I was wathching TV the other day about this Great Bailout, and was stunned by a definition, that there are Innovators, Imitators and Idiots.
How darn right!
Innovators are those who follow the basic rule of Real Estate "buy when the prices are low, hold to it, and sell when everybody is buying" attributed to John Paul Getty. Innovators base their decisions strictly on the values, and are not swayed by presidential elections or the media.
Time to buy is when price is low. They know that the market will warm up and then even get hot. Innovators make the most money.
Imitators are tempted by low prices. They also know that the market will come back, but they are sure when. They are afraid that this time it may take much longer. They wait for some signs that the end is near, and they want to see the light at the end of the tunnel before they dive into investing.
They have a pretty good sense of the market, and are able to pick the early signs of the change, and then they are in. They may pay a bit more, but they are still early enough in the process and make good money.
Idiots comprise a huge non-discriminatory group of all races, national origins, genders, etc (and blondes - LOL). Contrary to the popular belief, for the purposes of this blog idiots (and blondes) are not mentally challenged. Sometimes and often times it is even the opposite. They simply make bad business decisions.
Idiots do not buy in slow market. They know about the cycles but they are sure that this time it is different. The market will never come back. They call themselves "fiscally responsible", "smart", etc. When the market starts warming up, they still sit on the fence, as they need to make surre that the market is stable, and their investment is guaranteed. So, they jump off the fence the last, pay top dollar in the already declining market, fooled by its inertia. Idiots are those who lose money. Usually a lot of money.
So, when the government comes up with Great Bailout Plan, is it for Innovators? Nope. Is it for Imitators? Mostly no. Is it for Idiots? You bet.
Why not just sit outside the casinos on the Strip and offer to offset losses just because the gambles were expecting to win, but lost? Look, Idiots are those, who turned the Science of Buying and Selling Real Estate into the art of gambling. And then the question is: do we reward it as a form of art or we reward gambling? Do we need to give money, Oscar, or both?
Excuse me for asking, are you an ... ah, forget it!
Why do we love idiots so much?
Jon Zolsky, your Daytona Beach Connection