Chapter 7: The Bottom Line is Uncertainty
Many years ago I learned the difference between Risk and Uncertainty. Here’s my take. Risk is the probability of drawing to an inside straight in poker, or rolling 7 in a game of craps. You know the odds and either you win or you lose.
Uncertainty makes a game much more difficult to play. With uncertainty, you don’t know whether you can draw another card or not, or if a card will disappear from your hand, or even if your cards may change faces before your eyes! Or, you may not know if the spots are on the dice that will add up to 7, or if the dice will ever stop rolling and if they do stop, they could even stop on their edges. So, something entirely outside the normal “chances” or odds can occur. It could be good or it could be bad. In fact, it could be VERY bad.
In normal times, we can manage risk and go about our business with confidence in our skills and judgment. In uncertain times, like today, totally crazy stuff can happen in which case you lose, no matter how well you have managed risk. I am not, however, arguing that we should run and hide.
So, over the past days we have walked along the road of where the Denver and Colorado housing market is and where some folks think it may be going. Lots of smart people are thinking about this sort of stuff all the time and come to different conclusions. That’s the way the world works. For our part, we continue to make private real estate loans with our borrowers in whom we have confidence. We take on new borrowers, too, when we believe they have the moxy and expertise to be successful. Success means we all make money, and that’s exactly what is pulling us out of this housing recession, despite the best efforts of the Cartel (big banks and the Federal government) to meddle and control the recovery.
Check out my other Blog Posts and Free Reports on my Web site for additional ideas about the market. Read more tomorrow on this fascinating subject!
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