One thing that irks me about my industry is how often I hear colleagues blaming the media for market woes. Like, everybody who’s a journalist works for some sleezy tabloid, and they all got together one day at some secret meeting and decided that the boom was over and that it was time to pop the bubble and ruin the real estate market for everyone, everywhere. Puh-leese!
While at NAR, I spoke at a concurrent gathering of the Newspaper Association of America about real estate blogging, how it affects my business and theirs. I wasn’t in front of the editorial people. I was in front of the business development people who sell brokers, agents and affiliates so many zillions of dollars each year in print and online advertising. I believe I was asked to speak as an example of the atypical Realtor, their fading customer, and yet, perhaps the future of real estate.
It was an interesting exchange. I expressed my disinterest in wasting any more money on print ads, given that 83% of people seriously interested in buying or selling are doing their research online, while at the same time expressing disinterest in overpriced banner ads that yield little in the way of trackable results. I implored them all to move to a Google Ad Words model that serves affordable, contextual text advertising that can be easily changed to improve clickthrough rates, charged on a per click basis.
But I also learned that in most major metropolitan markets, the most highly trafficked websites are those belonging to the dominate local newspaper. Why is that? Because they are a trusted source. Why are they trusted? Because journalists have their own set of standards and ethics to which they must subscribe to maintain credibility. For each published article, they are required to conduct diligent research, talk to multiple sources, check their facts and submit their work for editorial review. It’s not a perfect system, but it works most of the time.
The media didn’t conjure up this market downturn. And it’s not their fault that it continues. Sure, maybe they get excited about what they discover and sensationalize it some, just like we all did when the market was hot, prices were going up and everyone was making money hand-over-fist. No, the market evolved on its own based on many factors that we’ve all discussed ad nauseum on this blog. It is what it is. The media only harps on it further because it’s not over yet. As long as there is news they will report on it. It’s what they do. When there’s no more news in this arena, they’ll turn to something else.
I can’t tell you how many times I heard this in the halls at NAR… "The media is so negative. They’re scaring all the buyers out of the market." I’ve even heard this occasionally in my own brokerage. Some may even say this blog contributes to the so-called problem, as I freely link to negative media reports if they seem relevant to what I see in our local market, thanks to the input from our many readers.
Yes, there’s always more than one side to every story. And you know me… I will point out the bright side at the risk of being skewered, because it’s there. It’s a possible alternative. But to simply blame the other side, to brush aside the opposing opinion without really considering where it’s coming from, that’s just pure weakness.
Marc Davidson over at Inman News published an outstanding column on this recently. Hopefully they won’t mind the reprint:
"Media, media bo bedia,
Bonana fanna fo fedia,
Fee fi mo media — media!
Come on everybody, let’s play the blame game
The media’s effect on real estate was the conversation that rose
most audibly from the panel sessions, lobby meetups, parties and hoopla
in Las Vegas during last week’s National Association of Realtors show.
I couldn’t escape it. It popped up in nearly every discussion as an
element of accepted wisdom about the past, present and future of our
industry.
CNN, The New York Times, The Wall Street Journal, Fortune and the like are in devious congress, a cabal that’s intent on destroying the real estate industry as we know it.
I watch the news, read the articles and bear witness to my own real
estate investment woes. I too have participated in the blame game. But
as I sat at Gate B20 waiting for my flight home I started to think
about how ridiculous this proposition truly is.
Maybe it was the shear exhaustion of the conference that lulled me
in an open cast of mind. Maybe it was the two agents who sat beside me
discussing the dead real estate market to which they were returning —
the one the local press had "all but written the obituary for." Maybe
it was the fact that the security gauntlet I just passed through — and
the "Orange Alert" status in which we all live — did little to
dissuade me and 26,000 other real estate folks from traveling, living,
partying, working and embracing life this week.
Sitting there, inside the terminal, about to board a United Airlines jet, I began to think outside my own box.
Deflection
John Burroughs once wrote that a man can fail many times, but he
isn’t a failure until he begins to blame someone else. By that measure,
we are involved in a community failure. By assigning such power to the
media we’ve assigned an equal amount of weakness to ourselves.
There is no conspiracy in the media. No cabal. No calculated
destruction. I know of no summit that has taken place where editors
gathered to declare a jihad on real estate. The victimization we are
experiencing is self-induced, a product of our own failure to offer a
countervailing force of opportunity.
If the media can be blamed for anything it’s their penchant
for sensationalizing. But the only reason real estate is victimized by
this is because, unlike other industries that are scrutinized by the
press, real estate does little about it. Yes, you will say, "NAR has
spent millions on ad campaigns to get buyers off the fence and
highlight the opportunities that abound." Put yourselves in the
consumers’ shoes for a minute. Are ads like that really doing it for
you?
Fast Food. Tobacco. Domestic auto making. Music. The press covers
these industries with the same zeal and greater skepticism than real
estate attracts. I read tons of stories about the dangers of trans fat,
the backwardness of the major music labels and the evils of foreign oil
dependency, yet Americans still pound their Big Macs while driving
their gas-guzzlers.
What these other industries have and what real estate doesn’t are
well-oiled marketing machines. They have a consistent message that
deflects the heart attack in a box with a two-all-beef-patty jingle.
Carmakers goose us with an idea of style that makes us figure that,
hey, as long as the earth is melting, at least we’ll go out looking
sporty. Local governments have mastered the art of beckoning residents
to hurricane-prone, flood-worn and tornado-infested communities because
they can — for better or worse — reach a place in the mind that
triggers desire.
So if the American consumer is spooked by the media, what is real estate going to do about it?
Hey, let’s throw a party!
If you woke up the day after the NAR conference and read this headline, "30,000 Realtors whoop it up in Vegas while millions of Americans face housing ruin," what would you think?
Or, if the writer spun the story of last week as "a massive gala in
Sin City hosted by the National Association of Realtors where tens of
thousands of real estate agents, blinking like Christmas trees,
congregated in sybaritic suites and carelessly gambled away the profits
from the recently ended real estate boom."
Given the condition of the market, that’s exactly what last week
could look like to the media. If such a story is written, we’d have
only ourselves to blame for believing that what we say, write, put
online, and do as representatives of this business goes unnoticed by
the public.
