How Smart Investors Avoid the Contrast Principle Trap

As part of my work at Kennon Green Enterprises overseeing our various investments, I read a lot of research reports and talk to the staff about how we can implement them to the benefit of our shareholders. It may not be obvious at first, so to give you an example of how this reading can pay dividends for our investments, consider the “contrast principle” in psychology. Dave Thomas perfected this at Wendy’s. Mr. Thomas placed a triple cheeseburger...

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Investors Should Think More Like Business Owners

It isn't unheard of for a business owner to borrow large sums of money to expand a factory or spend tens of thousands of dollars installing energy efficient lights to lower costs and increase profits. That is because the mindset of a business owner is on putting money out today in order to earn a return over time. Many investors don't think this way. Warren Buffett, arguably the most famous investor in the world with a net worth that was once...

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Fed’s latest stimulus may have little impact on mortgage borrowers

The Federal Reserve took aim at the nation’s wobbly housing market last week with its biggest stimulus action in two years, but that firepower is doing little to lower mortgage rates or make home loans more available for Americans. Instead, banks are set to see a windfall since the Fed’s actions will immediately lower the cost of issuing loans. It may take months or longer for benefits to trickle down to consumers, analysts say. The emerging...

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The Political Damage Caused by Foreclosures

The negative impact of the foreclosure epidemic in the United States has struck communities in many aspects. Local economies have been devastated and families have been forced to make deep adjustments in the wake of losing their homes, and it was only a matter of time before foreclosures affected the American political machine. According to a recent report by NPR, the voter databases used in the run-up to the 2008 election have been radically...

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US property prices up 2% over the last quarter, data shows

Residential property prices in the US increased by 2% in the last quarter despite the country’s overall economic outlook still being stunted, the latest analysis from Clear Capital shows. One third of the top metros posted double digit yearly gains, while the bottom 15 metros generally saw prices stabilise, it says in its July Home Data Index. ‘July home price trends continued to show promise at a time when the strength of the broader economy...

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Wealthy Unmoved by U.K. Tax Hike as Luxury-Home Sales Surge

The British government’s plan to raise a tax on luxury-home purchases sparked a last-minute dash by real-estate brokers to wrap up deals before the deadline hit in March. They needn’t have bothered. Brokers including Savills and Knight Frank define prime real estate as homes in the most expensive central London neighborhoods such as Belgravia, Kensington and Knightsbridge. Sales of homes valued at 2 million pounds ($3.2 million)...

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Weak jobs growth beyond government's control

No matter who ends up occupying the White House in January, many of the forces that have kept unemployment high and jobs growth slow will be beyond his control. With employment growth stuck at a slower pace than in any recovery in the past half-century, the presidential campaign now turns on which candidate -- President Barack Obama or former Gov. Mitt Romney -- has the better plan to boost employment. The latest jobs data will do little...

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Home prices signal recovery may be here

A sharp boost in home prices during the spring could signal a recovery in the long-suffering U.S. housing market, according to an industry report issued Tuesday. Home prices rose 6.9% in the second quarter, a signal that a housing rebound may be underway, according to S&P/Case-Shiller The S&P/Case-Shiller national home price index, which covers more than 80% of the housing market in the United States, climbed 6.9% in the three months...

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China Deterioration Raises Risk Of Wen Missing Target: Economy

Manufacturing unexpectedly contracted for the first time in nine months in August as orders shrank, a government survey showed Sept. 1. China’s economy is showing mounting signs of deterioration from manufacturers to banks, raising the risk that outgoing Premier Wen Jiabao will miss his growth target for the first time since taking office in 2003. Manufacturing slowed further in August, surveys of purchasing managers showed Sept. 1 and today,...

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SNB’s Jordan Repeats Franc Pledge, Sees Property Threat

Swiss Central Bank President Thomas Jordan Swiss central bank President Thomas Jordan reiterated his commitment to defend the franc ceiling and warned of signs of overheating in the residential property market. “In the current situation, a further appreciation of the Swiss franc would constitute a very substantial threat to the Swiss economy, and would carry with it the risk of deflationary developments,” Jordan said at a conference in Zurich...

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Lloyds Said Planning To Sell $2.5 Billion Of Mainly Irish Loans

Lloyds Banking Group Plc (LLOY) plans to sell about 2 billion euros ($2.5 billion) of mainly Irish real- estate loans, the latest phase in extricating itself from Western Europe’s biggest property crash, according to a person with knowledge of the transaction. The U.K.’s second-biggest government-aided bank will probably have to take discounts on the sale, said the person, who declined to be identified because details of the sale are private....

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Real Estate Outlook: New Home Sales Rise

The sales rate of newly built, single-family homes was on the rise during the month of July: this is welcome news to builders all across the nation. According to the latest figures from HUD and the U.S. Census Bureau, sales of newly built homes rose by 3.6 percent for the month to a seasonally adjusted annual rate of 372,000 units. "Sales of new homes in July returned to the same solid pace they set in May, which was the fastest sales rate...

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Which Is Better - Real Estate or Stocks?

Let’s begin by looking at each type of investment: Real Estate: When you invest in real estate, you are buying physical land or property. Some real estate costs you money every month you hold it - think of a vacant parcel of land that you hope to sell to a developer someday but have to come up with cash out-of-pocket for taxes and maintenance. Some real estate is cash generating – think of an apartment building, rental houses, or strip mall where...

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Where Is the Best Place to Invest My Down Payment Money?

If you are saving money for a down payment on a home or other real estate, you may wonder what the best investment is for you to earn a return on your cash until you need it. The answer is simple: None. Instead, you should put your money in one of a handful of “cash equivalents” that are protected by deposit insurance or the United States Government. Surprising? It shouldn’t be. In the words of the legendary investor Benjamin Graham, more...

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