Angel Reyes Blog : Angel Reyes : Texas Litigation Lawyer and Attorney : Dangerous Drugs : Wrongful Death : Business Litigation

Investors this week used the options markets in an effort to protect against a market sell off.  As our readers know, Dranger Capital Management ("DCM"), has been way out in front of this trading strategy as evidenced by its #2 ranking on Barclays.

Trading has been heavy in the S&P 500 ETF where traders bought twice as many put options than calls.  Such a strategy, one that DCM employed throughout this summer, points to the possibility of the S&P falling off its recent highs. DCM continues to follow its proprietary trading strategies to make money for itself and its clients with little more risk than general market risk.

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I recently came across an article that bears directly on our trading strategy here at Dranger Capital Management (DCM).  As many readers know, our strategy remains bearish on S&P 500 with both short and medium term holding periods. The strategy follows some basic market principals and incorporates the VIX and overbought/oversold indicators to accomplish above-market returns with little more risk than market risk.  See our current rankings in Barclays.

As the author below notes, two factors have made important contributions to stock market returns following recessions.  The first is valuation. Depressed valuations typically produce above-average returns going forward for 7-10 years. The second factor that drives market returns following U.S. recessions is prospective GDP growth.  Each quarter, the U.S. Department of Commerce releases an estimate of what is known as "potential GDP," as well as estimates of future potential GDP for the decade ahead. These estimates are based on the U.S. capital stock, projected labor force growth, population trends, productivity, and other variables. As the Commerce Department notes, potential GDP isn't a ceiling on output, but a measure of maximum sustainable output.

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Dear Readers,

If you're like me, you've been wondering when we'll claw out of this "repression" and move into better financial positions.  What with the stock markets still 30% off their highs from a year ago and housing still down over 30% from 2007 highs, what's to feel good about?  I suppose if you have your health, or better yet, health insurance, that is some solace.

So where can we put our money?  As I've written before, Cambria Investment Management, Inc. and Dranger Capital Management, LLC are 2 of the funds I've leaned on to get me through these difficult times.  The returns are positive, which in today's market, is a very, very good thing.

Alas, today's NY Times points the way.  If you really want to go long, send your money to Kenneth and Gloria Copeland out of Ft. Worth, Texas, almost in my backyard!

According to the Copelands, here is how easy it is: Simply send your hard earned dollars to the Copeland's "prosperity gospel" preachers, namely the Copelands, and watch.  Soon you'll have private jets, Alaskan vacations, diamonds, Valentino handbags, etc.  According to the Copelands, God knows how to get the money to you.  You just need to get your money to the Copelands!

Send the Copelands your money now!  Unless you have a brain.  In which case, check out Cambria and Dranger. At least the managers at those funds won't be buying airplanes with your money. See the full article below:
 
Angel

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Well, well, it seems some countries are making it easier to buy property. Let's look at the reality, since I'm a practical guy and most of my readers are practical as well.
 
Let's see, Oil Nut Bay, in the BVI, is now willing to take a $2 million dollar deposit up to a $25 million dollar deposit for lots. Hmmmmm.
 
Before you plop down your deposit, I recommend reading your local paper.  If you are really digging, read the New York Times and the Wall Street Journal - you will change your mind.  Think about it.  In the first year - you'll visit twice, every year thereafter, you will struggle to make it to the Island once a year.
 
I grew up in Puerto Rico - trust me, it's not easy flying across continents...

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On April 15, I posted a blog entry entitled "What You Can Do To Make Money In Any Market."  In that entry, I disclosed that I'm an investor with Cambria Investment Management, and posted a Businessweek review about the book, The Ivy Portfolio. Below is an article published in Barron’s on Monday about money manager Mebane Faber and his partner, Mazin Jadallah.  This article is further proof that if you want to not only survive but thrive in this economy, it’s time to switch to Cambria Investment Management.

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The Ivy Portfolio author, Mebane Faber, my money manager, is featured on CNBC today.  Check out Cambria Investment Management, Inc. Terrific money managers, or go with one of the wire houses and lose another 30% next year, your call.

CLICK HERE to view the CNBC video.

