Stock Market Rally's for best day in 5 years!

The DOW Jones, NASDAQ, and Standard and Poor are all up over 3.5% of their total volume today!All three are the largest single day jumps in over 5 years since the first major rally after the World Trade Center Attacks.

This is good news for investing all around, and is contributed to be a direct result of the FED's announcement to bail out mortgage companies by allowing them to "trade" the non-sellable mortgage backed bonds, for more liquidable treasury bonds.

Basically it would be like me having extra money while you are completely tapped, and have no credit left either, and giving you something you would easily be able to sell. In return you give me something you can't sell, or at least not immediately due to the nature of the product, in hopes that eventually I will be able to sell that item and make my money back, bailing you out right now by allowing you to sell the item I gave you.

Another analogy - - your house has been on the market for over a year. I will give you all of my stocks that are highly liquid, and of equal value to your home, and you give me your home. You can then sell ALL of the stocks tomorrow and get your money. I will hold onto your house until it sells for what I need it to sell for to get my money back. I will hope to make a little money in the meantime renting it out and hope the renters pay me... but I endure all the risks, and you don't. I also take the risk that I will NEVER be able to sell your home for what I need to sell it for to recoup my costs.

Make sense?

No? One last analogy. You have a huge collection of GI Joe's. They are quite valuable, but there is a limitted market for such things. I have a collection of Thomas the Train and BRAT's dolls my kids no longer use. I give you enough Thomas the Trains and BRAT's dolls to equal the value of your GI JOE collection and we trade. You immediately sell the stuff I gave you since it's popular and will sell quickly, and I put my new GI Joe Collection on EBAY, waiting for the right price. Hopefully the value of the GI JOE's go up while they are waiting to sell, and I get a nice profit out fo the deal, but if not, I really don't need the money, so I wait until I can at least sell for the value of the crap I gave you!

Make sense now? If not, sign off and go to bed... try reading this again another time =). For those of you who get it, let's move on!

Why on Earth would I do this? I do this because we are friends and I like you, and just want to help out. Plus I have the money to do it and I won't miss the stocks, or BRAT's dolls I gave you either. Not to mention that what you do on a daily basis really helps out my customers, who use my product regularly which directly affects whether or not I stay in business.

It was a good move in my oppinion, much better than just printing more money, causing our dollar to get weaker and weaker in the foreign trade markets. The feds have agreed to do this for about $200Billion.

The second leg of the bail out is, they have also agreed to lend out another $200Billion at 60% of the value of those same type of mortgage backed bonds on short term loans, to increase liquidity, and will hold those bonds as security on the loan. Once the banks have more money, they can then pay back the loan and get the bonds back.

Leymans terms - - You give me your GI JOE's as collateral and I give you 60% of what they are worth. You come back and repay me what I lent you and I give you the GI JOE's back. If you don't pay me back in time... I sell the GI JOE's. If they sell for more than 60% of the value, I make a profit.

If it sounds to you like the FEDERAL RESERVE has just become the World's Largest Pawn shop, you aren't far off!

Whomever may still think the mortgage industry does not DIRECTLY affect nearly every aspect of the economy should definitely rethink that after todays stock market rally, relating from mere NEWS of the FED bailing out mortgage companies and banks, and allowing them to pump more money into spending.

I heard today that an old friend of mine thought I was stupid for even still being in the mortgage business... but if I wasn't would I really care that the FED's are handing out $400BILLION to banks??? Maybe, but only if I thought it would raise my taxes or something along those lines.

The fact is, I like that I care, and I like what I do. Especially in times like this when everyone else is bailing out of the industry, or trying to charge people as much money as possible on every loan because they just aren't writing that many of them.

Meanwhile, I keep treating people fairly, giving a good service for a great price, and earning customers for life. When the other guys start price warring again because it has again become SEXY to refinance, my customers will stay loyal even if I am a little more expensive than the other guy at that time. If not, I will remind them what the other guy tried to charge them when the market was bad, an that my price has always stayed the same. If they still leave, then I won't take them back the next time the market rebounds, because frankly, I just don't need their business that much! My integrity and ethics keep me ahead of the curve, and keep me busy enough to enjoy my free time.

As always... I have everything you need mortgage related... plus extras you dont! Email or leave a comment if you if you have any questions, or just want to tell me what a swell guy I am! Any negative comments will be researched for address of poster and I will come to your home!!!! Just kidding.

Everyone have a geat week.

James Prince