Just think how nice it would be for the government to allow illegal immigrants to purchase homes in the US. This would solve the housing crisis right? I think this decision would create disastrous debates! Bet on the housing market long or short with ETF's "SRS" & "URE". Whether or not you think immigration reform is the key to soaking up the surplus in the housing market, makes you wonder if the housing market has bottomed. Existing housing sales are up, new home starts are increasing, and foreclosures are slowing . There are good red blooded americans that have been on the sidelines waiting to see an indication that the time has come to get out and buy. With a nudge by the government to give rebates for first time home buyers, it is only a matter of time for the market to mend. But hey, throw the immigrants in and game on. ;)
Fixing immigration policy to help fix housing problem
From Richard LeFrak's op-ed in the Wall Street Journal:
As consumers retrench, production is cut, payrolls are slashed, and consumer confidence, incomes and spending are savaged in a self-feeding downward economic spiral. But if the government buys surplus houses and sells them at low market-clearing prices, other house prices will drop, destroying more home equity and driving many more mortgages under water. Bulldozing excess houses would be an inefficient end for perfectly habitable structures.
A better idea is to offer permanent residence status to the many foreigners who are clamoring to get into the U.S. -- if they buy houses of minimal values (not shacks). They wouldn't need to live in those houses, but in order to remove the unit from the total housing market, they couldn't rent them. Their temporary resident status granted upon purchase would become permanent after, perhaps, five years, if they still owned the houses and maintained clean records. The mere announcement of this program might well stop the ongoing collapse in house prices, especially in cities such as Las Vegas, Miami, Phoenix and San Francisco, where prices are down 40% -- but where many foreigners like to live.
Each year, 85,000 H-1B visas are granted for foreigners with advanced skills and education, and last year, 163,000 petitions were filed in the first five days after applications were accepted. The Ewing Marion Kauffman Foundation estimates that as of Sept. 30, 2006, 500,040 residents of the U.S. and 59,915 individuals living abroad were waiting for employment-based visas. Many would buy homes if their immigration conditions were settled.
Source: www.queenscrap.com
There's an undeniable appeal to investments that promise to make money when the market drops. Perhaps that's why so-called short ETFs have attracted $9 billion. When the market goes down, these exchange-traded funds are supposed to rise. But in the recent crash, some investors who used the ETFs to bet against the market were shocked to find they lost money anyway -- and took a nasty tax hit, too.
Short ETFs -- also called bear or inverse -- use complicated futures and derivatives to provide the opposite return (or even two or three times the opposite return) of an index. It can be tempting: Who doesn't want to be up 30 percent when the market is down 10 percent?
Not so fast. Last year, when most major indexes fell by double digits, several bear-market ETFs also lost big. The MSCI Emerging Markets index fell 54 percent in 2008, so you might think the double-short ETF that tracks it would have gained 108 percent. Wrong: It lost 25 percent. The Dow Jones U.S.
Real Estate index fell 43 percent last year; ProShares' double-short real estate ETF fell 50 percent.
Don't blame us, says ProShares Chairman Michael Sapir. "It's the math." The funds match the opposite returns of an index on any given day, but the results compound daily. So even if the index is down over, say, a two-week period, an investor who held on through daily ups and downs could lose money. That's why Sapir and other ETF execs say their products are for sophisticated investors and daily traders. "Joe Buy-and-Hold? Please don't invest in our funds," says Direxion Funds' Marketing Director Andy O'Rourke.
"They're not appropriate."
Even worse, some of the bear ETFs that did make money last year came with a big tax bill. For most investors, one of the benefits of ETFs is their tax efficiency. But because of the leverage used in these ETFs, investors are often saddled with higher short-term capital gains taxes, even if they don't sell any shares. Ugh, says Morningstar strategist Paul Justice. If you're still tempted, he says, trade the short ETFs daily. Or find a bear mutual fund that involves less complicated math.
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With April fast approaching we are all managing our tax obligations from last year. When preparing all the documentation for my accountant, I always tell myself that this year I will be smarter. I will make wise decisions with my money and take advantage of all of the legal tax loopholes available to me. We here at etfdailynews are not tax experts, so check with your accountant first, but see below for one more reason you might choose an ETF for your investment vehicle.
