Real Estate Investments: Avoid Like the Plague
Our professors and partners have come from as far away as Australia to contribute their wisdom and guidance. Throughout the next two days we will be highlighting some of their ideas on managing risk and staying in the game as catalysts for discussion.
-Zebra Fund's trading approach focuses on active trading of stocks and options as well as longer term positions in out of favor stocks. I utilize a mix of fundamental and technical analysis to select positions, with an overlay of macroeconomic considerations.
- Real estate bubble
- Macroeconomic imbalances
- European macro backdrop
Outlook for the financial markets:
- I believe we are in a liquidity/debt driven cyclical bull market for equities, within a secular bear market. I view the residential real estate market in the midst of an unparalleled hyper-leveraged bubble, while the commercial real estate market is being driven mostly by cash-on-cash yield investments as a substitute for low interest financial products. I am bullish on precious metals, energy over the long term, and specific tech names.
Thoughts on controlling risk and staying in the game:
- When liquidity trumps fundamentals shorting the latter becomes exceedingly difficult, while at the same time long positions grow exponentially riskier.
- Anything remotely connected to the housing business or consumer spending should be handled with extreme care. The current flattening of the yield curve may be offering Home/ATM users perhaps a last chance to restructure their balance sheets. Homeowners should make contingency plans for significantly lower home values.
- Low volatilities offer a reasonable opportunity to lock in some insurance for equity portfolios.
If I could give one piece of advice to attendees...
- Avoid all types of real estate investments or leverage like the plague.
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