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The markets and economy have whipsawed just about everyone this year. I've written plenty about unemployment, especially Hispanic unemployment. Not much positive news to report today, nor since I reported back in 2007 that no one would miss the various subprime lenders, all of whom have gone kaput.  Funny thing, as predicted, no one remembers any of these companies’ names, but everyone remembers the pain the subprime lenders caused that rippled through the greater economy.  Say goodbye to Lehman Brothers. Taxpayers now own 80% of AIG. The bleeding hasn't stopped.  Where do you turn?

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With our current economic crisis, many seniors are left with their retirement funds greatly depleted and in some instances, wiped out. And those expensive Universal Life and Whole Life policies they invested in come with some hefty premiums they no longer can afford to make. The answer?  Sell these policies to investors who will pay a lump sum and the balance of the premiums. These transactions are called “Life Settlements.”  For more information, read the Wall Street Journal article below:

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A few years ago I wrote about the "Death Tax" and how the Republican party framed the issue so adroitly.  Think about it, who wants to pay "death taxes?"  Oddly enough, many Americans, with hardly any net worth at all to worry about, were in favor of repealing the death tax.  Now that's what I call framing an issue when you really want to pull the wool over certain people's eyes.

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My co-authors of the book, Hispanic Heresy, and I are quoted in the following article, which reveals how Hispanic homeowners have been greatly affected by our current mortgage crisis.  The article also references the devastating impact to Hispanics during an economic downturn. Please read the article in its entirety below:

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If you are a senior sitting on a life insurance policy that you no longer need, or better yet, a senior with a decent net worth and a need for cash, then get on the ball and look into spin life policies ASAP.  I say ASAP because the window may be closing, the insurance companies who write these policies are about to get into the business of buying them back themselves!

The new acronym to know is STOLI.  Stranger Owned Life Insurance and it resembles playing the lottery when you know the winning numbers.  The senior seller doesn't know the winning numbers, but the buyer does.  Does that even matter?   Not really and here's why:  There are now premium financing mechanisms that allow just about any senior to get into the spin life game.  Premium financing allows you to borrow the money to pay for the premiums and exit the policy with some form of cash payment without ever going out of pocket one red cent.  Now I call that a deal! Continue Reading...

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A novel legal theory aimed at making real estate agents take their fiduciary duties more seriously is making its way through the California courts.  The plaintiff, Ms. Marty Ummel, sued her real estate agent, Mike Little, a veteran with ReMaxAssociates in San Diego.  Ms. Ummel alleges Mr. Little failed to disclose the real appraised value of the home she bought.  Mr. Little served as buyer's broker and mortgage broker in the transaction. Ms. Ummel further alleges that Mr. Little knew, or should have known, that other nearby houses, just like the one she purchased, were selling for almost $200,000 less than the one she bought.
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Interestingly, the Bush administration, staunch market followers and rabid Republican small government defenders, has remarked that the government would work to "modernize and improve" the Federal Housing Administration "by lowering down payment requirements, by increasing loan
limits and providing more flexibility in pricing."  Has the Republican Party decided that government is not the enemy of the common man? Probably not, however political expediency will rule this day.  It is
fascinating to watch the Republican Party "flip flop" on whether the government should intervene on behalf of the people in the US who are suffering from mortgage woes. Continue Reading...

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My good friend Andrew Adler sent me the article below about Florida's attempts at property tax reductions. I couldn't resist offering my thoughts:

Marco Rubio, Republican Speaker of the Florida House of Representatives, thinks he's hit on a way to keep his seat. He's proposing a massive reduction of property taxes that he claims will cut the average Florida homeowner's taxes nearly in half. He proposes that Floridians should decide how much property tax they can afford and then the government should figure out how to stay within the budget the taxpayers allow. Continue Reading...

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UPDATE
Take a look at todays Law.com article titled "Subprime Crash May Be a Boon to Attorneys". This only further illustrates the subprime meltdown that I have been watching unfold.

ORIGINAL ENTRY
Let me begin by stating the obvious. The subprime mortgage market has melted down like Three Mile Island. Interestingly enough, just today TXU announced it would build the first US nuclear reactor since that tragedy. Continue Reading...

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By now you've probably heard that Panama is among the world's best retirement havens and is also a terrific place to invest for the long term.  Many Americans are wondering how to take advantage of the real estate investment boom that is heating up across Panama.  If you are thinking about investing in Panama, there are several ways to invest with your IRAs.  Interestingly enough, most Americans are not aware that they can invest 100% of their IRAs in foreign real estate.  Yes, you heard right, you can invest 100% of your IRA monies in foreign real estate!
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I continue to beat the dead horse of the subprime mortgage markets and their financial pain.  That's the way beatings work, they inflict pain.  Keep in mind that, unless I am very wrong, every stand alone subprime issuer will either be bought up at rock bottom prices or will be forced into bankruptcy, but that's just my opinion.  Does anyone else have a different opinion? Continue Reading...

