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Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 01:22 PM   #81
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Re: Feeling dumb and poor as the market goes up?!

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Originally Posted by Nords
I think it should be acknowledged that some people are more comfortable with stocks and others are more comfortable with real estate.
Ya think?


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Originally Posted by Nords
What doesn't make much sense to me is avoiding an asset class just because it's populated by hucksters... and then casting aspersions on those who do own it.
To me either. You assume facts not in evidence. Obviously, the field of real estate has its share of hucksters as well. I am sure you know this since you seem (as indicated above) to have a firm grasp on the obvious. I do not own equities but for other reasons, including my personal belief that the returns do not justify the risks.

Now let's talk about the aspersions: In my very first thread on this forum, someone asked me if I was related to John Galt. I didn't respond to the poster since I had no idea what he/she was talking about or who John Galt was. I figured it was some kind of insider joke and let it go. I now understand that the joke was on me since it appears that John Galt is some kind of despised character with a checkered past here. This comparison was drawn apparently solely on the basis of the fact that I didn't own equities. Nice.

Shortly thereafter in another poster called me "out of line" and "obnoxious" for suggesting that others would be well-advised to follow a zero-equities investing approach. Of course, I made no such such suggestion. The poster later apologized.

So you will have to excuse me if I question your advice to discuss why real estate works for me. In addition to being thin-skinned, this board seems to be a bit close-minded (if not positively inbred) when it comes to the choice of investment vehicles. I don't know John Galt, but I am coming to appreciate what he was up against.
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Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 01:36 PM   #82
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Re: Feeling dumb and poor as the market goes up?!

to some extent i agree with you, there are far to many on the board who believe their way is the only correct way. products that may carry a sales load are shunned without knowing the entire story , any funds that arent index funds are no good and investment products that arent fully understood are shot down not even based on fact.

but overall the board is a wealth of knowledge and experience and has some very nice people. it all goes with the territory.

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Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 01:43 PM   #83
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Re: Feeling dumb and poor as the market goes up?!

HB, I suspect you got compared with JG because (at least to me) you come off as a bit, um, assertive about whatever it is that is your schtick (and besides having a thing for equities, I am not sure what that schtick actually is).

As unclemick has said (paraphrased), we're all just a bunch of well-mannered sweeties here. Take it easy and we'll all get along. For example, many/most of us have significant equities positions, so when you start casting aspersions about something you appear to have no interest/recent practical experience with, it tends to rub some people the wrong way.

Perhaps you could tell us about what kinds of RE investments you find attractive? I suspect there will be bargains in the near to medium term future and I'd love to get an experienced take on what to look for and how to manage it.
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Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 01:51 PM   #84
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Re: Feeling dumb and poor as the market goes up?!

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Originally Posted by brewer12345
HB, I suspect you got compared with JG because (at least to me) you come off as a bit, um, assertive about whatever it is that is your schtick (and besides having a thing for equities, I am not sure what that schtick actually is).
Brewer,

I invite you to visit my very first thread and point out to me what the cause of all the fuss is (including the reference to JG).
http://early-retirement.org/forums/i...5031#msg155031
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Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 01:52 PM   #85
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Re: Feeling dumb and poor as the market goes up?!

Hellbender, we were late to putting away money for retirement and the only way we made it to financial independence was through real estate investments. So, I appreciate your position. However, unless you buy into REITs, real estate investing is a lot of work and a lot of due diligence is required. I think the bias towards index fund type investing on this board is that it can be a low cost way of investing without the same risks as with investing in individual equities and it is not a lot of work. I certainly don't see the equity investors on this forum as being susceptible to what you call "equity hawks."

Over the last few years we have been selling out of real estate for two reasons. One, we thought that we could get more for our properties than what we ever would pay for them. Two, owing rental property is a lot of work and we did not have enough properties to get a good deal on outside management.

So, to each his own.


EDIT: I just read the thread you linked to where JG was mentioned. I wouldn't take it too seriously. I think he was mentioned only because he doesn't invest in equities and favors fixed income and real estate. Yes, JG has something of a reputation here, but very little of it has to do with the fact he doesn't invest in equities.

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Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 01:56 PM   #86
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Re: Feeling dumb and poor as the market goes up?!