Beating the media at its own game
I have a vivid recollection of post 9/11. The airline industry was
decimated. Hotel rooms were collecting dust. Joke writers for Leno were
glued to news. The country was handcuffed and afraid to go outside
until first-term George Bush stepped up and told a frightened nation to
get on with their lives, to fly planes, book hotels and get back to
enjoying our American opportunities.
That is what a leader does. A leader gives marching orders that
stimulate positive action. This is precisely what is not happening in
real estate and why the media coverage of the market is getting so much
unwarranted attention.
Honestly, anyone can be a leader. Real estate is so local, that while it would
be great if NAR stepped up to the plate with a more convincing message,
people would be unlikely to heed it. But they do know who their local
Realtors and brokers are, and they are looking to them for reassurance.
Want to beat the media at its own game? Be a leader in your market.
There are a few out there. They are holding town hall meetings with
their customers, as one broker friend of mine has, where honesty about
the market is the order of the day. They are the agents who have
decided to turn off their lapel lights and turn on their imaginations.
They are the veterans partnering with younger agents to connect more
authentically with a new generation of customers.
They are telling a story of opportunity that makes griping about the media seem silly. You can too.
Marc Davison is a founding partner of 1000watt Consulting."
stjoe
Of course you blame the media. Heaven forbid the fault might lie within us, or the mortgage industry with its new improved loans, or the financial industry that bundled up subprime loans and sold them to the titans of the financial industry as AAA quality bonds.
But I would ask the following question of the average realtor: hypothetically speaking, how much money do you think you would have made the past few years if mortgage underwriting had been more stringent: e.g., no state income loans, a minimum of 3% down, all loans had to be fully amortized from the first payment?
Now some realtors would have made just as much money. But my gut reaction is that the good old days of two or three years ago would look a awful lot like the current market. But then what do I know. I am NOT a realtor.
SJ
smarten
I have two reactions to your post Diane.
First, I thought that what went on in Vegas stayed in Vegas? What’s wrong with you people?
Second, Jim Kramer [Mad Money (CNBC)] closes each night’s show with the following: “there’s a bull market out there somewhere, and it’s my job to find it!”
I’d personally like to see YOU AND GUY find that market in Reno/Sparks real estate, and then to share it with your loyal group of bloggers so we can ALL profit while the doom and gloomers sit around listening to the media.
It is for this very reason I again ask that you consider regularly featuring a “deal of the day” thread [not just in wordspeak, but REAL deals of the day]. Tell us about that beautiful SFR you’ve just again previewed [in the trenches] that’s down 37% from its 2005 high. Tell us about those sellers who are desperate because of whatever [something you’ve learned “off the record” from a fellow agent]. Point us in the direction of micro-bull markets within Reno/Sparks because THEY DO EXIST.
Of course these are just my opinions and I could be wrong…but I don’t think so!
DERRICK
Ofcourse there are many oppurtinities for buying a great property in reno at a great price.. RIGHT NOW EVEN! However If you need to be pointed in the direction and cant do your own DD then you aren’t serious about investing or buying…
Which brings me to my point. Are you looking to buy smarten?
Allen Murray
I agree with Smarten and Derrick both, is that possible? Real estate deals in this area do exist, however if you need someone else to point them out to you, you probably aren’t a real investor. One thing that I find interesting is the recent discussion on this blog about whether or not a recent house in Somersett that sold was really worth what the buyer paid. Obviously, to the buyer it was, but that fact that several here are questioning what that house will be worth 6 months from now may be a sign that the bottom is in sight. Nobody knows when that will be, but the fact that the discussion has turned from “real estate prices are declining” to “where are the deals?” or “do you think that house that sold will be a deal 6 months from now?” is a definite change of tone.
Guy Johnson
Allen,
Good observation on the change in tone of some of the comments of late.
– Guy
smarten
Derrick wrote, “if you need to be pointed in the direction and cant do your own DD then you aren’t serious about investing or buying…”
Interesting. Do I apply the same litmus test to your stock market short sales Derrick? Are you, being age 28, so much more savvy than the true professionals out there? Let me ask the question another way; how much did you make shorting the market this last week or weren’t you serious enough to catch this dip?
There are a number of us who aren’t living in Reno/Sparks and therefore, NEED pointing. Even if we lived here, with sellers being the way they are on pricing, it’s not an easy task. But that certainly doesn’t mean we’re not “serious.” When I look for a deed of trust investment, for example, I rely upon my mortgage broker to bring it to me. I don’t presume I know more than professionals in the field that are originating these things every day of the week.
Here Diane and Guy are in the trenches everyday and I’m CERTAIN they regularly see properties that in their opinion are really, really good deals [especially the ones offered by other agents]. I think they’d be doing us all a service if they shared their findings with some of us. After all, we’re ALL their potential clients. Of course if we don’t think their findings are good enough, I’m confident we’re serious enough to NOT act upon them.
For an example of what I’m talking about, take a look at Don Kanare’s musings for Incline Village [www.insideincline.com]. Whenever Don finds a super deal, he publishes an investor alert together with his reasoning. I find this to be extremely helpful. And of course if any of Don’s readers agrees with him, Don gets another commission out of the deal!
As to Allen’s observation regarding the change in tone in some of our comments as to the state of the local market some 8-12 months down the road, I find it to be very astute. I certainly didn’t connect the dots but now that Allen has, IMO that’s where the bottom lies.
Allen Murray
Smarten, I think you might be correct on your 8-12 mo. prediction, thats what most of the pros are saying also. I’ve said this before and I’ll say it again, if you are looking to the MLS for deals, you’re wasting your time in my opinion. The last 6 properties I have purchased were not listed, although I get sent “deals” all the time from Realtors. If the Realtor is doing their job, properties should be listed near market value. If there are any deals in the MLS they usually last a day or two at most, just my opinion. I think the market conditions this spring will tell us alot….get your checkbooks ready!
SkrapGuy
To Smarten and Allen:
Are you guys calling the bottom of the housing market in 8-12 months?
What objective criteria might I look for to signal that the bottom is near?
Rising sales volume?
