It was interesting talking to you today about your decision with Dave to buy your own office space. It sounds like your decision is based on the old investment analysis that goes: real estate was up last year, it was up the year before that and even the year before that and for the last 2,500 years.
I can tell you for a fact it is this type of analysis that causes people to lose money in the stock market all the time. You see if you do rear view mirror investing, you will never get out of the market in time.
You need to look at what is in front of you and what is in front is higher gas prices, steel prices, gold prices, etc. and a dramatically falling dollar. This
means that soon Alan Greenspan is going to raise rates and they are going to rise VERY quickly. I could go on about all the U. S. debt held by foreigners that will come flying back into the United States and the exploding deficits, but you should get the picture. The music is about to stop.
You work in the real estate industry (The mortgage biz will completely dry up.). It sounds like you have lots of real estate investments (Rents can drop. Talk to people in San Francisco where rents are down more than 30%.) And now you want to buy your office place? Diversification, to some degree, is always a smart thing. To have all your assets in one industry is suicide.
Good luck, but now when the music stops, you can't say you weren't warned. I hope you really think about this. It's probably going to get real ugly out there in the market. Lots of people will lose everything. I hope you aren't one of them.
Robert Wenzel is Editor & Publisher of EconomicPolicyJournal.com and author of The Fed Flunks: My Speech at the New York Federal Reserve Bank.
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