Profiting from Foreclosures?

Includes: CUBE, GLD, LSI, PSA
by: Roger Nusbaum

The foreclosure rate appears to be going up. Maybe the rate and persistence of the increase is open to interpretation but more foreclosures seems like a certainty. Losing one's home does not necessarily mean a person becomes homeless and penniless.

Some portion of these people will still have their jobs and be living somewhere like in an $800 apartment (versus a recently adjusted $3500 mortgage) or with a relative. Won't some portion of these forcibly downsized people put a lot of their stuff in storage? If so could this be a positive catalyst for Public Storage (NYSE:PSA), Sovran Self Storage (SSS) or U-Store-It Trust (YSI)? Do you know any other related companies like maybe a Canadian storage trust of some sort?

Lately there has been discussion trying to decipher why gold is going up (presumably signaling inflation worries) while at the same time treasury yields are going down which signals a lack of concern about inflation and might be signaling a deflation worry.

There are several possibilities for this I suppose including no reason at all, but there is one possibility that I have not read or heard anywhere but I am sure that someone has thought of.

For simplicity sake let's say gold is expressing an inflation worry and bonds are expressing a deflation worry. Isn't it possible that that each asset class is working on a different timeline? For example gold is worried about inflation in five years while the bond market is worried about deflation right now and for the next, say, two years?

The first flaw I can think of for this line of thought is that I would expect the ten year treasury to look further into the future than gold but the idea of different asset classes being on different time lines seems worth thinking about.

A spirited debate about social safety nets of healthcare and other entitlements broke out in the comments yesterday. I figured out how to articulate my thoughts on this subject and they will be very unappealing to some. In yesterday's post I made a remark about having enough money saved for some sort of medical thing that turns out to not be covered.

I do not want to be in a position where my fate is decided by someone else like an insurance company. If a person needs something medical done and insurance will not cover it and they cannot pay for it out of their savings then, yes that is a rotten outcome, but there is not much I can do other than pay whatever taxes I am told to pay.

People give themselves a better chance for avoiding this sort of problem by working longer and staying fit. Working longer means less time living off of savings. Staying fit reduces the odds of certain types of medical problems. If you love your work and are motivated to keep doing it until you are 80 then I have to think that the only things in the way of that would be any sort of medical thing or dying. In this case the savings becomes a giant emergency fund, most likely for a health event that is either a one time thing or a chronic thing if insurance somehow doesn't cover what you need.

It may seem like I am harping on insurance not covering but isn't that the biggest fear that most people have; some sort medical need that is not covered and not affordable from savings? I am sorry but I am more inclined to try to prevent my own problems than solve someone else's.

On a somewhat lighter note the picture is from the Boston Globe (hat tip to my brother), they have a bunch of pictures posted from the fires in Los Angeles. This particular picture amused me because I have lived it a few times. A few hours after we start an initial attack on a fire we see a scene similar to the one in the picture; that is a bunch of dudes (typically hot shot crews) half my age marching to the fire single file to relieve us.

On a much lighter note did you see the end of the Broncos-Bengals game? That was crazy. Directv gave away Sunday NFL Ticket for free Sunday and I took in quite a bit of the Red Zone Channel, what a great idea. No we are not getting it, only the baseball package for us...for this year anywayXD