Declining inventory?
Rising prices?
Some combinatin of the above?
A change in the rent v. own ratio?
Just curious.
Also, I guess if you can call one market, maybe you can call them all. So would you be willing to share your thoughts on where the Dow, Nasdaq, and S&P will be also?
Thanks.
Allen Murray
SkrapGuy, none of us know when the exact bottom or top of any of these markets will be. A successful stock investor recently told me that bottom and top feeders never make any money and I have to agree. If you are waiting for the absolute top or bottom of any market before you jump in, you will be a little late. When you see flip this house or flip this stock shows on TV, its probably a little late. I wouldn’t recommend you buy Google now, its too hot. If you’re just looking for a place to live, buy when you feel like it. I just heard of a 2800 sq. foot house near Red Hawk that formerly sold for $600K for sale now for $320K. Will this house price continue to fall? I’m not so sure.
smarten
Hi SkrapGuy –
Thanks for the invitation, but I DON’T mess with the stock market [but Derrick does]. If I want to gamble [and that’s exactly what the stock market is IMO], there are plenty of other options right here in Reno!
Insofar as the real estate market is concerned, I’ve said before you WON’T know you’ve hit bottom until maybe 3 months after-the-fact. But the dots I wasn’t connecting before Allen raised the subject were those related to the consumer confidence index; i.e., what a number of learned consumers are expressing on this blog [this is one of the two “objective criteria (you) might…look (to) for…(a) signal that the bottom is near”]. I used to call it the dentist effect [when dentists start purchasing stocks, it’s time to get out of the market].
I believe Allen and Guy are correct; the tone of some of the recent posts seems to have changed. For many months many posts predicted this market was in for a big correction. Then it started correcting and even Diane had to admit that RI and Lindie, as negative as they were, were actually correct.
Now we’re no longer talking about “corrections.” We all seem to be in agreement that the market has been correcting; many sellers and their agents are dead and just don’t recognize it yet; and as a result, the market still has farther to drop.
But for the first time, you’re starting to hear things like how much more does a property like Russell Pointe have to drop in price before it becomes what Michelle would label a “good value?” Derrick is talking about it soon becoming a good time for him to upgrade his Spanish Springs home [consequently he’d better save more so he’s ready to move on short notice]. According to Tom who has been monitoring Montreux for 1-1/2 years, for the first time prices in Montreux are starting to soften and if that former $3.5M property comes on the market for let’s say $1.75M or so, he would be interested.
And all of this is the point. Rather than making hypothetical guesses as to when will be a “good time” to purchase, some on this blog are actually coming up with targets [or they’re at least asking what the target should be]. Those targets aren’t really based upon any particular point in time [like 12 months from now] but rather, a reduction in pricing compared to 2005 prices. When will those price levels be reached? No one really knows for sure but the fact you and I are talking about it tells me the answer is sooner rather than later.
Remember, I’ve opined that when the rent versus own index reaches 60% or so, it starts to make sense to own [BTW, this is my second “objective criteria”]. Since rents aren’t likely to increase within the next year, the only way we get to this ratio is for prices to drop. And when they do drop, as we all know they’re going to, you’re going to begin seeing sales.
How long will it take to get there? Given most professionals think we still have another 10% or so reduction to go in the median price, I don’t think 8-12 months is out of the question [do you?].
So that’s my thinking. What’s yours?
Reno Ignoramus
I agree with Smarten and Allen that there will be occasional deals to be had, especially as the occasional seller moves out of delusion and stands out in the sea of denial that still engulfs most sellers.
But the suggestion that the market may be turning for home?
Today there are YEARS of inventory in every price segment of the Reno-Sparks market.
Only 5% of all listings sell every month.
Less than 4% of houses over $500K are able to attract an offer.
What suggests all these leading indicators of the market are going to turn around in 8 months?
I am not being facetious. But I agree there has to be some objective criteria to even make a prognostication. What market markers suggest improvement? Sales volume is declining, not increasing. Inventory is increasing, not declining. Sales prices, by every measure, per sq. ft, median, and avergage are dropping, not rising. More and more REO appearing on the market. Short sales becoming commonplace.
Guy’s data posted today shows the developers are, predictably, strangling resale sellers. We may soon be at the point, as GreenNV has pointed out, where the number of NOD recorded in a month is larger than the number of houses sold.
Things getting better in 8 months? Please, show me what, today, suggests that.
Just my 02.
Allen Murray
RI, I am surprised that you agree that there are a few deals to be found. Would you have said that 6 months ago? I think we can all agree that this market free fall cannot continue its downward trend at this rate forever, if it did, in 5 years all real estate in Reno will be worth zero. I don’t have any data, but the fact that we are discussing possible deals is a change in tone. My buddy just sold his house in 60 days, it was priced right. Zillow has my house up $200K from 3 months ago. That house in Red Hawk for 1/2 of its peak sales price doesn’t sound too bad. When do you think we will level off? Are you going to wait till the data shows that we are on an upswing before you buy?
smarten
RI. Things are getting worse as you recite. But that’s TODAY’s news and when conditions stabilize [as opposed to returning to “normal”], I trust you’d agree we’ve reached bottom. That will be TOMORROW.
You ask what objective factors can we point to now that suggest stabilization in 8-12 months? Obviously none. But what objective factors can you point to now that suggest the downward spiral we’re in is going to continue forever? Or for 3 years? Or for 8 months?
If less than 3% of inventory is selling there’s really not much farther to go before we’ve reached bottom, is there? So as more and more people start talking of it being a good time to buy; and as prices continue to drop so that the disparity between the cost to rent versus own diminishes; you will start to see the “objective factors” you crave. But remember when that happens, it will already be AFTER the fact because it will take a good three months or so after conditions have stabilized, before you’re actually able to recognize what has happened. So if you could see those factors now, you’d know we had reached market bottom three months ago, wouldn’t you?
12 months from now is the worst time of the year to sell, and it’s 2009. That’s nearly 4 years since the height of the market. So is my reasoning really so out-to-lunch?
