Sobering... I'm thinking of cashing in what's left of my chips and heading off to a sub-trop beach where the only thing that bites are the sand fleas.
LOL... I can appreciate that.
Where I work, I encouraged people to get out of the market in August. I would even support moving assets out of the market now on a belief you will see a pattern similar to the path the DOW took in 1929-32.
HOWEVER...
I have to stress that there will be lots of opportunity in the market in the years to come and it remains a great place to do business. This is NOT the death knell of capitalism.
I would not speak that positively about Real Estate in the next 7-10 years.
Curiously, there is a posting on another site that talks about the market vs Real Estate. And I wholehearted agree with alot of it.
Here is that posting...
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Some people have argued passionately on this blog that the stock market is the definition of risk. They harbour fears the 1930 experience will be played out again, and a second sickening slide will come, ultimately robbing investors of 89% of their invested sum.
This seems based on an irrational fear of financial assets, images of Bernie Madoff and an inbred fear that anything you can’t pee on the side of (like a house) isn’t worth owning.
Fair enough. Stocks have been scary lately. And yes, it is possible they may sustain a slide like in 1929. But everything’s scary right now.
But when it comes to stocks, bonds, mutual funds and the like, at least there is a broad, public market in which valuations are determined. Stocks trade relative to each other, and based on the financial health and prospects of the businesses underlying them.
This is where real estate - at least residential real estate - is fundamentally different. My argument, deeply held, is that real estate investors will come out of this mess far worse off than equity holders who trade in the Stock Market.
Stocks may have lost half their value, while real estate is down about a third, but stocks will recover long before housing does, and it may be 2020 before a house in Edmonton or West Van once again achieves its 2007 pinnacle.
This is because the real estate market is not really a market. It’s just a just swap meet where people come to bid on things based on emotion, hormones or their own perceptions of supply and demand. Unlike a share in RIM, which is worth the same in New York or Kelowna and tied to corporate profitability, the value of a house swings wildly, uncontrollably and irrationally from market to market. House prices are dictated by the local economy, geography, neighbourhood demographics, surrounding housing stock, local taxes and societal trends, just as much as interest rates, consumer confidence and the availability of credit.
Over the last few years in Canada we have grossly distorted home values. Sellers were greedy. Buyers were fools. Ottawa primed the pump with Canadian subprimes. Realtors were irresponsibile. The media was bought off. We borrowed more mortgage debt than ever before to gobble houses many could not afford at prices which won’t be seen again for years. There’s plenty of blame to go around.
And one lesson is this: When assets get plumped for no good reason, they can get bombed just as easily when the tide turns.
So, look at the houses in this picture.
The one on the left has 2,978 square feet, the one on the right 2,634 square feet. The one on the left was built 80 years ago, the one on the right, 63 years ago.
The one on the left sits on a lot 35x160, and the one on the right on a lot 50x120. The one on the left has 6 bedrooms, and the one on the right has 5 bedrooms.
They are both active listings at the moment within downtown neighbourhoods of two large cities.
The house on the right is listed at $998,000. The house on the left is for sale at $300. (That’s not a typo... that's three hundred dollars.)
Can you guess where?
And then tell me why residential real estate is more stable than Research in Motion.
