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Thread: weekend commentary - Mr. Toad's Wild Ride

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    Default weekend commentary - Mr. Toad's Wild Ride

    "Asset Deflation 6: The Death of Real Estate
    by Steve Moyer


    "I had a stick of CareFree gum, but it didn't work. I felt pretty good while I was blowing that bubble, but as soon as the gum lost its flavor, I was back to pondering my mortality." ~ Mitch Hedberg

    I sell investment real estate in the San Francisco Bay Area. Have been for 25 years. It's a nice business. I've enjoyed it, and I value my clients.

    My pappy's a realtor. My grandpappy was a realtor. My uncle's a realtor; so is my brother. Heck, some of my best friends are realtors (and it takes a big man to admit that).

    That's why it pains me to give you the bad news, to wit: Real estate in America is officially dead. But only for a generation or so.

    In other words, it is time to sell all of your real estate, save for possibly your home. If you don't, you will likely regret it. You will gradually watch all of your equity disappear into thin air. And then, unless you have little debt against it, you will likely lose your property to foreclosure. It's as simple as that.

    The far better strategy is to sell now, even if you are disappointed with the selling price, take your equity (less any capital gains taxes you must pay) and put it into safe, interest-bearing cash-equivalents for a while. Do not put it into the stock market. Do not fiddle with bonds. Don't buy gold (for now, anyway). Stay away from the other metals. Just sit there. Don't be cute. Stop annoying your brother. And try not to be smug. Exercise that virtue known to Job as patience.

    Eventually you will be able to buy all the real estate you want, probably including the stuff I'm happy to sell for you now, for literally nickels on the dollar.

    I have talked Asset Deflation enough that I'm a light shade of blue in the face, but allow me once again to introduce myself: My name is Steve Moyer and I will be the host of Safehaven's upcoming new series, "CSI America: What the Hell Happened to Real Estate?!" which will be dominating the headlines for the next decade or two.

    In case you haven't noticed, or choose to stick your head in the sand, or don't know much about investment manias and credit bubbles, or think that real estate values "always go up in the long run," or believe that just because Ben Bernanke's Fed has a printing press, they can compel ordinary Americans to borrow increasingly reckless amounts of money, allow me to be the one to pour a big bucket of ice water over your head. The fact is, we have officially entered the frightening, post-NASDAQ-bubble, post-subsequent-real estate-double-bubble, credit-contracting, asset-deflationary portion of the 75 year cycle. So buckle-up for Mr. Toad's Wild Ride, people, because there is no looking back at this point. Mark my words, it's going to be nauseating."(snip)

    from

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    Default Re: weekend commentary - Mr. Toad's Wild Ride

    he may or may not be right about the real estate market in America. My intuition tells me he probably is.

    But when he advocates sitting on your money and doing nothing with it my static detector goes haywire. Surely he has a position. If he's that confident on his position he'd be shortselling REITs and LPTs. If he thinks gold is overpriced he should be entering forward contracts. I'd take his advice with an entire salt shaker worth of salt

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    Default Re: weekend commentary - Mr. Toad's Wild Ride

    ^^^ I have to assume that this new series is aimed at 'amateur' investors ... most of which don't have the credit / account connections to short sell borrowed stock shares or to trade commodities contracts. Either that or it's aimed at 'Joe Sixpack' 401k investors who aren't provided with any 'contrary' options in their 401k plate besides stocks / bonds / indexes / cash.

    You are absolutely correct that there are now many ways for 'amateur' investors to profit from a downturn in the markets. But a 6%+ return on an FDIC guaranteed loss free investment may have an appeal to some.

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    Default Re: weekend commentary - Mr. Toad's Wild Ride


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