The Greater Fool
Popular media once again feeds the frenzy creating a crop of greater fools through unrealistic television reality shows.
If anyone is looking for a greater fool to pass the hot potato to, here they are:
It's hip to flip real estate
Take a peek, the picture they paint is absolutely unbelievable. It's no wonder we're in a market like this, the mass of sheeple have conspired in the greatest get rich quick scheme ever created.
Cutler agrees. You'll succeed as a flipper, he says, "if you do it wisely. Study, anticipate the unexpected, and use reliable contractors and subcontractors, or you might take a risk and fail."
So there it is everyone, we're all wrong, all you need to do is study, anticipate the unexpected, and you too can be a real estate tycoon! I wonder how many would-be tycoons were created based on these television shows, my guess, quite a few.
Have any of you ever watched these shows? I can sum it up, a bunch of hacks do a hack-job on a run down shack and almost always walk away rich. I guarantee if you watch a few hours of these shows, you too will run out the door, check book in hand, ready to find the fortune you deserve.
Boy-o-boy. There is a great anecdote about the stock market crash right before the great depression (it's been said it's a myth, but who cares, it's appropriate) Joe Kennedy stopped to get his shoes shined, and the shoe shine boy was giving him stock tips and telling him how to get rich in stocks. That day, he sold all the stock he owned, and the market crashed soon after. The moral of the story, when the shoeshine boys start talking about something, make sure you aren't in it.
These TV shows are made up of nothing but shoe shine boys. Go out on the street, ask anyone to give you a way to make alot of money quick, I bet you the majority will say real estate. Popular media, tv, newspapers, they all seem to push this nonsense with no regard for the real consequences. All shoe shine boys with their get rich quick schemes. There is only one way this mania will end, I'll give you a hint, it's not going to be with everyone a real estate millionaire.
I'll leave you with one last parting thought, an old poker quote..
If you can't find the sucker at the table, it's because the sucker is you.
Caveat Emptor,
Grim
If anyone is looking for a greater fool to pass the hot potato to, here they are:
It's hip to flip real estate
Take a peek, the picture they paint is absolutely unbelievable. It's no wonder we're in a market like this, the mass of sheeple have conspired in the greatest get rich quick scheme ever created.
Cutler agrees. You'll succeed as a flipper, he says, "if you do it wisely. Study, anticipate the unexpected, and use reliable contractors and subcontractors, or you might take a risk and fail."
So there it is everyone, we're all wrong, all you need to do is study, anticipate the unexpected, and you too can be a real estate tycoon! I wonder how many would-be tycoons were created based on these television shows, my guess, quite a few.
Have any of you ever watched these shows? I can sum it up, a bunch of hacks do a hack-job on a run down shack and almost always walk away rich. I guarantee if you watch a few hours of these shows, you too will run out the door, check book in hand, ready to find the fortune you deserve.
Boy-o-boy. There is a great anecdote about the stock market crash right before the great depression (it's been said it's a myth, but who cares, it's appropriate) Joe Kennedy stopped to get his shoes shined, and the shoe shine boy was giving him stock tips and telling him how to get rich in stocks. That day, he sold all the stock he owned, and the market crashed soon after. The moral of the story, when the shoeshine boys start talking about something, make sure you aren't in it.
These TV shows are made up of nothing but shoe shine boys. Go out on the street, ask anyone to give you a way to make alot of money quick, I bet you the majority will say real estate. Popular media, tv, newspapers, they all seem to push this nonsense with no regard for the real consequences. All shoe shine boys with their get rich quick schemes. There is only one way this mania will end, I'll give you a hint, it's not going to be with everyone a real estate millionaire.
I'll leave you with one last parting thought, an old poker quote..
If you can't find the sucker at the table, it's because the sucker is you.
Caveat Emptor,
Grim
13 Comments:
I don't really think it was the dot.bom/market crash alone that pushed people into RE, although that was definately one of the factors.
Coming off the dot.bom get-rich-quick scheme, everyone was in the money-mindset looking for the next free-ride.
WTC bombings happened, and shifted mindset again towards family and home. I feel that this was one of the major factors behind the remodel craze.
Greenspan & Co. dropped rates to unheard of levels and lenders lost touch with reality making it possible for just about anyone to buy.
I'm not sure which of these three I'd point to as the trigger here, although all three definately played some role.
Now, as to where people will put their money after this? Alot of folks have said commodities, but looking at oil and precious metals, they are near peak prices as well. I don't think the average joe will ever comprehend commodities or foreign currencies, and I think the market crash is still too fresh in the minds of many.
Believe me when I say I've been thinking and looking about the next big bubble, the folks that find it now will be very very rich.
