Crash Market Stocks - Financial Tips On Making Money In The Stock Market

News hit today of the Treasury's plan to unveil their newest PPIP program that many investors have been waiting for. On Wednesday, the Treasury plans to announce details of their long awaited Public-Private Investment Program. This is the new entity established by the government to help in disposing of toxic commercial debt. Much like the RTC program from the 90's, the PPIP will aim to find private investors who are well capitalized to partner with in taking over toxic, bank owned properties.

Unfortunately, the plan sounds too good to be true, which is probably why there are very few rumored players. Two confirmed players in the program are GE Capital and Wilbur Ross Distressed Real Estate Fund. The hopes of the program is for the PPIP to partner with the private institutions to help absorb future losses the properties may have. The program looks to be structured with high favor towards the private institutions, however, there are many factors that could turn the deal sour.

First off, much like how the CMBS debt was bonded together, so will much of these "distressed properties." Most likely, these parties will not get to pick and choose from a list of distressed assets, but will be given a portfolio to look at. With the several good and promising assets that are in the portfolio, will be the many bad useless assets. Not only that, but they will most likely differ in product type, which could cause for many of these institutions to stretch outside of their comfort zone.

I know it seems that buying distressed properties, in the way the PPIP has outlined it, seems like a steal, but there are still plenty of downside risk for these groups to consider. First, how much worse will property values get. Many feel that commercial real estate is just beginning its problems. Is this the first of many bottoms? How long can these groups absorb losses. Sure, there is essentially no bottom to the Treasury's pockets, but there indeed is for GE Capital. I believe the only way we're going to see a quick recovery from commercial real estate values, is to offer up the properties to the entire market. Sure, prices would come down much more dramatically, but nature would take its course.

In preparations, I may go in and play a few of these institutions long, as I expect a good possibility for a very short term bounce for some of these players. Much of the perception will be that these groups will receive great deals for an extreme discount, however, we will soon see just how well it works out. After much of the settling down, I expect to load up pretty heavily on SRS.

Today's rally was mostly fueled by a good day with oil. Volume was very light today, as we're heading into vacation season. Tomorrow we have the consumer confidence report, which will probably come in rather positive, however, I would expect that number to begin to tail off again the next few months. Also, we finish off the week with unemployment numbers, which could be quite the eye opener for investors. Stay in touch with more news through TradingSolutions: Financial analysis and investment software that combines technical analysis with neural network and genetic algorithms. Happy Trading.

I apologize for no post yesterday, as due to the busyness of the ICSC conference, I was unable to find time to get something up. The conference ended today, so daily posts should be expected once again from here on out. I am glad nothing too significant has taken place this week thus far (aside from the 200+ point rally on Monday) as I haven't had the easiest access to my Zecco.com trading account to make moves. I am now back in business and received some great knowledge and insights from the conference that has reaffirmed my existing thoughts on the economy and the future of the stock market.

There were several professionals at the conference who did not stay the whole duration of the conference, due to costs and a lack of meetings from poor attendance. Many of the companies, cut their attending staff in half or even more. I discuss the conference in much more detail in today's premium podcast (subscribe here) and talk more about Simon Property Group and GGP's influence (or lack thereof) on the conference.

I believe it is very safe to say that problems for commercial real estate are just breaking. Although there has been a slow bleeding in the industry for over a year now, the problems are becoming more severe and are accelerating for commercial real estate owners. Remember, a lot of money had been made in real estate from 2003 to 2007, so many of the companies were decently capitalized and had reserves for some properties in case of some difficulties. However, there were very few who expected problems as severe as we have seen them in this market.

One big trend I found in my conversations at the conference is the lack of activity going on in the business. Most everyone was saying the same thing, which was that now is not the time to buy and that they are waiting for the "distressed" real estate to hit the market as well as the REO properties. This lack of activity in such a large financial market will have big effects on the the overall economy. As a result, banks will not be issuing many loans in commercial real estate, tenants will continue to struggle, and landlord's income will continue to bleed. Eventually, these problems once again are put back on the banks, which is why I have continue to be very bearish with financials.

Another common conversation was the zero existence of financing, especially with the banks. Most deals that are being done are either through seller financing, private equity, or all cash. Even some of the trophy assets that you would think should not be a problem to get financed are having problems with banks. Much of the problem is due to the rapid cap rate compression we saw the past five years, due to the strong compression we saw in interest rates. Now that interest rates have risen from the low 5% to now 7-9%, all in a year, cap rates have not caught up. This is a big reason for the lack of transactions in the market.

With many other reasons, these are just a few of why I continue to be bearish in the real estate market and in financials. Plays like SRS, I feel will be very rewarding when this next turn comes into fruition. However, shorting individual REITS and other real estate companies could prove to be stronger for a longer term investment as to not get hit with decay from the leveraged ETFs. There may be a lag time in these problems fully being exposed in these companies, due to the recent financial help from the government, however, I believe great difficulties and bankruptcies are inevitable for many of these companies.

We have now seen a couple straight days of downward trading following the big rally on Monday. It has been a pretty mellow week in regards to economic data, as only new homes were announced yesterday, and actually proved to be much worse than the market anticipated. I believe we will begin to see us slowly return to earth from this government spending honeymoon the markets have enjoyed the past few months.

Bank of America will be issuing 825 million shares to the public at $10 a piece. The most amazing thing about this is that the stock was up today! That is like going to the store and asking the clerk if you could pay an extra dollar for a stick of gum. The offering is more than 10% below its current price, which is quite of a large gap compared to other offerings we've seen. It is these things that I see in our market that makes me wonder who on earth is in this market right now. Eventually, the stock price should adjust, but good luck to those that are buying it now.

I will be looking to take some positions, possibly tomorrow or Friday, depending on how we see the market move and what the volume is doing. I am very comfortable with our current market position and the opportunities I see ahead of us in the short term. I will be on chat tomorrow so that if you have any other questions from the conference you can ask me then, or post it as a comment. It's good to be back and Happy Trading.