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Great news for the Dominican Republic.  Below is an article from the Office the United States Trade Representative detailing the entry of the Dominican Republic.  This should greatly benefit international investors in the country.  My law firm is working with real estate funds, developers, and private equity groups to locate and build resort and retirement communities across the Dominican Republic.  If you've thought about having a second home in a tropical paradise, we can help. Continue Reading...

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For months now I've been following the story of the troubled subprime mortgage loan markets.  I am not really old enough to remember the Savings and Loan scandals which led to the collapse of the Savings and Loan institutions that had mushroomed across the United States in the 70's and 80's.  After all, I was busy drinking and chasing girls through college at the University of Kansas and the University of Michigan Law School.  However, I am enough of a student and reader to vaguely recall that there were some really loose lending criteria, some eager to please appraisers, and the usual cast of greedy developers and businessmen to cause quite a banking scandal during those years. Continue Reading...

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In the next 10 years, 70 million baby boomers will retire.  Some commentators have likened this coming retirement wave to a tsunami.  Many of these baby boomers will be looking to retire in a tropical paradise. I encourage readers to look into Panama.  Panama has strategic advantages over its neighbors Costa Rica, Nicaragua, and Mexico. Continue Reading...

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Here is an interesting article that I wanted to share regarding the recent steady decline of subprime mortgage derivatives:

Subprime Mortgage Derivatives Tumble for a Fourth Straight Week
2007-02-16 11:43 (New York)
By Jody Shenn

Feb. 16 (Bloomberg) -- A derivatives index used to bet on the riskiest U.S. mortgage bonds headed for its fourth straight weekly decline as more lenders said they were losing money.

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Today's Wall Street Journal reports that several major banks and Wall Street firms such as Merrill Lynch, J.P. Morgan Chase, and HSBC Holdings are forcing subprime loan originators to take back their crummy loans.  ResMae Mortgage, which recently unloaded $3.5 billion in subprime loans was asked to buy back $308 million for loans that were already in default.  So what does ResMae do? Continue Reading...

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So the bad news continues to roll in regarding subprime lenders, many of whom are publicly traded companies.  As I mentioned in my previous postings, NovaStar Financial is the latest subprime lender to catch its investors off guard.  NovaStar investors would have been well advised to be reading this blog, maybe they wouldn't have been caught off guard by the meltdown they're now facing.  Shares of NovaStar are now down 42%!  I for one, am not shocked in the least.  I should have been shorting this pig.  Recall, ResMae Mortgage, Accredited Home Lenders Holding, New Century Financial are also reporting massive losses.  If you are in any of these equities, get out now, you may be upside down, but it will only get worse for you.
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Dallas, Texas has the highest number of 30 day delinquent home mortgage loans of the 28 major real estate markets in the United States - higher even than Detroit, which has been battered by the auto industry's woes.  Detroit just can't seem to catch any luck, in spite of being the world headquarters to General Motors, Ford, and Daimler-Chrysler.  That's why I find it so interesting that Dallas' delinquency rates are even higher than Detroit's.  After all, the Detroit real estate market, at least since the 1960's, has been underperforming the rest of the country. Continue Reading...

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UPDATE: Today’s Dallas Morning News front page article about North Texas minorities overpaying on home loans caught my eye.  The DMN found that a third of all Dallas-Ft. Worth home mortgages taken out by minority applicants in 2004-2005 involved high cost sub-prime mortgages like the ones I described in my earlier post of December 7th, 2006 (below).  Ann Graham, a professor of law at Texas Tech University is quoted as saying, "It's definitely a problem because there are borrowers out there who are ending up with loans that are inappropriate for them."  She must be getting the same sinking feeling I'm getting. Continue Reading...

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When did this country and the politicians who make our laws start thinking that inheritances are more important than earning a living?  I am amazed that our leaders continue to discuss and argue for a repeal of the Estate Tax.  This Tax Cut should be repulsive to every hard working American that is on a company payroll. Continue Reading...

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