AssetBuilder Chief Investment Strategist Scott Burns: Bursting of Housing Bubble Is Not All Bad
"The positive side of the current pain," Burns says, is that "we're watching the deleveraging of finance."
Dallas, TX (PRWEB) April 2, 2008 -- Scott Burns, chief investment strategist for AssetBuilder and one of America's best-read personal finance columnists, says that investors concerned about the ongoing mortgage crisis can take comfort in the fact that while they will be "bruised" by the current market downturn, those responsible will be "buried."
"Let's consider the positive side of the current pain. Bear Stearns is gone … So are many mortgage brokers, investment firms that leveraged mortgages, hedge funds that borrowed heavily ... Good riddance," Burns writes in a recent syndicated column entitled "The Last Bubble."
"What we're watching is the deleveraging of finance … We'll change our behavior to avoid future bruising. We won't rely on our houses to substitute for real saving. Millions have learned not to trust lenders and brokers offering great investment opportunities. That's a good thing. We'll borrow less. We'll pay off debt sooner.
"Over time, we'll liberate much of the money wasted on interest payments …When we've done that, our dollars will be stronger," he adds.
Flight to Safety Not So Safe
Burns notes that while many investors are moving their money to U.S. Treasury obligations, this "flight to safety" is not so safe when it comes to retaining purchasing power.
"Unless inflation slows sharply in the next year, T-bill investors are flocking to an opportunity to lose purchasing power. And that's before taxes on the piddling yield they will receive ...When investors are willing to accept certain losses on Treasury obligations, expectations for other investments have to be really grim," Burns says.
He warns long-term investors, however, that retreating to cash may prevent you from taking advantage of a market recovery.
"Will those who went to cash know when to buy again?" Burns asks. "The answer from history is 'probably not.' Most will be too scared to reinvest."
Read more of Scott Burns' column, "The Last Bubble" here: http://assetbuilder.com/blogs/scott_burns/archive/2008/03/21/the-last-bubble.aspx
About Scott Burns
Scott Burns is a newspaper columnist and author who has covered personal finance and investments for nearly 40 years. Today, he is one of the five most widely read personal finance writers in the country, according to The Dallas Morning News. In 2006, he co-founded AssetBuilder, a Registered Investment Advisor (RIA), where he serves as chief investment strategist.
Burns and Laurence J. Kotlikoff are co-authors of the soon-to-be-published Spend Til' the End: The Revolutionary Guide to Raising Your Living Standard - Today and When You Retire (Simon & Schuster, June 2008) and of The Coming Generational Storm: What You Need to Know About America's Economic Future (MIT Press, 2004).
About AssetBuilder
AssetBuilder offers weary investors a science-based alternative to the unnecessary costs, risks and complexity of traditional Wall Street firms. With fees that rank among the lowest in the financial services industry, AssetBuilder provides customers a menu of pre-constructed, risk-managed portfolios that make choosing and implementing a personal investment strategy simpler than ever. Co-founded by personal finance writer Scott Burns, AssetBuilder's portfolios are an extension of Burns' widely praised "Couch Potato" methodology. Based in Dallas, AssetBuilder is a Registered Investment Advisor. For more information, visit the company's Web site at www.AssetBuilder.com.
###
|