And after all, I’m not saying buy in 8-12 months per se. I’m saying that if you’re a buyer, target what it is you want, and at the price you’re willing to pay. And when you get there, have the confidence to pull the trigger. If it’s not the bottom of the market, it will certainly be close. And if you never reach your target, you’ll know your predictions were unrealistic.
SkrapGuy
Smarten it just seems to me we have more than 10% to go before we get into good deals. In many cases, a lot more than 10%. Now I don’t mean to pick on Diane here, but look at all her listings that appear on the slide show in the upper right hand corner. Are you saying that at 10% off, those are all good deals?
At 10% off, are any of those good deals?
smarten
SkrapGuy. I never meant to suggest that a 10% price reduction off of some of today’s unrealistic prices would represent the bottom of the market.
What I said was that many professionals are predicting another 10% or so reduction in the MEDIAN PRICE.
According to Guy, today’s median price is LOWER than it was in January of 2005. So for it to drop another 10% or so puts it at about $250K. I submit to you that is substantial [maybe Guy can share with us when was the last time the Reno median price was $250K?].
Reno Ignoramus
Allen, I suppose I may actually wait until the data shows we are on an upswing. Because, as you very correctly point out, we never know when we are at the bottom (or the top) until after we have been there. So to the extent I will wait for the data, then yes, I will be 5-6 months behind the bottom. (My belief is that about 5-6 consecutive months of improving indicators should signal the bottom). But if this market continues its descent as I suspect it will, being 5-6 months late won’t be so bad at all. I suppose it’s just my investing philosophy. I have always pretty much sold out “too soon” and gotten in “a little late.” I’ve rarely timed anything perfectly. But I think you can do pretty good with that approach.
Let me ask you your thoughts on another aspect. After we hit the bottom, whenever that may be, then what happens? Do we go into a period of stagnating prices, not really going up or down? Do prices return to historical norms, essentially pacing inflation? Just how far out can we take this crystal ball?
Happy Thanksgiving to you. And all.
Dave B
Diane,
You are correct when you write that the press hasn’t created the problem. But I think that they don’t tell the whole truth either. How many times do they report partial information or statistics that are so general in nature as to be considerd worthless. In my market, one would think that the world as we know it has ended. “Foreclosures in Santa Clara County are at an all time high” etc. Sure this is factually correct, but its implication is that foreclosures are happening all throughout the Santa Clara Valley (and in large numbers). Sure the east side is heavily affected, but the northern part of the valley has been relatively sheltered. Homes are selling in Los Altos, parts of Mountain View and Sunnyvale, but that isn’t being reported. Why? Because it doesn’t sell.
I’m not harping on the newspapers, they’re trying to survive. But I am harping on the perceived power they have to alter reality just a tiny bit. Unfortunately they are the “trusted source” for information in a field where we should be. I’m also harping on our own trade organizations (NAR and CAR) and ourselves as we have done nothing to change the public perception that Realtors are one rung from the bottom on the sleaze ladder. Its our responsibility to move up that ladder.
Perry
I know this may be an over simplified way of looking at things but when my wife and I sold our last house in Aug 04’ I used pendings as a way to determine when it was time to get out. I started to see pendings decrease in my neighborhood. We lived in a poorly built time capsule in Southwest Reno. I remember telling my wife that I thought the market was starting to change and that if we were ever going to sell that worn out house it was then. On the surface the market seemed hot as the house sold in 45 minutes but the truth lay just below as people that came through while we were working out the offer said they thought the house priced a little high.
If you search 4 bedrooms in Northwest Suburban it seems like things are improving. Two months ago you would see very few pendings matching these criteria. Of the first 50, 8 have an offer. The average price of the listings is $148sq’. That number is slightly skewed as one of the homes is priced at $192sq’. Two of these pendings are also foreclosures owned by Countrywide. I know that my square foot analogy may be simplistic but I think these homes are of similar quality and location so I say they offer a base price of what moves. While I’m not calling the bottom, there does seem to be a price at which stuff moves, even in this market during the holidays.
DERRICK
“thanks for the invitation, but I DON’T mess with the stock market [but Derrick does]. If I want to gamble [and that’s exactly what the stock market is IMO], there are plenty of other options right here in Reno!” By Smarten.
I respectfully disagree with you comparing the stock market to that of gambling. Since you cant make the connection I will do it for you.
When I or anyone buys shares in a company we are given part ownership of that company, sure the stock price can change up or down, which is based on a number of people trying to figure out how much profit shareholders will recieve, Lets not forget dividends either (I have yet to see a slot machine that pays a dividend), that is if you understand what I mean by divivdend,
Anyways, when you look at the LONG TERM picture a company is really only worth by what it can make in terms of profit aka shareholder value, since you Now Own part of that company. ON the short term side of things a company can still continue to deliver because of the expectations of future profits thus it can still create shareholder value/wealth, eventually its real value will be shown. Based on your own research and due dillgence you can create Wealth through the stock market. How many gamblers do you know win more than they lose? I know I dont know too many ! LOL!
Gambling is pretty much where 1 person gains at the loss of another person aka LOSER, there is no Value being created here.. Unlike stocks gambling does not create any value. There is a HUGE difference between going to downtown reno and pulling a slot machine for 8 hours and buying stocks or ownership in public companies.
smarten
I’m going to say it one more time for you Derrick [“when I or anyone buys shares in a company we are given part ownership of that company”].
When you purchase a stock, you own nothing more than a piece of paper which basically entitles you to NOTHING. When I buy a local business and there are profits, those profits go to ME the owner [as they should]. If I want to give my employees a bonus, that’s MY choice and generally, I’m left with more than my employees.
When you own a publicly traded stock and there’s a profit, generally NONE is distributed to you, the owner. Notwithstanding, a CEO, like the former CEO of Exxon, will be given a $400M compensation package. NOTHING for you the owner, and a grossly excessive payment to someone you the owner DIDN’T choose to pay anything.
Stock dividends, as you know, are a joke. Few stocks pay dividends; the ones that do pay but a pittance; and generally, a stock that pays a dividend is valued less in the marketplace than its comparable counterpart. And then when you get your dividend, both you and your company are doubly taxed. If you care about dividends, open up a savings account at your local bank. You’ll be paid more with ZERO risk.
