Date posted: October 26, 2011
There are always glass-half-empty and glass-half-full people. When it comes to today’s economy, it seems most people are glass-half-empty — or even completely empty — when it comes to the economy. But are there some positive ways to look at today’s financial situation, says N.C. State University economist Mike Walden.
“I think it’s easy for us … to be very gloomy about the economy right now, given the condition that it’s in. But there are people out there who are always looking for opportunities, and I think even for the average person there are some opportunities out there. And I think they are in … three areas: First of all, buy stocks. By some calculations, the stock market and the individual stocks are actually rather cheap, and every time the stock market dies, they become cheaper. So you do hear people from some quarters saying, ‘Hey, this should actually be a buying time, especially when we have those 300- or 400-point declines on a given day’ for people to load up on stocks, especially if you’re an investor for the long run.
“Also, you hear people say the same thing about real estate. Everyone knows the tough time that the real estate market has had. Home values are … on average 30 percent off their highs a few years ago. Many people are very reluctant to get into buying a home. In fact, the rental rate has gone up. The home ownership rate has gone down. But again there are people who say, ‘Hey, don’t be gloomy. This is a buying opportunity, when are you going to get this particular home, this particular house, that you couldn’t get a couple of years ago. Now it’s 30 to 40 percent cheaper.’ So, again look at this as an opportunity to buy.
“And then the last opportunity that some say is with respect to borrowing money. Now that may sound funny, because many people are saying, ‘Hey, debt got us into the problem in the first place. You really need to pare back on debt.’ And of course many people do. But there are others who perhaps … are financially are very well secure. And so if they have an opportunity to borrow some money to make an investment, you couldn’t find a better opportunity for borrowing in terms of the interest rate that you pay. And the last 50 years, interest rates are so low.
“So, again it all depends on your perspective. But if you’re financially secure, you’re willing to invest for the long run. There are some deals out there that you may not want to pass by.”
Category: Economic Perspective