Tuesday, September 30, 2008

Something Even I Need To Be Reminded Of: It's Not A Bear Market For Everyone


The last couple of weeks have been psychologically tense. The stock market has been getting hammered. The credit markets (especially institutional lending) has transformed. Housing prices continue to trend lower, though at a slower pace (see today's S&P/Case-Shiller home-price report for July). And the consumer continues to look like a deer in the headlights. Indeed, as far as the consumer knows, the consumer credit markets have all but dried up for them as well. And they'd be wrong.

Consumers who continue to keep their eyes on the headlines are missing the boat. I will concede that the consumer credit markets have closed up for some consumers (no question about it). But banks still want to lend to good risks (indeed, they NEED to lend to survive). Although this is anecdotal, I have friends who, over the past week, have applied for a slew of credit cards. All of them have FICOs over 700 (some in the low 700s). With the exception of a Nordstrom denial (too many inquiries), it was a clean sweep. There were American Express, Discover, Citibank, Juniper, HSBC, and Chase approvals. And the limits were generally strong. I was surprised. I shouldn't have been.

I had fallen into the trap of looking at the overall markets -- and paying attention to the scary headlines. I figure if I am doing it, so are a lot of other people. I'm now focused on the ball again. There is a bear market for some people -- yes, indeed -- but there is also a bull market out there as well. Last week I wrote a story about being flexible in my thinking. I'm always willing to tweak my thesis.

People with good to excellent credit can still apply for credit cards. They'll still get approved. They'll still receive healthy limits. In other words, despite all the doom and gloom, there is opportunity out there for those who qualify. The banks are open for business. They're simply waiting for the right people to come on in.

Don't get caught in the trap of thinking that everyone is foreclosed from the consumer credit markets.

That's simply not so.

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17 comments:

Jen said...

IMO, for every person selling off out there, someone has to be buying. In volatile markets, sometimes comes the best opportunities.

If you are (were) prudent and have positioned yourself to take advantage of these economic conditions (hedging for both the highs and lows), I don't think you should be scared. In fact, embrace this market, educate yourself, and there will be opportunities out there.

Opportunities will certainly look different than they did 3, 6, or 18 months ago, but I do not believe that we are in the middle of an economic apocalypse. There are opportunities abound.... you just have to be willing to seek them out and not be paralyzed by fear of being rejected.

Jen said...

btw, did I post before Mr. Wang? *faints*

Credit Matters said...

Jen, I agree with what you wrote. This contrarian thinking has always worked on Wall Street (buy when there is blood in the streets). Why not here?

And, yes, you beat Mr. Wang to the punch. He is probably working his stock portfolio right now. Too busy for lil ole me.

Anonymous said...

Love this posting! Good info to know!

Credit Matters said...

I hate to lean with the crowd, Anon. It's they're bobbing, I want to be weaving.

Bob Wang said...

Somebody had to pick up the pieces today ;-)

savemanatees said...

Investors are making billions on Credit Default Swaps. These derivatives are making the people who bet on the default of MBSs and are right now hauling in the cash.

I traded at the end of the day yeasterday...in financials. Small risk for a potential up tick. I'm anti bailout....but if they are bound and determined I'm going to try and get some crumbs in my pochettes!

I'm positioned to take advantage of additional credit. I bought an REO property in GA for cash. But do not lose sight of debt....credit should buy good debt. In this economy avoid bad debt.

Credit Matters said...

Anybody see what the SEC did today in relaxing mark to market (fair valuation) accounting?

Bob Wang said...

Yes.
Sounds squishy though.

Credit Matters said...

Bob, very interesting language. SEC is ultimately saying that it is Ok to look to other factors when assigning a valuation to some of these distressed assets (assuming there is no market for them -- and no way to assess a valuation).

Obviously, the powers that be are trying to get us out of this mess -- no matter what.

Bob Wang said...

Where IS everybody tonight?

Credit Matters said...

Bob, I have a column coming out in about 20 minutes. Not sure where everyone is, though. Probably still at the party.

Bob Wang said...

Dang!
Need my beauty sleep tonight.
Have to catch it tomorrow.

Credit Matters said...

Haha. Coming out in ten minutes. If you're up, cool. If not, see ya tomorrow.

Anonymous said...

For the first time in my life I have been buying individual stocks instead of mutual funds - bargin shopping. Over the past 3 weeks my blended gain is 220%. I wish I had had more cash to throw at it in the beginning: my actual dollar payout is rather small, but I am very happy.

Charles Clarke said...

Yes, excellent credit is still getting great offers. Just got in the mail a 12 month, 0%, no fee balance transfer offer from both a current card and a solicitation for a new one.

GlobCredit.com said...

Charles, thanks for the post. I have a couple of great offers right now from Chase (business) and Merrill Lynch. 0% from Chase and 0.99% from Merrill.

It seems the best deals are coming from existing relationships.

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