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Five Things You Need to Know: The Price is Right, Illiquidity of Real Estate, Wag the Investment Dog, Back in the Day, Bluto Blutarsky


The absence of unlimited personal guaranties in a real estate deal is the only leverage an investor has vs. its lenders.


Editor's Note: While we congregate in Vail for Minyans in The Mountains 3, we asked each Professor to prepare some thoughts on fiscal literacy, how to listen to the market and their area of expertise.

1) Profits in real estate are created when buying at the right price. The sale process merely monetizes the gains.

2) Unlike other markets, the illiquidity of real estate can create periods when there are no buyers at virtually any price.

3) While residential real estate speculators may be a minority of overall buyers, they inflate and dictate prices for all market participants.

4) It rarely pays to the let the "tax benefit tail" of real estate wag the "investment dog."

5) The absence of unlimited personal guaranties in a real estate deal is the only leverage an investor has vs. its lenders.

Random Thoughts

  • When one is young, all things look bright and full of potential. As one grows older "things were definitely better when we were growing up." Later in life it turns out that things hardly ever changed, except as to how we perceive them. Is this true of markets as well?

  • From 30,000 ft., the decoding of the human genome / genetic engineering is to biotechnology what "broadband" is to digital media distribution, only the former might actually do some real good in the end.

  • This has been said hundreds of times, but not enough IMHO: in secular bear markets the Minx behaves so that bulls and bears feel a world of hurt.

  • Over the last 2000 years the average "civilization / empire" has lasted approximately 300 years, two-thirds spent ascending in power and influence and one-third spent declining into submission and – at times – disappearing. The U.S. was born 232 years ago. I believe it will prove to be the exception to the average, but not without some stern "internal" tests along the way.

  • Ted Kennedy? Tom DeLay? John "Bluto" Blutarksy? It would not even be close.
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