I’m so amused by those “professional” stock people you see on television that talk about how the stock market has out performed all other investments over time. They assert that if you’re in the stock market to make a quick buck [i.e., you’re not willing to hold for the long term (generally 10 or more years)], it’s far too risky and you SHOULDN’T be a player. Well guess what? I never met ANY stock market player who wasn’t interested in the short term.
These same stock market gurus assert that realistically, you the investor shouldn’t be looking for more than a 7% gain [in appreciation] over the next year. Well guess what again? If I can get 5.75% in a FDIC insured CD [Countrywide Bank recently offered such CDs] with ZERO risk; yet stand to gain 1.25% more by accepting the risk of your favorite stock; I’ll take the 5.75% every day of the week.
Unless you finance a SFR purchase with a negative amortizing loan, when your business of owning real estate yields profit, it goes to YOU the owner. To help you with your purchase, 90% or greater of the acquisition cost is easily available in the form of a purchase money mortgage. Try finding ANY financing source that will be as generous insofar as your stock purchase is concerned [anything over a 50% LTV is unheard of]. One of the great advantages of real estate investing is your ability to leverage your investment. Less leverage in the stock market results in less gain.
When you get a conventional real estate mortgage, the cost is relatively low compared to let’s say, an automobile or stock margin loan. And you have 30-40 years to repay! Try finding ANY margin loan for you stock purchase that isn’t horrendously priced and exhibits term limits.
When the value of your stock declines, you get a margin call – many times with little if any opportunity to avoid the premature sale BY SOMEONE ELSE [even though YOU’RE the owner] of your security. When the value of your house declines, it’s nothing more than a phantom loss that over time [and yes, you’re given the luxury of time] gets healed.
While you’re sitting around waiting for your stock to increase in value, generally, you receive ZERO rental income. Although SFR rents aren’t great in Reno, even the worst example has some rental value.
Your real estate rental income is by and large sheltered because of the phantom tax benefit called depreciation. This animal doesn’t even exist in the stock market world.
While you’re incurring negative cash flow on your stock purchase because of margin borrowing, you get a zero federal income tax write off against ordinary income. Yet the exact opposite happens with your SFR [thus resulting in zero state income tax in a State (like California) where there IS a state income tax].
When you sell your SFR for a profit, if it’s your personal residence, the federal tax due on the gain is by and large permanently forgiven. That’s not the case insofar as your personal stock market portfolio gains are concerned.
If your SFR is not your personal residence, you can in essence permanently defer any federal income taxes due on the gain by making a IRC 1031 exchange. Try doing that with your personal stock market portfolio gains.
Don’t want to sell yet want the equity out of your SFR? Refinance [although there are limits, I personally know of NO ONE who has EVER been taxed for excessive borrowing against real estate after its acquisition]. Try refinancing your stock to pull out gain and see what happens.
Want to make your SFR more valuable? There are things you yourself can do [increase rents if you’re a landlord; add square footage; upgrade interior amenities; etc.]. Want to increase the value of your stock? Good luck!
Although you may be a paper “owner” of a stock, you’re 100% dependent upon others for ANY increase in value while realizing none of the benefits of ownership other than the pride you may feel each morning when you open your computer and look at your portfolio [assuming it has increased in value]. And unlike real estate [hey, they’re not making any more land and the cost of building materials never goes down], there’s NO GUARANTY you’ll EVER realize any gain on your particular stock purchase. So in reality, it’s really no different than rolling the dice in a Reno casino.
Finally, let me give you a real world example of what I’m talking about. I have a small amount of money in a traditional Vanguard mutual stock fund IRA. The fund is “professionally” managed and purportedly is well diversified to minimize risk. After the 2000 crash, the value of this fund dropped by over 50% [professional management did NOTHING to protect my investment]. We’re now coming up on 8 years and notwithstanding a massive run up in the DOW, the value of my Vanguard stock fund is still LESS than when I first made my contributions. So much for a prudent position in the stock market not being a gamble.
Have I made the connection?
MikeZ
RE: “Bottom in 8-12 mos?”
NOT. A. CHANCE.
Take off those rose-colored glasses, the market is still deteriorating; we’ve got 2-3 more years AT LEAST of this. And that’s the most optimistic scenario.
derrick
if you still think gambling is the same as buying stocks obviously you have learned nothing. Gambling is a zero sum game smarten.taking money from the loser and giving it to the winner. Buying stocks or investing is creating wealth. 30k invested in walmart 30 years ago would have made you well over 20 million. If you still can’t realize the difference between the 2 thais unfortunate.
Ann O.
Smarten, I’m impressed by what you cranked out on Thanksgiving morning while I was sleeping in. I ignored a previous comment from Derrick about stocks because I don’t think they’re relevant to this blog. However, you have made an excellent comparison with real estate. I was surprised to see that you and I agree on at least one thing–the stock market.
Derrick, if Diane will tolerate it, I’d like to see you expound on how buying stock or investing creates wealth. In my opinion, putting $30,000 into the stock market 30 years was a gamble. The lucky people put their money into Wal-Mart and now have well over $20 million (your figures), and the unlucky people put their money into companies no one remembers any more and have nothing to show for it. It was LUCK! It had nothing to do with research or due diligence. What good is research and due diligence when insiders are always one step ahead of you?
Since I’m not lucky and I’m not an insider, I have a hard time believing people who urge me to invest in the stock market. I did nothing but lose money following the conventional wisdom of “invest in growth stock mutual funds and hold for the long term.” That strategy created wealth for all kinds of middlemen but not for me.
longerwalk
(cough) DH and I retired from the military at 42, and are living well due to investing done over 20+ years . . . not due to military retirement, which is a pittance. The investing has been done in the stock market, almost entirely. Not insiders of anything, btw. We just study companies well before we invest.
Real estate can be a good investment, but since it is illiquid, it is harder to deal in. Being a landlord of good properties will probably yield the best, but you HAVE to KNOW the territory well. As far as buying a residence one plans to live in . . . buy into a good location, and don’t buy into a hot market, then live there several years, at least. And certainly, buy below your means so you can survive a downturn or bad luck (like losing a job). Sweat equity isn’t a bad idea, either.
