Contrary timing

Contrary Timing

Despite the current general direction of these markets, everyday we hear more and more positive news:

The markets always overshoot the economy by about 6 months. Meaning that historically, the markets continue in their current direction (up or down) for about 6 months after the economy has shown signs of turning. Interest rate cuts started in January this year with more rates predicted for the near future. This means that about 6 months after the interest rates start to fall (Jan) the market should start to turn (July).

One of the many signs that signal the approximate bottom of a bear market is a series of stalled rallies…Much like a car engine that won’t turnover. Lately we have seen 2 or 3 consecutive days of positive returns followed by yet another beating. All the markets are up again today, March 19th, so hopefully this car will get started shortly!

For several weeks now we have heard analyst after analyst say that the 1st 6 months of this year will be pretty rough (so far an understatement) but in the beginning of the 3rd quarter (July) the fundamentals are all there to start making money again.

Historically, the better returns have been achieved when the expectations for the future become the most pessimistic relative to the current valuations of the market. All signs suggest that the economic weakness we are seeing in the first half of this year is already well reflected in current stock prices.

No one rings the bell at the bottom but you are sure to hear about it loudly and prophetically six months after it occurs.

While nothing is ever guaranteed in this life, I hope that these brief thoughts find you well, and give some encouraging perspective in an otherwise discouraging economic climate.

Author: David Denroche, financial advisor @ Denroche Carter Financial Services

Contrary Timing to Maximize Home Purchase

Being contrary can help maximize your home buying efforts. Not the stubborn kind of contrary, but the kind that positions you to purchase outside of the prime home buying time.

If you're a first-time buyer or one moving up and want to avoid heavy competition from other buyers, now's the time to hit the market!

Why does contrary timing work? It's due to three major factors of market flexibility, negotiating power and interest rates that can work on your behalf during the non-peak home buying season.

First, market flexibility. By purchasing after school begins in the fall and prior to it ending in May, competition from other buyers may trim by fifty percent or more. This is vital if you're a first time buyer who needs to ask the seller to help with discount points or closing costs. It's also important if the type of property you desire is scarce and/or desired by move-up buyers since they usually wait until spring to sell their existing home. "JON helped us find our dream home over the course of a month of intensive searching, When we were ready to upgrade to a larger home we called on JON again to work with us."

The second factor on your side in a non-peak market is negotiating power. The longer a house has been on the market, the more potential negotiating power you can wield.

Motivated sellers may soften the list price and/or make financial concessions in order to entice a buyer. This is especially true if the economy appears to be softening since it could shrink the number of buyers available for the next peak buying season. This could have a strong impact from now through the 2001 home buying season.

The last factor on your side, interest rates, is often overlooked but can be a powerful tool in helping a first-time buyer leverage in off-peak markets. Once the market peak wanes, interest rates often decline especially in an election year. This is due in part to lack of demand, but is definitely an asset to the purchaser who needs a bit more room in qualifying for the loan size needed. And since loans are in less demand in the off-peak season, lenders may be willing to forego some of the fees typically charged in an active market in order to capture the mortgage customer.

In addition to lower interest rates, this could result in greater wins in other areas like waiving prepayment penalties on loans and hefty origination fees.
By using contrary timing to purchase your first home or move up to your dream home, you can save thousands over time on financing costs, find increased negotiating power and eliminate some of the competition from competing buyers. Let this contrary market approach put money in your pocket and give you a solid buyer's edge!