Corporation or Llc for Flipping Houses by owy17991

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									                                                               AL
                                    Index

                                                          RI
                                                    TE
                                           MA
                                         D

Adjustable rate mortgages (ARMs), 96       Bubbles:
                                    TE


“Alt-A” loan, 102                            and bonds, 141–143
American International Group (AIG),          defined, 25
     87, 123                                 future, 51–53
                            GH




American Stock Exchange, 155                 and the gold market, 27–31
Astor Asset Management, 89                   and liquidity, 48–50, 56–57, 140 (see also
Astor Financial LLC, 157                        Credit cycle; Housing bubble)
                                             and money markets, 31
                       RI




Baker, James, 36                             and NOW accounts, 31, 39
Bank of America, 180–181                     and technology, 44–48
                PY




Banking Act of 1933, 114                   Buffett, Warren, 19
Banking Act of 1935, 114                   Bull market. See Expansion
Barclays of Britain, 106                   Bureau of Economic Analysis (BEA), 173,
        CO




Bear Stearns, 112, 115, 116, 117, 118,          174, 178
     120–122, 124, 132                     Bureau of Labor Statistics (BLS), 61, 64
Bernanke, Ben, 70–71, 111, 112, 113,       Bush, President George W., 93
     121–122. See also Federal             Business cycle:
     Reserve                                 stages, 14
Black Monday, 35–38. See also Blips          and GDP, 14–15 (see also Gross domestic
Blips:                                          product)
  defined, 26                                 and ETF, 16–17 (see also Exchange-
  and Wall Street, 32–39                        traded fund)
  and 401(k) plans, 34–35, 42–43             consistency of, 22–24
  See also Double-dip recession              See also Economic cycles



                                         200
                                            Index                                       201

Century Date Change Special Liquidity            and Federal Reserve (see Federal
     Facility, 119                                  Reserve)
Chicago Board Options Exchange                   and government intervention, 3–4
     (CBOE), 116                                 importance of, 190–191
Citigroup, 106                                   in the 1970s, 6, 8, 20, 21, 127 (see
Collateralized debt obligations (CDOs),             Bubbles, and gold market; Inflation)
     104, 121, 140                               in the 1980s, 6, 8, 20, 21, 41–43, 127 (see
Collateralzied mortgage obligations                 Blips; Double-dip recession)
     (CMOs), 140                                 in the 1990s, 6, 8–9, 21, 24, 59–61, 127
Congressional Budget Office (CBO), 107               (see Bubbles, and technology)
Consumer Price Index (CPI), 57, 58–59,           in the 2000s, 6, 9, 10–11, 61, 127 (see
     60, 78. See also Inflation                      Bubbles, and liquidity)
Continental Illinois, 116                        investing changes, 5–7
Contraction, 14, 81, 130. See also Business      repeatability of history, 7–13, 51–52
     cycle                                       reverting to the mean, 143–145
Cost-of-living adjustments (COLA),               societal changes, 5, 10
     28, 64                                      stages of business cycle (see Business
Credit crisis. See Credit cycle                     cycle)
Credit cycle:                                    2008 recession, 4–5, 19, 21, 134
  borrower/lender dynamic, 82–84                 See also Credit cycle; Housing bubble;
  crisis example, 84–88                             Inflation
  and deleveraging, 88–89, 135                 Employment Situation Report, 164, 165,
  and housing cycle, 81                             176–177
  and the future, 90–91                        ETF Port, 164–165, 179
  impact of, 89–90, 128, 129, 133, 136–137     Exchange-traded fund (ETF), 16–17, 91,
  overview, 77–81                                   110, 145
  phases of, 82                                  advantages of, 153–154, 156
  See also Housing bubble                        broad market vs. individual sectors,
                                                    167–168
Deflation, 66. See also Inflation                  and current outlook, 166–167
Deleveraging, 88–89, 135. See also Credit        defined, 152
    cycle; Housing bubble                        and diversification, 182–183
Department of Housing and Urban                  and employment, 164, 165, 175–177
    Development, 93                              and GDP, 172–175, 176 (see also GDP)
Depository Institutions Deregulation and         as an innovation, 156–159
    Monetary Control Act, 39                     inverse, 162–163
Depression, 127–128. See also Economic           and long-term approach, 170–172
    cycles                                       and money flows, 177–178
Double-dip recession, 32, 39–41, 67              Port, 165–166, 179
Drexel, 124–125                                  and profits, 181–182
                                                 and research sources, 178–180
Economic cycles:                                 for retirement plans, 160
  and blips (see Blips)                          and sectors, 159–162, 163–166,
  and bubbles (see Bubbles)                         180–181
  and current conditions, 19–21, 22,             SHY, 153
    133–138                                      using, 155–156
  and employment, 176                            XLF, 153, 181
202                                          index

