Morning Folk!!
How can folks stay ahead of the game when they deny the
reality of the times? I am not sure what drives human nature. I just observe
how it manifests. I talked about the recession before there was a recession. It
bothered some. I guess for those guys I should just BS them because reality is
a bit hard to deal with. They are not pigeons, they are ostriches. The closer reality gets, the more they
bury their head in the sand and don’t want to deal with it. Cash reserves begin to get lower and the longer the downturn lasts, the better chance we have of hitting a 'Breaking Point.'
So here we are, the summer of 2010. We had that little blip
of an increased business cycle. That was just what it was, a blip. We are in some of
the most troubled times of most of our lives. I can’t remember when so many
things were at the brink. The brink and climax. The brink any way you want to
look at it. So many things at the very edge. The world is a tinderbox. This is
not going to be a boring summer. This is going to be some very unsettling
times.
But that does not mean there is not opportunity. That just
means it is time to make hay. Not be an Ostrich. This is the time to take a
risk, but you better bet right! This is not a time for big mistakes. It is a
time for a big win. But you have to be selective. Be patient. You don’t need
100, you need 1. Just 1 hit during this era.
We are in a hurricane of an economy. In that type storm you
can have ferocious winds and torrential rains one minute and then perfectly
calm the next. Then ferocious winds and torrential rains. The process repeats
itself many times. Until you get that final squall. Hang on, that is always the
worst one. The one that does the MOST damage because it hits when everything is
weakened. I believe we are going into the economic squall. Folks are weakened and the worst is yet to come.
The things I see I just don’t like. What if I told you that
the cost of homes could drop another 15%-50% no matter how good your property
or the location? I can draw the picture for you to show you EXACTLY why that is
LIKELY to happen. Not everywhere.
But let’s take this scenario from my local area.
You have beach areas and you have inland areas about 30
minutes from the ocean.. Originally because it was much less expensive inland.
But in time even the inland was built up.
So what happens when you own a $10 Million house in the inland area and
houses on the ocean are selling for $5 Million?? Well, you have a very big
problem. First of all you can’t sell that house inland. You can walk away. You may be
forced to walk away especially if you owe over $ 5 Million. So then what is the
value of that $10M house??
$3M????? Remember, you can buy that house on the ocean for $5M. The bank is likely to get it back. So timber!!!
The most expensive homes in the least desirable areas are about to crumble.
That is just a housing example and the reason I use that is because it will
paralyze folks for decades. They can’t sell, that means they can’t move. They
may not be able to afford it long term, so they just walk away. Collapse. It
will be played out in town after town and city after city. I really want to be
wrong, but the above case is happening everywhere at every level. Next to domains, nothing I pay attention to more than real estate and the weakness I see and the REASON for that weakness.
There is an equation here and it is based on time and years
and whether you will have the resources and/or income and how long. So if you
can wait things out, you can do very well. But the market out there is like
quicksand and I don’t think anyone has a handle on how this will all play out.
Countries going broke and states are out of cash. Believe it is not happening, fine.
Be an Ostrich. But things are unstable at best. They can spiral out of control.
Look around,, things are already out of control.
You can and should thrive during these times. But that is
only up to one person in the world. As I stated early on in this downturn, you
can hit the throttle and go for it, or you can pull back on the throttle and
surely get washed away. It is your choice and your choice alone…….Pigeon,
Ostrich, or Eagle.
Have a GREAT Day!
Rick Schwartz
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