Its the Economy, Stupid

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Its the Economy, Stupid

A report I receive periodically on executive recruitment says that executive compensation is going up up up. This is due to the fact that the economy is booming, profits are really up, and execs are exercising their stock options. Look for compensation packages with restricted stock options to start seeing the light of day soon.

Its also reported that the job market is booming, but there simply aren’t enough applicants for the jobs. With unemployment at 5% employers are looking for good people. Most have jobs and the second or third tier of unemployed are now coming to the surface. If you are good at what you do and what to change jobs, now is probably the time.

As for the housing boom, or boomlet, or balloon, of course there is doom and gloom on every corner. Prices can’t keep going up. Well, sure they can, as long as demand is outstripping supply. And from what I can see, houses are being built by the thousands in the Burbs and people are buying them.

Why not — if you lock in a loan interest rate, can now afford to pay it, and don’t plan to sell, then so what. If the price of your place fluctuates, then why do you care. The only problem is if you want to sell in the near future. Most people can assume that their compensation is going to increase over the years. So they will become more and more comfortable in their homes. Those that got variable rates better look out, because when interest rates do rise, they could get the shaft instead of the house.

Housing is sort of like stock, only better. As Warren Buffett says, buy any 10 stocks, hold them for 30 years are you are rich. Same with housing. If you buy on the coasts, only move if you are moving inland. Everyone I know that has kept their homes 15 years or more and beside themselves with glee, and they bought 15 years ago when housing prices were on the rise then…Certainly there are pockets, somewhere, where prices are stable — but I don’t know where they are.

A friend is quitting his job, selling and moving to the countryside in Tennessee to retire. His home in California will be bought by a young family with a professional income, and he will retire in a great place to fish, and play golf. Plus he will pay cash for his retirement home. Why? He kept his house for 20 years and didn’t move. Works everywhere and every time.

JVH

John Van Horn

John Van Horn

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