Read Financial Materials with Skeptical Minds

I came across the MSN article today — Foreclosure ‘crisis’ is overblown — amidst all the doom-and-gloom financial news.

Excerpt with the main points to save you some reading time:

Though the national rate of foreclosure increased by a whopping 79% between December 2006 and December 2007, the rate was still only 1.033%. Because about 30% of all homes are owned mortgage-free, this means that for all the noise about a crisis, only seven-tenths of 1% of all homes were in foreclosure.

In the top 100 housing markets, the average foreclosure rate was somewhat higher — 1.38% — and it was up 78% over the previous year. But if you rank-ordered the list of the top 100 areas, only 34 had foreclosure rates above the group average. Fifty-one areas had rates of 1% or less.

Foreclosure rates actually fell in 14 of the 100 areas. More important, many of the areas with the highest increases in foreclosure rates were rising off rates that were tiny. The Bethesda, Md., area, to offer the most extreme case, saw foreclosures rise 1,288% — to a rate of 0.682%…

Does this mean we can stop worrying and planning and saving? No, it does not mean that we can overlook the entire real estate ordeal and what’s really happening. However, I think this demonstrate that we need to be skeptical and understand the bias of the authors of the materials we read, despite whatever useful information exist in them. Further more, we must understand the possibility of some financial writers/analysts who exaggerate and write with the agenda to destory/hike a stock for their affiliated short/long position.

This is definitely an emotional time as people’s livelihood may be on the line as the market rises and falls like roller coaster these days. Yet, it remains important to not get carried away by our own emotions and thoughts. Don’t just take other people’s words for granted. Go find out on your own. Keep reading. Keep learning.

Since I said what I did, shall I even trust the article? I’m stumped.

Originally posted 2008-04-01 23:49:14. Republished by Blog Post Promoter