Expansion, 14, 43–44. See also Bubble, and        Gecko, Gordon, 33
    technology; Business cycle                    Glass-Steagall. See Banking Act of 1933
                                                  Glass-Willis proposal, 114
Fannie Mae, 104, 122, 123. See also Housing       Greenspan, Alan, 9, 38, 42, 44–45, 68,
      bubble                                           99–100, 103–104, 111, 112, 115–118,
Federal Deposit Insurance Corporation                  119. See also Federal Reserve
      (FDIC), 40, 85, 115, 128                    Gross domestic product (GDP), 4, 14,
Federal Emergency Management                           15, 19, 20, 43, 77, 107–108, 127,
      Administration (FEMA), 113                       172–175, 176
Federal Open Market Committee
      (FOMC), 49, 69–70, 71, 114, 119, 122,       Hamilton, Alexander, 113
      123. See also Federal Reserve               Home equity, 95
Federal Reserve, 17–19, 32, 35, 38, 42, 48,       Hoover, Herbert, 93
      49, 51–52, 67                               House Price Index (HPI), 81
   and economic control, 114–115                  Housing bubble:
   expanded role of, 113                            bursting of, 106–107
   future intervention of, 125–126                  and credit equity, 100–103
   history of, 113                                  early warning signs of, 98–100
   intervention overview, 111–112                   and lending practices, 100–103
   and liquidity, 117–120, 124, 140 (see also       and lessons learned, 108–110
      Bubbles)                                      overview, 93–95, 135–137
   and S&L crisis (see Savings and loan crisis)     and securitization of mortgages,
   and the stock market, 115–117                      104–105
   and Treasury bailout, 122–123                    and societal influences, 95–98,
   See also Bernanke, Ben; Blips; Bubbles;            105–106
      Double-dip recession; Greenspan,              and wealth effect, 107–108, 137–138
      Alan; Inflation;Volcker, Paul                  See also Credit cycle; Federal Reserve
Federal Reserve Act, 114. See also Federal        Humphrey-Hawkins Act, 114
      Reserve
Federal Reserve Bank of New York, 117.            “Ignore the Man behind the Curtain”
      See also Federal Reserve                         (Stein), 19
Federal Savings and Loan Insurance                Inflation:
      Corporation (FSLIC), 39–40                    and Bernanke, 70–71 (see also Bernanke,
Financial Institutions Reform Recovery                 Ben)
      and Enforcement Act, 40                       and business owners, 72
First Bank of the United States, 113–114            causes of, 58–61
First Options of Chicago Inc., 116                  as a constant issue, 66–67, 79–80,
First Trust, 86                                        134–135
Flipping houses, 96, 109, 110. See also             and consumers, 72–73
      Housing bubble                                double-digit, 111, 115 (see also Double-
Freddie Mac, 104, 122, 123. See also                   digit recession)
      Housing bubble                                and Greenspan, 68–70 (see also
Friedman, Milton, 58                                   Greenspan, Alan)
Funds-of-funds squared, 83–84                       and investors, 73
                                                    in the 1970s, 67–68
Garn-St. Germain Depository Institutions            and oil prices, 65–66
    Act of 1982, 39                                 overview, 55–57
                                            Index                                         203

   and Treasury bailout, 57–58, 77, 79–80,      Paulson, Henry, 4, 112, 123
      85–88 (see also Federal Reserve)          Peak, 14. See also Business cycle
   and Volcker (see Volcker, Paul)              Pennington, Ty, 96, 106
   and the wage-inflation equation,              Personal consumption expenditures
      61–62                                          (PCEs), 174
   and wage pressures, 63–65                    Price-to-earnings (P/E) ratio, 158, 170
Initial public offerings (IPOs), 44, 140. See   Putnam Investments, 85
      also Bubbles, and technology
iShares, 155, 167                               Resolution Trust Corporation (RTC), 40,
                                                    115, 133
JPMorgan Chase, 106, 112, 115, 121,
   124, 128                                     Santayana, George, 51
                                                Savings and loan (S&L) crisis, 39–41, 115,
Kennedy, President John F., 114                      123–124, 128–129, 133–134
Keynes, John Maynard, 25                        Second Bank of the United States, 114
                                                Securitized investment vehicles (SIVs),
Lehman Brothers, 106
                                                     104, 121
Loan-to-price (loan-to-value) ratio,
                                                Solomon, Anthony, 30
    100, 101
                                                Speculators, 193–195
Long-Term Capital Management (LTCM),
    112, 117–118, 119
                                                Term Auction Facility, 122
Lynch, Peter, 151
                                                Time magazine, 29
Mark-to-market accounting, 86–87                Treasury bailout. See Federal Reserve;
Miller, G. William, 29                               Inflation
Minsky, Hyman P., 83                            Trough, 14. See also Business cycle
Morgan Stanley, 3–4
                                                U.S. Census Bureau, 94, 95
National Bureau of Economic                     U.S. Congress Joint Economic
    Research, 178                                    Committee, 99
Negotiable Order of Withdrawal (NOW)
    account, 31, 39                             Veblen, Thorstein, 10
“No doc” loan, 100                              Volcker, Paul, 29, 32, 67–68, 111, 114, 120.
Nomura of Japan, 106                                 See also Federal Reserve
Non-Farm Payrolls Report, 176
Northern Trust, 180–181                         Wachovia, 106
                                                Washington Mutual, 106, 128–129
Office of Federal Housing Enterprise             Wealth effect. See Housing bubble
     Oversight (OFHEO), 81                      Wells Fargo, 106
Office of Thrift Supervision, 40, 115            Wesbury, Brian, 86
Offshoring. See Outsourcing                     “Wipping inflation now” (WIN) era,
Outsourcing, 61–62                                   55–56. See also Inflation

								
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