FWIW.
longerwalk
Diane, fine comments on the mass media’s approach, and how to combat it. Irritates the heck out of me how they ‘just’ sell paper these days, though I’m sure that’s been happening far longer than we are led to believe. Excellent positive thinking. I’m very impressed.
Derrick
Once you can understand the idea of ZERO SUM you might just understand the difference between gambling on a slot machine and investing in stocks.
Investing in stocks differs from gambling because once a stockholder you now own a part of the company, You can sell these shares/ownership or save them in hopes of future growth. You cannot say the same thing about someone who bets money at a casino or on a game of pure chance seeking nothing more just CHANCE! Against all odds the “gambler” seeks to gain an uncertain outcome and win the loser or the losers stakes.
Also you have no ability to liquidate a sports bet or a black jack bet right after placing it. However the stock market always provides a wide range or prices over time and allows anyone to dispose of a purchase easily. It would be great if you could do that with lets say black jack.. but as well all know thats why its considered gambling. I would like to see someone place a black jack bet then immediately try to take back the bet! Not going to happen!!
do you understand that at all?
Reno Ignoramus
The Vanguard Windsor Fund, since its inception in 1958, has delivered an annual average return of 12.5%. Show me one house, just one house in Reno, built in 1958, that has gone up in value 12.5% a year over the last 50 years. If one had bought a house in Reno for $10,000 in 1958, or put $10,000 into the Windsor Fund, which would have produced the best return? It’s not even close.
The Vanguard US Growth Fund, since its inception in 1959, has delivered an annual average return of 10.9%. Show me one house in Reno, just one house, built in 1959, that has gone up in value 10.9% a year over the last 49 years. If one had bought a house in Reno for $10,000 in 1959, or had instead invested $10,000 in the Growth Fund, which would have produced the best return? Again, it’s not even close.
The suggestion that ANY investment in the stock market is ALWAYS a fool’s game, is, well, foolish. But you need to be in the market for a long time, not try to time it, and take steady, but not spectacular gains. Now if a person is trying to time the market, playing with shorts and longs, trading on margin, like somebody on this blog may be doing, then, yes, I certainly agree THAT kind of stock “investing”, if we can even call it that, is basically gambling. Not much difference between trying to guess shorts and going downtown and putting your money on black and even.
Don’t get true stock market investing confused with the adrenaline rush of betting on short and long positions. True stock market investors don’t calculate their performance on a daily, weekly, or monthly basis. Anybody who does is not investing, they are gambling.
Note the similarity to what house flippers were doing in 2004-2005. They were essentially buying houses on margin (it was somebody else’s money), they were not looking to long term appreciation as they had no intention to ever actually own and hold, and they were betting they could time the market and sure that somebody would come along and pay more for the flip than they did. They were gambling. Just as short and long traders are gambling.
SkrapGuy
I am wondering if we might have some clarification as to which one of the Derricks it is that has been talking here about stock investing. Is it the Derrick who is the multi-millionare, the one with annual income approximating $1,000,000, or is it the Derrick with annual income of about $70,000? Knowing this will help me in evaluating how much merit to attribute to his posts. Thanks.
john
Lessons from Japan-
Anyone who thinks the bottom is 8-12 months away and that we won’t be able to see the bottom before it’s too late, and all the buying opportunities will be gone, should read about Japan’s real estate bubble in the 1980’s which peaked in 1991, and the lingering effects 14 years later.
From the NYT Dec 2005.
http://www.nytimes.com/2005/12/25/business/yourmoney/25japan.html
If you think this is going to be a quick and relatively painless 2-3 year correction, and that you better be ready to buy in 8-12 months or the window of opportunity will close, is stuck back in 2002 with a prebubble mentality. The end of the correction is not even in sight. In fact, the begining hasn’t really even begun.
Allen Murray
I don’t think one can use past history to predict the future of any real estate market, too many variables. In reality, we wont know who’s predictions here will be correct for years to come when we look back on the data. John and RI will probably hold off on buying while some of us others won’t. When we observe the summer of 2005 as our local market peak, next summer will put us at 3 years of decreasing median, and puts us at 2003-2004 prices. I think that may be the price level that is sustainable in our local market, but I guess we will have to wait and see.
smarten
RI –
I have to respectfully disagree with some of your post. Namely the part that states “show me one house in Reno, just one house, built in 1959, that has gone up in value 10.9% a year over the last 49 years.”
Just like Derrick CANNOT point to ANYONE who invested $20K in Wal-Mart stock 30 years ago and now has a Wal-Mart portfolio valued at $20M, you CANNOT point to ANYONE who made an investment in Vanguard’s Windsor mutual fund 49 years ago [I don’t even think there were any publicly traded mutual funds 49 years ago] and has averaged an annual 10.9% return!
But even if you could, these numbers are nothing more than hypothetical, theoretical returns assuming whatever. You, Derrick and Vanguard are doing nothing more than playing with the numbers; something you yourself would label “voodoo” [would you not?].
So I’ll throw it back to you and Derrick but rather than hypotheticals, I’m going to give you a real world example [and BTW, I know many other people like this one].
This person I know purchased a SFR in Saratoga [Silicon Valley], CA. in July of 1975 for roughly $75K. Since most people I know don’t purchase real property like Derrick does [meaning they place a small amount of their money down and finance the balance with a mortgage], this person placed 10% down and secured a 30 year mortgage for the balance of the purchase price.
This person still owns the home and although I’m not certain of it’s current fmv, I’m sure it’s at least $1.5M. Given this person’s original 30 year mortgage has long been repaid, his/her initial $7,500 “investment” has grown into $1.5M [or more] in only 32 years! This real world return is so much greater than the hypothetical 10.9% RI references in his post [if my calculations are correct, it has been 6,250% per year each year for 32 years (is this right?)], it’s like comparing the New England Patriots to the San Francisco 49ers!
Furthermore, rather than looking at nothing more than an account statement on a monthly basis for 35 years, this person I know actually got to live in the home for a number of years and now realizes rental income; income which allows him/her to read Derrick’s monthly account statements in an upscale rental which is totally paid for by the rental income he/she realizes from his/her Saratoga SFR [try doing that with your Wal-Mart stock Derrick].
