Advisor warns of rough financial ride

MILFORD — The instability in Wall Street isn’t going to change until prices in the housing market stabilize, according to Joseph P. Biondo, chief invvestment officer at Biondo Investment Advisors. He does not see that stability before late next year.Finance area problems prompted a loss of 800 points in the Dow Jones Industrial Average, some seven percent of its value, through Wednesday of this week; a fall to its lowest levels since Nov. 2005. Oil prices and other political issues contribute, but “real estate is at the root,” he said. Biondo said the biggest contributor was “insanely high” levels of borrowing, as banking institutions aided some who should not have been borrowing. They packaged those mortgages to sell to larger companies, who saw no end in the growth of real estate values. “Speculation, cheap and very available cash - those three ingredients make a very dangerous cocktail,” he said. With the foreclosures that followed, those huge institutions have been left cash-poor, with portfolios of property that no one knows how to value, he said. He said the crisis is similar to the S&L failures of the 1980s. Then savings and loans companies sought fast profits in junk bonds. “It’s is the same thing packaged a different way. They got greedy,” Biondo said.