Unfortunately, that requires that there is another bubble. If the housing crash puts us into a long painful recession (or even depression), the question won't be where people are putting their money, because there won't be any.
grim
Found this article about possible tax reform. And housing is a target.
http://www.latimes.com/business/la-fi-taxbreak8oct08,0,1112971.story?coll=la-home-headlinesh
Gold is great, if you bought it a while ago. While I think it's great for capital preservation, I really don't believe we'll see huge appreciation like in the past (only because we've already seen quite a bit of appreciation already). However, if the the fed can't keep tabs on inflation, you'll see that in the price of gold..
I've been looking to buy gold for a few weeks now, but the thing that stands out is the large difference in the bid/ask spot prices.. Seems the guys making the big bucks in physical gold are the ones buying and selling it.
The one precious metal that looks undervalued in comparison is palladium.. But I'm a complete neophyte, and I don't know why it's currently trading so low in comparison (or why there was a huge spike a few years back)..
As for why you never see housing as part of any inflation measures is because the government wants it that way. The CPI uses something called equivalent rent, and not housing prices in the index. Because rents are historically low, and home prices aren't part of the index, the government says there that it doesn't affect inflation because the rent on an equivalent home has not increased. The fact that rents have not risen but home prices have is *THE* biggest bubble indicator there is.
grim
It's another homebuilder bloodbath today.
Dominion Homes Inc (DHOM) down over 17% so far this afternoon. It seems the market was a bit spooked by profit warnings.
Other homebuilders on the slide as well, Toll Brothers (TOL) down almost 4%, Hovnanian (HOV) down over 4%, KB Homes (KBH) down some 3 and a quarter percent. Drops across the entire sector.
Seems the market has been reacting (overreacting or properly reacting?) quite dramatically over the past few weeks. The homebuilders look like they are on a neverending downward slide. While we don't have a real-time view into the U.S. housing market, we can certainly make some assumptions based on the movement of homebuilders. It looks like shareholders don't have any faith that past growth/profits will continue. This is most certainly a sentiment shared by home buyers. Either way, I believe these movements should be viewed as a harbinger of things to come in the real estate market.
The party is over and the hangover is going to be a nightmare.
grim
Commercial real estate has peaked.
5-6% cap rates suck.
Heard from a few sources going to open houses across the state. They said things were dead. Really dead. Spoke to some looking buyers. Most are aware that prices are to high and will only bid less alot less.
Surprising but true.
So you are saying soemone just bought a house for $1.7 mil now builder lowered $100,000?
lol. What happens when the builder lowers by $400,000? or $500,000?
Your fiend is going to wipeout all his bubble gains on this one. $85,000 deposit up in smoke. Hahahaha.
It's always fun on the way up but leverage does quite the destruction on the way down. Lots of fools going to be wiped out.
50% corrections in condos on the way at least.
In the early 1990's condos dropped by 50% in price. So why do you feel they will only drop 20-30%?
I know at the top it's very difficult to buck the trend, but believe me, anything with this kind of leverage will have a big drop.
Leverage works both ways..sharp moves in either direction. Now the unwinding of leverage will cause much distress and many stretched.
Those with sanity and discipline will be able to pick up a few pireces when the bust bottoms.
It is easier said than done. I wouldn't rush in there to quickly. Many trigger happy buyers need to be a little more patient. When bankruptcies are front page and real estate is doom and gloom it is hard to step up to the plate buy and go into massive leverage. I did most of buying in 1993-1994. 2 years after bubble pooped. This time around though I believe it will go down much faster and harder due to massive leverage and greater transparency through internet and 24 hr news.
another thing as mentioned here before is that credit availability dries up. Only those with pristine balance sheets and cash can have free reign to buy. Others will find it difficult so liquidity is definately tight. As the bozo lenders when awal in recent years they will hunker down and tighten up lending standards so to turn off the money supply.
6-7% isn't worth the headaches.
Believe me. As for escalating rents. I think rents are not going to soar either, so price is important.
in my opinion if it drops faster does not mean that it will bounce back quicker. Pessimism about real estate will grow.
People are getting laid off. Companies like AT&T LU Merck Schering Plough Pfizer dominated employment. Now they have been laying off in our areas. Salaries are not growing very much and are definately not keeping up with living expenses...house prices gas utilities insurances..
What is the cash for?
cash may just be the best investment right now. Noone can predict the future with any certainty.
But I feel very certain that housing is insane and irrational activity has been widespread. This will change.
I have been following a site now for almost 2 years and I have found it to be both reliable and profitable. They post daily and their stock trades have been beating
the indexes easily.
Take a look at Wallstreetwinnersonline.com
RickJ
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