And this person I know is not alone. Before the dot.com era, the richest people in the world had accumulated their fortunes in real estate rather than the stock market. Since you and Derrick want to deal with “hypotheticals,” let’s take Donald Trump for instance. Didn’t he purchase the Chrysler Building in Manhattan about a decade ago for $1M? And didn’t he sell it for close to $500M? And didn’t he make his initial purchase using OPMs? Comparing this annual rate of return to Vanguard’s hypothetical 10.9% is even more outrageous!
And if this person I know had purchased in let’s say Palo Alto, Los Altos Hills or Sausalito, his/her annual rate of return would have been three times as great as it was!
Now can I point to a similar “hypothetical” example in Reno? Of course!
How much did an “average” 4BD Reno SFR sell for in 1959? $1,500? $2,000? And what is it worth now? Let’s assume $2,000; factor in a 10% down payment; and, Guy’s latest DEPRESSED [roughly 27% from January of 2005] median price – $289K – for today’s fmv.
Thus even in Reno, you’d have an average 30% annual rate of return; again, VASTLY greater than Vanguard’s hypothetical 10.9%!
So if you really want to create wealth Derrick, IMO you’re stupid to waste your time on the stock market [even though I would defy you, the unprofessional trader, to average a 10.9% annual return over 35 years]. Had you financed the purchase of your Spanish Springs home [rather than buying with all cash]; and used the equity in your home to purchase stocks [since you think it’s so easy to turn $20K into $20M]; in 25 more years, you’d be a ZILLIONaire. In fact, given the recent run up in the DOW; and your self-proclaimed expertise in selling builder stocks short; you’d probably ALREADY be a zillionaire.
So again, much for the stock market!
And BTW, as Ann points out this is a REAL ESTATE rather than stock market blog. So let’s stop talking of the merits of purchasing stocks and get back to what this blog is supposed to be all about.
Allen Murray
Smarten is correct, I can give a real life Reno example. My friend lives next door to a 92 year old lady in old SW Reno, across the street from the Mapes mansion on Mt. Rose Street. She bought the house in 1942 brand new for $10K when that street was a dirt road. It would now conservatively sell for $350-400K. I forget how to work the compound interest buttons on my HP12C, but if you figure 10% interest on $10K for the past 60 years non compounded, thats only $60K. I can tell you the return is WAY higher than 12.5%, and that doesn’t take into account any leverage or interest write offs. I have read and believe that in general over the past 50 years, real-estate as an investment has outperformed the stock market. Real estate has been the measure of wealth since man began to own land and will continue to be the measure of true wealth in the future.
Lindie
Uh, Smarten, we all know you are very bad at math. You really need to just avoid trying to do calculations.
$2,000 invested at 30%, compounded annually, for 50 years, would be worth $5,436,873,530.
$2,000 invested at 12.5%, compounded annually, for 50 years, would be worth $1,003,068.
I can assure you that the $2,000 investment 50 years ago in the Vanguard Fund returning 12.5% a year would be worth just a hair over $1 million today.
I can equally assure that the $2,000 invested 50 years ago in a house in Reno is not worth $5.4 billion today.
So your comment that the 50 year old house in Reno has appreciated at an average annual rate of 30% is, with all due respect, absurd.
$2,000 invested at 10%, compounded annually, for 50 years, would be $290,740. Yes, that’s 10%, not 30%.
You also make another fundamental error in the assumption that the average 50 year old house in Reno today is worth the median price of $290,000. Most 50 year old houses in Reno are not worth the median. But that’s another issue.
Even with your false assumption, RI is correct. The Vanguard Fund has outperformed the 50 year old house. And, by a very large margin: $1 million to $290,000.
RI is correct, Smarten, it’s not even close.
I like you Smarten, but you really need to stay away from calculations, ok?
Disclaimer for the purists: The above figures for the Vanguard Fund are necessarily not precise. That is because the 12.5% annual return for the Vanguard Fund is an average annual return. No doubt in many of the past 50 years, there have been years when the Fund did worse than 12.5%, and years when it did better. Without knowing the exact rates of return for each of the individual past 50 years, I cannot calculate the precise value of a $2,000 investment made 50 years ago.
Lindie
Allen,
$10,000 invested at 5.75% interest, compounded monthly, for 65 years, is $ 416,197.
Just go to any investment calculator online. Put in $10,000 for the initial investment. Put in 5.75% rate of return. Put in 65 years. You get $416,197.
65 years is a long damn time. Turning $10,000 into $415,000, more or less, is no great investment. In fact, its about 5.75% a year.
Really.
Roger
This whole conversation is just plain nonsense. A $10,000 investment, made during the Roosevelt Administration, that today is worth $350K-400K, is dismal. This investment has not come close to keeping pace with inflation.
I don’t post here much, and now I know why. If the people who frequent this blog think that the equity markets and the millions of wordlwide investors who have trillions of dollars invested in them, are fools, well, I guess you all are just too smart for me.
MikeZ
RE: “1942…$10K, now…$350-400K … if you figure 10% interest on $10K for the past 60 years non compounded, thats only $60K.”
WHAT?! You’re WAY OFF.
10% per year compounded for 65 years would turn $10K into $4.9M.
To turn $10K into $400K over 65 years, that’s a meager 5.84% (5.62% for $350K)
Now factor in all the money put INTO that house over 65 – taxes, repairs, interest, maintenance, time, sweat equity, and you’ll see what a terrible investment it was.
Parisol
According to this Smarten fellow, houses in Reno increase 30% a year. So, for a $10,000 investment, made 65 years ago, this 92 year old woman’s house should be worth $2,315,341,230,680.
I don’t live in Reno, but maybe I will move there. Smarten tells me I can invest $500,000 on a house, and in ten years, my house will be worth about $9.5 million.
Is this blog a freaking joke?
Allen Murray
Ok Guys, like I said I didn’t calculate it out, and I never said stocks are a bad investment, but you still haven’t proven to me that the stock market in general has out performed the real estate market over the last 50 years. Also, if we assume that this 92 year old buyer didn’t pay cash for her house and put 20% down or $2000 on it, what is the rate of return? Also, if you stock people prefer to invest in securities instead of real estate, more power to you, real estate isn’t the only way to make money, but I think diversifying into both is a good idea. Also, I assume you all don’t read here to learn about the stock market, you are here because you are thinking about investing in real estate. Lindie, thanks for calculation.
