Hi Brian,  I worry about you and the craps table.  I do have to say that my 401K did very well this year.  I agree real estate is a very good investment when it is well thought out.

I think this is a great analogy Brian!  Dennis Miller should be looking at you to become one of his writers!

So if you should ask yourself the tough question on how to profit from a changing market, and you think real estate would go down.. wouldn't the logical conclusion be to put your money somewhere else than real estate?

If you look at John Q Public assets, the vast majority of their asset wealth is in RE (although, oddly, their % of equity is at historic lows) . Any good financial planner knows that diversification is the key, so for people overweighted in RE, wouldn't the logical diversification strategy be not to overweight more, but instead find other assets to invest in? For people underweight in RE, but believing that the current market may be overvalued, they can still make a RE play without buying real estate. That is what REITs are all about.

p.s. What is a bubblehead?

The bubbleheads would be those trying to make the short run money instead of seeing the whole picture I believe, great blog, I clicked the link and read the rest as well. Very nicely done!

Mikey I agree with you about REITs, but I am a lot more skeptical about true diversification in the old style. I'm open to any of you telling me why I'm wrong I'm used to it lol 

Good analogy.  Real Estate IS a great investment --- 

Brain, I enjoyed the Post and the link to Bloodhound.  I have always been told that the best time to buy is when everyone is trying to sell and the best time to sell is when everyone is everyone is trying to buy.  You don't buy when the market is at its peak (little money to be made there) you buy when it is going down (the money will be made when it comes back up).  The trend has always been for house to be selling at a higher price when the market comes back up, then they were selling for when it went down.  Real Estate to me needs to be looked at long term, and not on flipping houses and then cry foreclosure.

I agree with you about 2007, I feel a change, and I think that people are tired of hearing about the doom and gloom from Chicken Little. 

Now on another note, Brian stay away from the crap table with the family vacation money, this is not a good way to invest it......LOL 

I'm sure they would loan you some money, for a great rate, right there at the casino so you could double down next time!

 Just kidding.  Our industry is enough of a gable for me.

Brian, around these parts, a Bubblehead is a submarine sailor, a term that many of us find rather "endearing."  Your posts are the ultimate tease! How can I NOT click on the link to Bloodhound? You bait your hook extremely well, my friend. And the fish at the end is ALWAYS a Keeper!

Pssst...It's us. Happy New To You...Sorry we think it sounds better without the Year. SVW.

Last year's words belong to last year's language and next year's words await another voice. And to make an end is to make a beginning. "T.S. Eliot"

From Broker Bryant and The Lovely Wife...Wishing You a Good New. ROAR!

Craps or real estate will choose the dirt but set aside some $$ for entertainment ..bubblehead, bait...to bloodhounds...hmmm

Anybody this smart should wear suspenders!

"You really don't want a 30% decline in housing prices because every financial asset you have will be devalued . If you're stashing your cash in the local bank, it will be gone because the bank will collapse."

Hmm, some markets have already fallen about 10%.  Another 20% and the banks will be collapsing?  Interesting theory.

What a risk taker, betting against the others at the crap table.  They usually get pretty upset about that, especially if they lost, they will blame you.

Aloha to all and have a Hauoli Makahiki Hou  (Happy New Year in Hawaiian)

Real estate has fallen some 20 % in the worst period since the depression.  That caused S&L failures and a significant decline in the s&p.  30% would decimate the economy.

Just a FYI, the "mike" on your other blog is not me.

Oh and you should listen to some lenders conference calls, the reason they say they can such lax underwriting for those loans and still protect their shareholders is that they assure the analysts that they sell all the risky loans off to the seconday market and keep the "good" loans for themselves (yes, they actually say this).  What is also interesting is how they account for negative amortization loans, when someone goes neg-am they still count that negative-amortization as revenue in the current quarter (even though that money isn't collected). So there are some "phantom profits" floating out there, and if those loans go bad, the lender will have to account for those losses sometime in the future.

Here are some lenders you can watch for their upcoming (or past) conference calls and quarterly reports if you are interested in learning more: CFC LEND NDE NEW WFC BAC NCC WM H DSL HRB FHN HMB WB

Wow, I just went through the comments over there after skimming them, I sure wish Noah was in my area in California I am looking for a RE agent like that where we see eye-to-eye I will keep up my search in the mean time.

Also, as for your last post re: doubling down, it is called the Martingale system and well I will let you research yourself why it doesn't work.

Real estate and stocks both have the same rules - Buy Low and Sell High to succeed. Be a contrarian.

You kind of sound like what I remember some stock analysts saying after 9-11.  It was suggested to buy stocks because it would help the economy at this very important time in history.  That strategy was pretty bad.  The market continued to go down for another year. 

Bubbles usually take more than a year to turn around.  Study the 1929 stock bubble and the 2000 tech stock bubble.  The big damage didn't start until after a year into the decline.  It's usually three years before they turn. I don't know exactly when the real estate bubble popped but I don't think it's been a year yet.  I think there is plenty of downside risk left to go.  There's a term for buying on the way down.  Something about catching a falling knife.  I hope things don't get too bad but the nice thing about markets is that you can make money when they go down as well as when they go up.  If banks are going to collapse, short the bank stocks. 

Tim:

Are you suggesting that real estate is a bad investment right now? I'm not saying to buy because it's your patriotic duty, I'm saying to buy because the upside will be good in the next 10 years and you might miss the bottom.  Certain markets are starting to reveal a bottom.

San Diego's bubble popped in the summer of 2005.  The Vegas bubble popped earlier than that when Pulte Homes slashed 30% of the prices of their homes one day with no prior notice. (I think it was late 2004).

Mikey:

Thanks for the info about the lenders you purport to be in trouble.  Many popped up in the recent boom and many will go the way of OwnIt in the coming year.  I find it intriguing  that a lender would tell a group of securities analysts to buy their stock because they shoved the bad loans to the very market they're enticing.  I'm not saying it's unbelievable, after the last 5-7 years, I'd believe anything.  I think the weak link in the Martingdale system are betting limits.  That has been my downfall in the few times I tried it.

Brian,

Thanks for the post. I clicked on the link and found the banter very interesting. Steady as you go, stay the course, as you hold your ground.

Brian,

Have you tried the dewey-don't system?  It is my bread and butter.  I read about it in the book "How to beat the craps out of the Casinos."  Drives some pit bosses crazy, but most are good sports. 

Brian... I knew exactly where you were going with when I even read your title.... overall, some good points. I will comment more next year....  ;o)  seriously though... I am heading out now.

Have a safe and happy New Year buddy....