For those of you who have not been paying close attention to the falling interest rate environment perhaps you should. Rates for mortgages have fallen dramatically. If you have a 30 year fixed rate mortgage at 5.5% or above, you might save yourself a nice chunk of change so to speak by refinancing. The difficulty right now is lending standards have tightened and property values have fallen as hard as interest rates so many who would like to refinance simply cannot qualify.

For those who have been considering the purchase of a retirement/vacation home, now might be a very good time to at least begin your search and get your financial ducks in a row. Prices have been falling and as I mentioned above, interest rates are low. I cannot say that prices in residential real estate have bottomed which is why I use the phrase “at least begin to search”.

In closing I would like to thank everyone for their continued support. I would also like to especially thank those of you who have referred friends, family, associates, and co-workers. Should you have any questions or concerns please do not hesitate to call or e-mail.

My prognosis for 2009 is that the S & P 500 will post a positive yearly return with heavy volatility along the way. I believe that residential and commercial real estate will continue to be a drag on the overall economy with prices drifting lower in both sectors. I still believe that the recession will technically end in 2009 but it won’t feel that way at least until the second quarter of 2010. This prognosis is based on the assumption that the banking system continues to heal and the powers that be make the right decisions.

Even though the market is showing some signs of improvement the overall economy is not. In fact it probably won’t until at least the end of this year, at the earliest. As a result expect to see more layoffs. On a more positive note, spring is here so if you do lose your job at least you’ll have some warm weather to enjoy.

Please feel free to call or e-mail any questions or concerns. I’ll keep you posted as events transpire

My expectations on the economy haven’t changed that much since my last communication. I expect the economy to have difficulty throughout most of this year. This means more layoffs, less hiring, and more for sale signs on homes and business’s. At best, I see the economy starting to get better in the last quarter of 2009. On a positive note, I think Chairmen of the Fed, Ben Bernanke, has finally come around to doing what needs to be done to get the economy moving forward again. I know that I have criticized him previously for not getting his act in gear but now I have to give him some credit where credit is due. Once his stimulus package starts working its way into the economy things should start to get improve.

I’ll keep you posted as events of magnitude transpire. As always please feel free to call with questions and concerns.

The radio show is every Friday at 5:30am on WCRN AM 83 Radio, and also available here for your convenience! Just press the play button below…

The radio show is every Friday at 5:30am on WCRN AM 83 Radio, and also available here for your convenience! Just press the play button below…

I’ve mentioned before that the volatility of the markets comes as no surprise to me as I expect this type of volatility in both directions for the reasonably foreseeable future. The good news is that we seem to be able, despite all the negative news, to stay above the 800 level on the S & P 500.

The bottom line is that the markets and the economy are cyclical just like the seasons themselves. As we know that winter will eventually give way to spring, we can also be sure that a recession will eventually lead to recovery. The difference is that the timing of seasonal changes are much easier to forecast.

As always I want to thank you for your continued support and especially thank those who have referred friends and family members. If you have any questions or concerns, please call me at the office or send an e-mail. Enjoy the day!!!

Don’t forget to listen to my Financial Spotlight radio show now available here on my blog.

The radio show is every Friday at 5:30am on WCRN AM 83 Radio, and also available here for your convenience! Just press the play button below…

You have heard me argue in previous newsletters, various media outlets, and my radio show that each day that goes by where the market stays above previously set lows is another day for the markets to heal and someday move forward. I still adhere to this philosophy and have heard many other financial professionals saying the same thing.

I think it will be a while before we claw our way out of this worldwide recession but I expect that we will emerge with a much stronger banking system than we had before. Until then try to keep smiling even if it hurts.

Until next week or some crazy event in between.

On the real estate front things continue to worsen as the Case-Shiller index reported a record decline in home prices for the year ending in November. Boston was listed as one of the cities with a record percentage decline. Adding to this problem is the fact that it has become increasingly difficult for many to obtain financing as lending requirements have tightened dramatically relative to a few short years ago. Prices are expected to continue to fall through 2009 and few expect a recovery in the short term given the fact that people do not want to buy a house when they believe prices are still falling and they are concerned about their job.

As for the economy, as most people on Main Street see it, is in very tough shape. I told you back in November and December that I expected record layoffs to occur in the first quarter of 2009 and continue at a slower pace for at least the next quarter. So far my expectations are correct. I just hope the second quarter layoffs come at a slower pace. I do not expect to see signs of recovery as measured by increasing employment statistics until late 2009 or perhaps even 2010.

What can this information tell us ?

1. Keep your resume updated and be proactive in a job search as it is quite possible that you like many will get the proverbial pink slip. 
2. Cut your expenses to the best of your ability and take advantage of the low interest rate environment to refinance and consolidate debt when applicable.
3. Do not discontinue contributions to investment accounts. In fact you should consider increasing them as at some point the market will most likely rebound and right now stocks are relatively cheap. The stock market usually recovers long before the economy as it is a leading economic indicator
4. In general, be very cautious of real estate unless you are well capitalized and have a high level of confidence in your cash flow.

I’ll keep you posted as new information comes to light. In the meantime keep smiling; better days are ahead. Exactly how far ahead is anyone’s guess. Let’s just hope it is sooner rather than later.