Some Important Words for These Troubling Few Days

Alan Greenspan says that this is a once in a lifetime financial crisis. Then why is someone I know making more money in this crisis than ever before? Well, read on ...

And I know what you're thinking. "What's it going take to fix this mess?"

I have the answer ... and if you're reading this, you are probably part of the solution. Read on ...because the answer might surprise you!

But first, let's recap. The Dow Jones Industrial Average tanked again today. It wasn't pretty. It lost 449 points, or 4.09% of its value. And Uncle Sam came to the rescue again.

This time, however, it is serious. Helping Bear Stearns out was one thing. Giving investor confidence to Fannie and Freddie was another. But all of a sudden, the perfect storm developed and Merrill Lynch and Lehman Brothers were is trouble. The bull lost its horns and is now a cow, out to greener pasture somewhere...with plenty of foreclosures around the farm to boot.

Merrill was saved by Bank of America, but Lehman is done and sold some assets to Barclays today. Now the bloody streets get even worse...Morgan Stanley tanked 25% today. Goldman Sachs plunged 17% today. All my buddies from Georgetown are freaking out today.

Why? Well, the AIG mess is quite a mess. We're talking over $1 trillion in assets that almost went on the auction block for pennies on the dollar. That would spell financial ruin the likes we haven't seen in a century. It would make AIG's 74 million clients a little panicky, too, don't you think?

AIG still will be selling its assets, but in this case they'll be doing so to pay Uncle Sam back, rather that giving folks a free to all in a liquidation. So thanks, USA, for backing AIG with $85 billion.

What happened in real estate today (of course everything that's happening is related to real estate). Housing starts for August dropped to 17 ½ year low the U.S. Commerce Department reported today. The seasonally adjusted annual rate was 895,000, which is off from the estimated 950,000 and represents a 6.2% drop.

But, as long as you are not a homebuilder, we in the real estate world know that this is actually a good sign... meaning that in order to recover, this is the medicine we need. We need less new home inventory so that we can move more of the existing inventory we have, and to create an equilibrium of supply and demand. A new house just isn't going to compete against a bank-owned 2007 or 2006 house that is 30% less than the cost of construction. Starts on single family homes were 33% below August 2007 levels at 630,000.

Ok, but Robert ... you're the guy that's screaming that this is the biggest opportunity ever. So where's the silver lining you ask?

The Mortgage Banker's Association reported that loan applications jumped 33.4% to 661.7 just last week, its highest level since May 9, 2008. This shouldn't be too much of a surprise because the government bailout of Fannie and Freddie gave more confidence to the market for mortgage backed securities. So rates dropped. This is good news for Realtors, good news for lenders...and perhaps good news for new home builders going forward.

And guess what? When equity markets are awful, and investors are looking for hard assets, where do you think they are going? Well, precious metals that's for sure (gold had its best day ever today, up 11% to $80/ounce). But don't forget about bricks and mortar. Some investor pulls out $500,000, does a self-directed IRA into real estate, and gets a 8% to 10% return on the cash just based on rent alone. Then they get the upside appreciation, too.

I'm telling you. Read me loud and clear: when financial markets plunge, the real estate market will be the beneficiary. Just watch. Only so much money can go to gold. Or better yet, start taking action!

So who gets us out of this mess? You do. If you're reading this, you're probably a real estate agent or investor. Once you get going, and do your thing, and start telling people that the real estate market is A LOT more stable than the stock market, you'll begin to make sense.

And guess what else? Banks are tanking. They have to unload nonperforming assets. So short sales will become easier. REO's will become plentiful. And realtor bank accounts will start filling up, not depleting.

So hang in there. Sure it is painful for your 401(k), but you better be able to make it back in spades with the opportunity you've got in front of you.

Go for it!