Go with the flow.
It was golden nugget. Some of the best advice I was to receive in the next 40 years or so and it was hidden in the last paragraph of a book on sailboat racing. It went something like this;
"...and most importantly never forget, on the course as well as life's endeavors-- Go with the flow".
Well I'm sure that book helped my sailing abilities. But I also remember (you never forget the really big mistakes) being put-off by the passiveness of that statement. Probably some ex-hippie interjecting his philosophy of life where it doesn't belong-- or so I thought. At age 12 I was going to conquer the race course and then move on to anything else I desired to succeed at... (Never mind the book was written by one of the fiercest competitors ever to sail).
Much later as I struggled through the epitome of personal challenge (trading stocks) it dawned on me what the book was actually saying. Or sadly you might say it was beaten into me. Repeatedly. But at least I finally got it:
On the water you can't control the wind; you sail with it. It does what it's going to do, you adjust to those terms and if you adjust better than the other boats you win the race. Because you can't out-smart the wind.
In stocks it meant exactly the same, it is not possible to out-smart the market. You trade within the path it's taking. You "Follow the money".
"The years teach much which the days never knew" -Ralph Waldo Emerson
Real estate is dominating today's headlines in a battle between the doomsayers predictions of utter collapse and NAR's ridiculously tenacious silver lining campaign. Somewhere in the middle is probably were it all shakes out but let me ask you this; does it really matter?
If you want to buy a house is it a good time? Answer: Go with the flow.
- The most popular investment in the United State is residential real estate. About two-thirds of Americans own the house they live in.
- The American mortgage system is by far the strongest and most sophisticated in the world.
- The government promotes home ownership with tax breaks and expansion of mortgage financing.
- Values are driven by inflation, population growth and high levels of employment (home ownership is about the only US investment in which inflationary gains are not taxed).
A seemingly contradictory principle that any successful "trader" in any market knows:
It is not possible to time a market.
And so I say yes- go buy a home. Stop tripping over dollars trying to save pennies.
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