Daily Intent

Last night at 6pm the east side of Santa Barbara’s Riviera fell victim to scorching fires leaving over 100 homes in ruins, 5000 evacuees, and Westmont students contained in their own gymnasium.  It was powerful and spread quickly.

The fire continues on with temperatures in the 80s and high winds looming in the late afternoon.  There was “no expected containment of the fire” as of 10:30am this morning.

Thanks to Schwarzenegger’s emergency call, fire crews from all over the state have responded rapidly to band together with the local forces to bull doze, set lines, clear brush, and contain individual house fires.  Helicopters and planes are working diligently to block the fire from mushrooming up and outwards.

We send our support, resources, and thoughts to the Kay, Malloch, Diaz, and Nelson families and the many others who have lost their homes.

We thank Mr. Phil Faulding and all his colleagues for battling the fire on the front lines.

For more information: www.sbcfire.com
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New: Financial Focused Market Street Report

Once a month The Market Street Report will take aim at satisfying those readers craving more in depth financial knowledge.   We’ll go beyond the headlines to  extrapolate the most pertinent information going forward.

I have been fortunate to form strong relationships with highly competent financial players in the local Santa Barbara community as well as hedge fund front runners in New York.

I will compile these reports into an easily readable format attached to this email.

This week we have thoughts from Caleb Overton - Tremblay Financial, Clay Murdy - Pivot Independent, and Brad Stark - Mission Wealth Management. .

Please let me know if there is information I am leaving out that you would appreciate moving forward.
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Buzzword: Diworsification

“The process of adding to one’s portfolio in such a way that the risk/return trade off is worsened.

Investors often achieve this by investing in a number of different mutual funds that have similar investment strategies within the same grouping of shares.

A diversification strategy usually involves the accumulation of assets with negative correlations, which reduces risk and can increase potential returns by minimizing the negative effect of any one asset on portfolio performance.  However, investing in too many assets with similar correlations will result in an averaging effect where risk is at its lowest level and additional assets reduce potential portfolio returns as well as the chances of outperforming a benchmark. -Investopedia

  Six Points to Ponder:

   1. The Santa Barbara Tea Fire takes out 100 plus multi million dollar homes.
   2. Stocks unsure of which was is up. The Dow is down 500pts on the week.  S&P 500 down 46pts.  Nasdaq down 150pts.  Oil is down to $56.
   3. Unemployment numbers came out.  6.5%.  Expected to continue rising.  While our trade deficit shrunk due to decreased demand for oil.
   4. Credit bailout up to $2.7 Trillion.
   5. Freddie and Fannie mortgage plan to modify loans at higher rate.  “If housing doesn’t stabilize, it’s really going to continue to bleed the economy.” -Economic Advisor.
   6. The Lakers dominate.  Blazers had a thriller in beating Yao.

Positives:

    * Loan Modification Plan to Qualify- must be 90 days or more late on mortgage payments, owe at least 90% of home’s current value, live in the home, and  you must not have filed bankruptcy.  These conditions being met will lead to a new loan no greater than 38% of monthly household income, rates lowered for at least  5 years and loan terms lengthened to 40yrs.
    * The government is using every resource available to fight the housing slump / credit crisis.  $2.7 Trillion will have some positive impact.  Where and to whom is the biggest question mark.
    * A shrinking trade deficit is generally good news, however in this case it has little weight.  It was a product of slumping oil prices rather than increased demand from abroad.
    * The west coast is going to be dominant moving forward in basketball.

Negatives:

    * The spending continues.  Debt continues to grow.
    * The markets tested the 8000pt Dow barrier this week and quickly rebounded to a 500 plus point day.  It has since lost ground, but not below 8000.  8000 is becoming a curious bottom as we’ve tested this threshold a few times now.  Should we break through into the 7000s and stay, we will have more issues ahead.
    * Unemployment is a huge concern as many believe it could reach levels of 7, 8 or even 9%.

Services: Co-selling Program

If you are selling a condo / home in the $500K - $700K range, this program may not concern you, since these are selling like Daily Grind Breakfast Burritos, however for those with listings beyond this threshold, you are in need of support and extra contacts.  Let me be that person.  I want to help you sell your homes.

Local:

Help your neighbors at any local Refuge location
Where: San Marcos High School
When: All Day
Cost: $0
Why: Your community is in need.

Live and Be Well,

Jeff Bochsler