The Year Almost Everyone Was Wrong

I remember it clearly.
It was 2007 and 2008.

All around me, I saw prices rising: stocks, commodities, houses...everything.
You could get a job at Wendy's at $14 an hour to start.
A euphoria swept the market and it seemed like everyone was talking about buying a house to "flip" or revenue property.

People were snapping up 5 and 10 Miami and Las Vegas condos at a time....even before construction began.

This market was going to the moon. Everyone knew it. Experts were predicting the DOW to reach 30,000.
The only risk was that you would miss the boat, so you had better buy something now. And people did... Lots of people.

Buyers were lining up to make bids on houses. They were offering $50,000 over asking price, all the while hoping that one of the other 30 bidders would not outbid them.
This was an "Information Economy", not subject to the normal up and down cycles of economies past. This economy would grow forever.
The only risk, is that you might miss the boat, and then you will never be able to afford a house, so buy now.

Oh, no. You don't have enough money to put a decent downpayment on a house? No problem, I am sure you can find a mortgage broker who can pull some strings and get you into a house for nothing down. And don't worry about getting yourself into trouble with your mortgage, house prices always go up. A couple years from now, you will have a nice chunk of equity.

Yup, I remember it well.

Most people were wrong.
House prices did go down..... a lot in many places.
In many US markets, house prices are half of what they were before the bubble burst.

Millions of jobs and trillions of dollars have been lost over the last few years.

If you had asked anyone, (a person on the street or a financial or economic professional) whether AIG,  Lehman Brothers, GM and Chrysler could fail, most would have said "no".

 Now, a few years later, in a much different financial and economic landscape, with markets facing uncertainty, people are feeling anxiety about the future.

Is this a good time to buy stocks or mutual funds, or is better to hold bonds or gold, or even cash?

Where is the economy headed?
Are things going to get better from here, or are there still more rough waters ahead?

Should I sell my house now or wait till prices come back up...... Are house prices going to come back up?


This blog is here to answer questions like this.
If you have questions about financial, economic, investing or real estate topics, this is the place to ask them.

My name is Dan Kremer and I am here to answer your questions.

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