Contrarian Investing in Denver

Contrarian investors have long been noted as the wisest of all investors. They do it the right way - buy low and sell high. They invest when the market is all doom and gloom, the news media is negative, and the cost of their investment is at a low point.

Look at the Denver real estate market as reported by the media (and this blog). Colorado has the highest foreclosure rate in the nation. Homebuilders have excess inventory of homes because they have overbuilt. State and Federal officials are investigating title companies, appraisers and lenders. Sellers are having to hold on to their homes longer. Buyers are nervous about making the leap. And on and on...

Here is what smart, contrarian investors see. They look at what is currently good about the metro Denver economy that will drive growth in the future: low unemployment rates, increasing job growth, lower fuel prices, low interest rates, excellent availability of mortgage money.

We often look at the newspaper, television reports, or online news discussing the "national" real estate market. Then, we make the mistake of applying it to the local Denver market. The East Coast and West Coast real estate has risen dramatically in recent years, while Colorado and most of the central part of the U.S. has seen steady, or only small increases, in home prices.

The definition of a contrarian is: "An investor who buys when most people are selling and sells when most people are buying. In practice, this is very difficult to do, partly for psychological reasons, but if done successfully can improve returns (definition from telusplanet.net)."