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FHA Train Wreck, New U.S. Housing Market Crisis

Housing-Market / US Housing Nov 25, 2009 - 03:33 AM GMT

By: Andrew_Abraham

Housing-Market

Who do you believe these days… the Govt…the news…or an industry insider? My bet would be with the industry insider.
Robert Toll the principle of the largest luxury home builder Toll Brothers said the other day that the Federal Housing Administration (FHA) is a train wreck waiting to happen.


That is not the most encouraging news nor a sign of green shoots. Put this into perspective the FHA has insured lenders against mortgage defaults on 20 percent of all homes bought in the last year. What is more troublesome is that many of these homes had down payments no more than 3.5%. Another great detail is the FHA’s capital reserve fund plunged 72 percent just this year alone.

One would ask, Didn’t we learn anything from the sub prime crisis?

Looking at details like this encourage me to be invested in trend following a basket of commodities, currencies, interest rates etc… In times of a crisis trend following has proven itself. The strategy is liquid, transparent and highly regulated. Try getting out of a piece of real estate in a crisis. One of my colleagues once made this statement..” You can stand on your head and spit wooden nickels and still not sell the property in a crisis”.

Andrew Abraham
www.myinvestorsplace.com

Andrew Abraham has been in the financial arena since 1990. He is a commodity trading advisor and co manager of a Commodity Pool. Since 1993 Andrew has been a proponent of quantitative mechanical trading programs. Andrew's major concern is not only total return on investment but rather the amount of risk that one would have to tolerate in order to achieve returns He focuses on developing quant models that encompass strict risk adherence and correlation. He has been a speaker at conferences as well as an author of numerous articles. Andrew has spent years researching ideas that have the potential to outperform indices as well as maintain fewer draw downs.

Visit Angus Jackson Partners (http://www.angusjacksonpartners.com) Contact: A.Abraham@AngusJackson.com (mailto:A.Abraham@AngusJackson.com)

© 2009 Copyright Andrew Abraham - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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