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Originally Posted by hellbender
Brewer,

I invite you to visit my very first thread and point out to me what the cause of all the fuss is (including the reference to JG).
http://early-retirement.org/forums/i...5031#msg155031
Hmmm, I gues a certiain pugnacious tone may be what is ruffling feathers. No matter. How did the foray into hard-money lending go?
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Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 02:05 PM   #87
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Re: Feeling dumb and poor as the market goes up?!

Compared to stocks, real estate is easier to understand, and returns are easier to predict. I can calculate the cap rate on any property I buy. And I know that the fundamental driver for both capital appreciation and increases in rental dividends is wage increases. Any appreciation over the rate of wage increases is almost always speculative, and when speculation drives my yield low enough, that gives me a clear signal to sell.

With stocks, the speculative noise often seems to drown out the fundamental signal. Most stocks pay a lousy dividend, so I have to base valuations on earnings. Anybody who has ever worked in a public company knows that earnings are "managed," so that doesn't fill me with a lot of confidence in earnings as a metric.

We're also at a very strange place with stocks. Earnings are the highest ever. Some of this is due to the run-up in oil. Some is due to the recent spread between short- and long-term interest rates. Neither trend is sustainable, so it'll be interesting to see what happens to earnings (and stock prices) in the next few years ....
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Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 02:09 PM   #88
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Re: Feeling dumb and poor as the market goes up?!

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With stocks, the speculative noise often seems to drown out the fundamental signal. Most stocks pay a lousy dividend, so I have to base valuations on earnings. Anybody who has ever worked in a public company knows that earnings are "managed," so that doesn't fill me with a lot of confidence in earnings as a metric.
I disagree. With sufficient fundamental work, it isn't hard to separate out the fluff and it is much easier if you focus on cash flow.
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Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 02:21 PM   #89
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Re: Feeling dumb and poor as the market goes up?!

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Originally Posted by wab
Compared to stocks, real estate is easier to understand, and returns are easier to predict. I can calculate the cap rate on any property I buy. And I know that the fundamental driver for both capital appreciation and increases in rental dividends is wage increases. Any appreciation over the rate of wage increases is almost always speculative, and when speculation drives my yield low enough, that gives me a clear signal to sell.
Maybe yes, maybe no. I know a real estate investor who got into the business in the early 70s. He bought houses and apartment buildings to rent. Leveraged to get in, but the cash flow was just fine. Then in 1978 our local economy crashed with the steel industry. We lost a good portion of our population. People moved out. People would get behind on rent. No one was buying anything. He almost lost everything, but barely managed to hang on. Fortunately he did hang on and kept investing in real estate. His net worth now is probably 20+ million dollars.

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Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 02:27 PM   #90
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Re: Feeling dumb and poor as the market goes up?!

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Maybe yes, maybe no. I know a real estate investor who got into the business in the early 70s. He bought houses and apartment buildings to rent. Leveraged to get in, but the cash flow was just fine. Then in 1978 our local economy crashed with the steel industry. We lost a good portion of our population. People moved out. People would get behind on rent. No one was buying anything. He almost lost everything, but barely managed to hang on. Fortunately he did hang on and kept investing in real estate. His net worth now is probably 20+ million dollars.

Sounds like an issue of too much concentration and leverage, rather than anything RE specific. With too much concentration and leverage, you can blow yourself up with almost any asset class, given enough time.
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Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 03:54 PM   #91
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Re: Feeling dumb and poor as the market goes up?!

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Originally Posted by Martha
Hellbender, we were late to putting away money for retirement and the only way we made it to financial independence was through real estate investments. . . . . .real estate investing is a lot of work and a lot of due diligence is required.
So, if you had it to do over again, would you avoid real estate because it requires more effort than index fund investing?


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Originally Posted by Martha
Over the last few years we have been selling out of real estate for two reasons. One, we thought that we could get more for our properties than what we ever would pay for them. Two, owing rental property is a lot of work and we did not have enough properties to get a good deal on outside management. .
I sold my rentals to. Also for two reasons. 1) I was planning to move upon my iminent retirement and do not prefer to manage from long distances and 2) the market was obviously long in the tooth. Easy decision .. . . . no regrets.



Quote:
Originally Posted by Martha
EDIT: I just read the thread you linked to where JG was mentioned. . . . .I think he was mentioned only because he doesn't invest in equities and favors fixed income and real estate.
That's the conclusion I came to.
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Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 05:24 PM   #92
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Re: Feeling dumb and poor as the market goes up?!

