Solano Real Estate Scene: Holy 401(k) shrinkage, Batman!
Bam! Bang! Bap! Clank! Clunk! Crash! Ouch! Rip! Crunch! Kapow!
It was just a month ago that life was good and our IRAs and 401(k)s were performing beautifully, and now there is blood in the streets of Wall Street, Main Street and the Permian Basin.
The values of even the most conservative mutual fund, ETF, and Indexed Fund IRAs and 401(k)s have been whacked over and over these past two weeks like the bad guys on the old “Batman” TV show.
This flight to quality has been caused because of the very real possibility of a global recession coming soon. I have never seen anything like this in my 40-year career and it appears that no matter what we think and no matter what we hear from our government and the financial advisers we pay to help manage our money, the only real solution is a vaccine or cure.
Warren Buffett has always suggested that he likes to buy when most people are fearful because he believes wholeheartedly in the U.S. economy and he knows over time his specific investments will always average a rate of return in excess of 10 percent historically. Based on the rule of 72, this means his equity value will double every 7.2 years.
I am optimistic this will pass and the markets will recover but that doesn’t mean I am not slightly sick to my stomach and scared about the next year or two.
Real estate market values are based on the home sales over the past six months, so if you are considering a reverse mortgage or refinancing your home, now would be a great time to do it, while values are high and rates are lower than they have been in history.
Don’t be greedy or foolish about your refinance and wait to catch the low because the low is a one-day period of time in history and processing times at mortgage companies, banks and credit unions are going to get pressed because mortgage applications are up 150 percent from six months ago and staffing has only increased 5 to 10 percent nationwide.