The stock and bond markets of Wall Street are driven by unemotional numbers like profits, P/E ratios, return on investment, etc. But they are also driven by emotions.
A New York broker once said, “Downtown, there are two emotions: Fear and Greed. The rest is bull*$x&.”
Greed as in the late 1990’s when investors jumped to buy any stock that ended with a “.com”. Of course that bubble exploded in 2000.
Fear as in the last week when the debt problems of Greece and Portugal and maybe Spain caught the attention of the investment community. Will these problems spread to France and Germany? Will the debt crisis affect the United States? Are Europe’s biggest banks facing insurmountable strains? Will the crisis have a negative impact on China’s exports to Europe? What are the implications for the LIBOR?
The anxiety in the investment community has led both institutional and retail investors to flee the stock market and shift their funds to gold, bonds and money markets.
When money is poured into bonds the price of bonds goes up. As the price of bonds goes up the yield or interest rate on those bonds goes down. As a result mortgage rates have fallen dramatically. The 15 year fixed rate is at its all time low. And the 30 year fixed rate is close to its all time low.
If you have an adjustable rate mortgage or can benefit by refinancing, this may just be the time to pull the trigger.
Posted by Terry Brunner. Terry is a Senior Loan Officer with Horizon Financial. Terry can be reached toll free @ (877) 627-9211 x150 or email TBrunner@HorizonFinancial.org. Visit Horizon’s website at www.horizonfinancial.org