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Originally Posted by hellbender


So, if you had it to do over again, would you avoid real estate because it requires more effort than index fund investing?
Absolutely not. Of course, this is easy to say because my husband did all the work.
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Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 05:25 PM   #93
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Re: Feeling dumb and poor as the market goes up?!

my only regret is i didnt put everything in my fund portfolio and didnt do the real estate. i could buy almost 3 of everything today.
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Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 05:27 PM   #94
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Re: Feeling dumb and poor as the market goes up?!

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Originally Posted by wab
Anybody who has ever worked in a public company knows that earnings are "managed,"
This is a good point. Most folks don't know/understand this.

JG
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Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 05:38 PM   #95
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Re: Feeling dumb and poor as the market goes up?!

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Originally Posted by brewer12345
Sounds like an issue of too much concentration and leverage, rather than anything RE specific. With too much concentration and leverage, you can blow yourself up with almost any asset class, given enough time.
Concentration yes. He never has invested in anything but real estate and all the real estate he initially invested in was in one community.

Too much leverage? Only in hindsight. As I said, the properties cash flowed just fine when purchased. It was the economic crash that was devastating. If you tenants move or can't pay rent, it doesn't matter how much leverage you have.

But then again, he ended up very very rich.
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Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 05:43 PM   #96
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Re: Feeling dumb and poor as the market goes up?!

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Originally Posted by hellbender

In my very first thread on this forum, someone asked me if I was related to John Galt. I didn't respond to the poster since I had no idea what he/she was talking about or who John Galt was. I figured it was some kind of insider joke and let it go. I now understand that the joke was on me since it appears that John Galt is some kind of despised character with a checkered past here.
Hello. First, being compared to me is kind of an honor. (I'm infamous). Secondly it's a good group here. I even enjoy the clueless and not so bright posters
(far far less numerous than in society in general). Finally, I kind of enjoy the
debating (fighting?) and insults/invective. But, that's just me havin' fun.
It's certainly not everyone's cup of chowder.

JG
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Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 05:48 PM   #97
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Re: Feeling dumb and poor as the market goes up?!

I've always seen this board as "asset class balanced" - not necessarily "pro stocks" (although there are individuals) or "pro RE" (although there are some individuals).

What I think everyone has in common is developing a "perpetual motion financial machine" to produce an income stream from an asset base, at acceptable risk.

Everyone's "machine" is different to suit their needs/comfort - made up of portions of asset class components - stocks, bonds, RE, TIPS, commodities, etc.

Each asset class has an average return, deviation of returns, and correlation factor with other asset classes.

To me, what is most important is understanding the "power of the total machine" - mixing stocks, RE, bonds, etc - what is the return/deviation of the overall portfolio.

I don't understand the "___ asset class is best" comments.

I sleep at night best when my eggs are in several less-correlated baskets (baskets purchased on sale at Walmart).
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Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 05:54 PM   #98
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Re: Feeling dumb and poor as the market goes up?!

Lately its hard to find asset classes that dont correlate together. seems like bonds, stocks real estate and commodites are all following the same ques.


we have days all are down together. i guess eventually if we get a strong enough trend one way or another the more normal deviations will apply but for now looks like they all go together.
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Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 05:59 PM   #99
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Re: Feeling dumb and poor as the market goes up?!

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Originally Posted by Martha
Absolutely not. Of course, this is easy to say because my husband did all the work.
This guy sounds like a prince. Suggest you hang onto him like grim death.



JG
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Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 06:24 PM   #100
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Re: Feeling dumb and poor as the market goes up?!

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Originally Posted by Mr._johngalt
Hello. First, being compared to me is kind of an honor. (I'm infamous). Secondly it's a good group here. I even enjoy the clueless and not so bright posters
(far far less numerous than in society in general). Finally, I kind of enjoy the
debating (fighting?) and insults/invective. But, that's just me havin' fun.
It's certainly not everyone's cup of chowder.

JG


Hi John,

I halfway thought the purpose for the original inquiry about my relation to you was simply to get me to say "Who is John Galt?"

I always considered "assertive" and "pugnacious" to be desirable qualities. Sounds like you might agree.
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