Stocks vs. Real Estate

Financials drag on market; Dow falls more than 240

NEW YORK (AP) -- Stocks sank in light trading Monday as worries about American International Group Inc. touched off broader concerns that the deterioration of the credit markets will bring more big losses for financial companies.

Price is clearly more important than volume. Price is what made it to the headlines. Light trading was of secondary importance. I don't know about you, but I often use the price to calculate my net worth. Volume is not needed in the equation.

Realtors say existing home sales rose in July

However, the number of unsold properties hit an all-time high, the latest indication that the worst housing slump in decades is far from over. Prices nationwide are not expected to hit bottom until early next year.

Volume is clearly more important than price. Volume is what made it to the headlines. The thought that prices are not expected to bottom anytime soon is a secondary concern. I therefore offer a simple solution to the housing problems. We need to find a way to get even more people to sell their homes. The headlines would therefore look even better. That shouldn't be difficult. We could point out that prices are not stable yet (as seen above) or we could simply point out how many other people are forced to sell in a panic (as seen below).

Between 33 percent and 40 percent of sales activity is coming from foreclosures or other distressed properties, estimated Lawrence Yun, chief economist at the Realtors group.

Just imagine how great the headlines will look if we can increase that percentage even more. We probably want to stop just short of "Existing Home Sales Skyrocket on Blind Panic and Similarities to Great Depression" though. That might be overkill.

I know what you might be thinking. What good could possibly come from increasing real estate sales volumes as I have described it? Plenty of good for real estate agents earning a commission on each sold home one would imagine. "Realtors say..." was the headline after all.

Hey, if things get really, really bad in the future perhaps the powers that be might consider putting stock brokers back into the headlines. For example, "Stock Brokers See Record Trading Volume" might cheer us up and add to a sense of overall well being. Buried deep within the article we could see that the stock market actually crashed, but only if we bothered to look. Just a thought.