Suze Orman on the Fed Funds Rate

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Quail_Hill_Renter_IHB

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<p>I watch the Suze Orman show often and lately she's been getting more and more people needing advice about their adjustable rate mortgages. Here are two links to youtube clips that are interesting. </p>

<p>In the first one Suze speaks on the Fed Funds Rate and how it won't help people with adjustable rate mortgages. Then she goes on to describe how lowering the fed funds rate can hurt and thinks inflation is high:</p>

<p><a href="http://www.youtube.com/watch?v=C8PgXZIXUxs">http://www.youtube.com/watch?v=C8PgXZIXUxs</a></p>

<p>Then in this link she has a Los Angeles realtor on as a guest who can't afford her mortgage payments anymore. She went from making $136K to barely doing $40K this year:</p>

<p><a href="http://www.youtube.com/watch?v=c1g15SJacxY">http://www.youtube.com/watch?v=c1g15SJacxY</a></p>

<p> </p>
 
I think Suzy is right on when it comes to mortgage interest rates. The lower FED funds rate will cause inflation which will drive up mortgage rates as lenders seek to be compensated for getting back money worth less than when the loaned it.
 
Didn't anybody tell her that real estate always goes up in the long run? Or that the lenders would not lend her the money if she could not afford to pay? Or that she just needs to think positive?
 
Not only that, but rate cuts usually cause a bump up in the stock market. I think this is retarded, but it happens anyways. This will usually correspond with a flight out of bonds, which lowers the bond price andincreases the yield. You'll be looking at higher mortgage rates at least in the short run
 
<p><em>Not only that, but rate cuts usually cause a bump up in the stock market.</em></p>

<p>Except the stock markets are down 10%, officially in 'correction' since Ben started attempting to helicopter in his pet theory on Great Depression prevention.</p>
 
I can't find which thread it was mentioned, but the short interest on the homebuilders is very high. That has the makings of an enormous short squeeze. If we get a sharp short-squeeze rally in the broader market, the homebuilders may go on an extended run as everyone races to cover their short positions. It could make for a great 3 to 5 day long trade. It could go on even longer if all the short positions get liquidated.





I suspect the same condition exists in the financials as well.
 
<p>This is the thing though....she is teaching women (and some men who watch her show) how to handle themselves financially....and they are listening ! Millions of people have no clue what to do about money matters, they listen to her advice because no one else is telling them. She has that energy about her that motivates people....and if she's motivating people to be fiscally prudent, how is that anything but good ! </p>

<p> I do agree that she is a <em>little</em> over the top though. She also has really cute hair. </p>

<p>And don't get me started about Dr. Laura. </p>
 
<p>ohh I hear somebody has the LoVe for Dr. Laura... ha ha.</p>

<p>But I also think Susie is a wee bit over the top. But hey she's getting alot of women to think just a little bit more about saving rather than spending.... I know my wife listens to her more than she does me... </p>

<p>-bix</p>
 
<p>nir:</p>

<p>Uh......you guys need therapy. Either you don't nag and your husband wants you too, or...................I have an MBA. I'm not a MFC. We are squarely out of my window of expertse.</p>
 
<p>no_vas,</p>

<p>Thank you for your advice. I feel Suzie is a bit over the top; however, I do practice finance similarly to her advice in real life anyway . Yes, it's true that I do not nag, and my husband even has a MBA from USC.</p>
 
<p>Trust me, everyone does. </p>

<p>Grad School is five years worth of evenings I'll never get back. If I had to do my MBA again, I wouldn't unless I was an engeneer or a hard science major. My buddy's wife is a MFC and a PhD. Her degrees work. I have friends who are JDs or CPAs. They work. I know people who have PE's and SE licenses. They work. MBA's alone are just kind of.............cute.</p>

<p>I'm not down on Suze's message. IMO, some of her advice is, um, not optimal IMO. Given her audience, I'll give her a hall pass. </p>

<p>Her <em>delevery? </em> I take issue with. <em>DRAMA ADVERSE</em> I am.</p>
 
<p>Suze does fine when it comes to household financial stuff. Typically the people that call into her show are the ones that can't figure out that paying 19% CC interest on last month's pedicure isn't a sound financial practice, so she does do some good.</p>

<p>My problem with her is the same I would have any person my mom's age trying to incorporate generational slang into their speech to stay relevant. She speaks like a guest on the Jerry Springer show circa 1997.</p>

<p>For your amusement: <a target="_blank" href="http://www.youtube.com/watch?v=FGcBRlDsUa4&feature=related">Suze hosts Mad Money</a></p>
 
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