to kick in: "That stimulus package has just started. We expect it as we go through to 2009 and 2010 to be a big job creator." Asked if she fears a double-dip recession, in which the economy seems to recover after the first dip only to fall again, she said "in terms of the double dip I very much have the sense that policy has been really good in this downturn." I have no idea what that means, and I doubt she does either, but it sounds like a slippery way of saying "if it works, give us the credit, but if it doesn't, it ain't our fault." This stimulus package may be a big job creator and it may not, but I don't see a lot of value added jobs coming out of it, do you?

Who is it that leaves sinking ships again?

CEOs are leaping off the ship in record numbers, according to new data from Challenger, Gray & Christmas. 1,484 CEOs headed for the exits in 2008 -- which works out to an average of six every business day, the most since Challenger first began the survey in 1999. "CEOs are under intense pressure," says John Challenger, CEO of Challenger, Gray, in just a bit of an understatement. While high profile firings make the news, Challenger's research shows that resignation was by far the biggest reason for an empty corner office this year, with 623 either retiring or "stepping down." CNN speculates that while some of the resignations are probably veiled firings, it also may be that a lot of CEOs just don't know how to deal with the economic downturn and just want out. CNN cites a report on the economy from consulting firm BCG, called "Collateral Damage":

"In a study in early December 2008 of about 60 major companies worldwide - long after the creation of TARP and the clear collapse in consumer confidence, mind you -- more than half of the companies had not made any significant changes to their strategic plans. On average, they were assuming no more than a 5% reduction in volume in a year that was already shaping up to be disastrous. "What is striking," the report reads, "is that, outside of the construction and auto industries, many companies are assuming that the crisis will have a very modest impact in 2009."

Now on to our real estate investing education section...

The Role of Lady Luck, Real Life Lessons and Learning in Short Sales

There are three types of investors in every market segment; those with true knowledge and know-how, those with the wisdom to recognize what they don't know and make it a priority to learn from others and those that get lucky once in awhile. Learning how to distinguish one from another is the key to true, lasting success.

Let's face it, more often than not lady luck is often responsible for the majority of profits - and losses. Research indicates a few interesting trends about human nature; most people tend to attribute positive results to their own keen knowledge and know-how while blaming negative results to "luck". In fact, both positive and negative outcomes are equally represented by "luck" including some larger than life fortunes. So, how can a new short sale investor determine if their mentor is truly knowledgeable versus just lucky? Start with these simple clues:

Repeat Results. Luck is just another word for probability - in any given scenario some outcomes are more likely than others. Anyone can get lucky once in awhile but that isn't the same as true knowledge. Think of it like buying a lottery ticket; the probability is x that you will win some type of prize. Sometimes the jackpot is huge and life-changing while other times it is modest. While it might be tempting to think of the jack-pot winner as possessing some type of specialized insight the fact is, they just got lucky. Following the lead of luck rarely yields the same results twice. Savvy short sale investors should search for mentors with a proven - repeated - track record of success.

Investing in Success. True investors rarely shy away from investing in their own success. They clearly understand the risk/reward ratio and constantly use calculations to support their moves and positions in the market. This is not the same as taking unwarranted risk - instead, they have learned to invest in their own success by carefully analyzing each situation and taking proactive steps to maximize outcome and results. The result is a trend toward growth. Look for mentors that are growing their business not downsizing...especially during tough economic times.

They Have a System - Not Secrets. Nearly every successful business prospect of modern history is built on a system - not secrets. That is not to say the system itself doesn't contain proprietary information but it is not the core of the business strategy. Everything from Henry Ford building a better automobile to Google's infamous algorithms demonstrates the importance of a system. Even the success of the fast food industry center around consistent results due to the systematic routine of building the same eating experience and locking in the same prices throughout the nation. Systems can be reproduced - secrets lose their value once shared. Search for short sale mentors with a proven system rather than elusive secrets.

See you at the top!