Allen Murray
Mike Z….I said non compounded….at 10%…am I still off? Please read more carefully.
smarten
I apologize to all if my calculations are out to lunch. I didn’t mean to create a storm over the issue. But I don’t think my premise is out to lunch.
$7.5K actual out-of-pocket invested after 32 [NOT 65] years = $1.5M today. If you CPAs out there say that translates into a 5.75% return [$431.25/year], even though where I went to school a $1.49925M gain averages out to $46,851/year, then I guess I say sign me up for 5.75%!
Derrick
Just for the record… The stock market has outperformed housing 95% of the time for the last 75 years…
Not to mention stocks are easily liquidable as house are NOT.
Dont forget to factor in the costs associated with owning a house.
1:Insurance
2:Land tax
3:Maint. (roof, paint,plumbing,landscaping,etc.. etc..)
4:Utilities
5:The list goes on..
The costs associated with owning stocks?
CHEAP! LIQUIDABLE!BETTER RETURN THAN HOUSING!
You made a great point murray and RR .. Thank you for pointing out that there IS a difference between investing in stock and gambling.
Do you understand it yet Smarten?
Reno Ignoramus
“If you take a longer view-say 25 years- you’ll find that the S&P has actually stomped the real estate market, from Boston to Detroit to Dallas. From the start of 1980 to the end of 2004, home sales prices increased 247%. A pretty sweet deal, it would seem. Over the same period, however, the S&P shot up more than 1000%.”
Forbes.com
April, 2005
“Over the long run stocks win easily….from 1978 to 2004 housing delivered a solid but unimpressive annualized return of 8.6%. Commercial property did better at 9.5%. The S&P, however, delivered a crushing 13.4%.”
CNN Money.com
Galleries 2007
This is, truly, not news. I invite all to google “stocks v. real estate” and read the dozens and dozens of articles all saying the stock market beats the snot out of the housing market, especially over long periods of time. Yes, if we narrow our focus down to 2001-2004, when all the Voodoo money was made available to enable valet runners to go out and pay $500,000 for a house, in that very narrow and speculative time, housing prices outperformed stocks. But take out the Voodoo money fueled nonsense, and this question is not close. Really, go google it.
smarten
Let me do a follow up because most of you are not accurately restating what it is I initially stated.
I never said that the actual out-of-pocket investment made in 1959 on a $2K Reno house was $2K. I said it was $200.
I never said that the actual out-of-pocket investment made in 1975 on a $75K Saratoga house was $75K. I said it was $7.5K.
I never said Reno houses had appreciated in value, on average, at 30%/year. Rather, I said that the appreciation in value on the cash down payment initially invested represented a [non-compounded] return, on average, of 30% annually.
I never said the Saratoga house I used as a real world example had appreciated in value, on average, at 6,250%/year. Rather, I said that the appreciation in value on the cash down payment initially invested represented a [non-compounded] return, on average, of 6,250% annually [although I did and continue to question whether the math is correct].
If I put 10% down on my real property purchase; finance the balance; rent out the property; and my rent = my monthly mortgage and other debt service costs; forgetting about any income tax benefits, my out-of-pocket “investment” is still 10%!
If my rent is less than my mortgage and other debt service costs in years 1-6 [or 1-12]; and it’s more in years 7 [or 13]-30; my out-of-pocket “investment” is still 10% [or possibly less].
If I put 10% down on my real property purchase; finance the balance; live in the property; and my my monthly mortgage and other debt service costs are = to fair market rent; forgetting about any income tax benefits, my out-of-pocket “investment” is still 10%!
If I could put 10% down on my stock purchase; secure a margin loan for the balance; and then pay off the loan at maturity; my out-of-pocket “investment” would be 100% plus 100% of my margin loan payments.
So what’s not to understand?
Derrick
Its too bad most people dont understand that reno ignoramous. I for one have always felt the stock market was a better place to invest over the long term, obviously the numbers you posted Prove that not it is but it has crushed Real estate!
I also agree with the face that YOU agree with me 😉 when I say investing in the stock market (long term) is not gambling.
I think smarten is having a hard time grasping that concept..
There is no comparison between which is a better investment… house or stocks.. NOT EVEN CLOSE!
Robert
Over LONG periods of time. Over LONG periods of time.
We all can cite examples of a house that more than doubled in price bewteen 2001-2005. But that’s certainly not the norm over time.
We all can cite examples of a stock that skyrocketed. Like google going from $85 to $500 in 3+ years (show me a house that ever did that). But that’s certainly not the norm over time.
We all can cherry pick individual examples to support our particular point of view. But these anecdotal examples don’t prove anything over LONG periods of time.
I suggest the example offered by Allen of the 92 year old woman who bought 65 years ago actually makes the case for the stock market. Now, hopefully, this house has been a warm and comforting home for this woman for 65 years, and yes, you can’t live in a mutual fund. But there can be no serious debate that a $10,000 investment made during WWII, at a time when 75% of all Americans today were not even born, has done quite poorly to be worth only $350-400K today (about 5.6% annually). Even a conservative balanced mutual fund, such as the Vanguard Wellington Fund, which has been open to investors since 1929, has returned 8.5% on an average annual basis for the 78 years it has been open to investors.
Derrick
1980-2001 Housing S&P 500 (w/o div.)
Total return 185.00% 961.40%
CAGR 5.11% 11.09%
Yet another example of how the market has CRUSHED housing.
These numbers dont even include the costs of owning a house!!
MikeZ
RE: “but you still haven’t proven to me that the stock market in general has out performed the real estate market over the last 50 years.”
And it appears no one ever will. Your mind is made up; you’re absolutely convinced that real estate performs better than stocks and (apparently) no amount of math or real-life data will change that.
RE: “if we assume that this 92 year old buyer didn’t pay cash for her house and put 20% down or $2000 on it, what is the rate of return?”
Since it’s paid off now, and since she paid interest on that $8,000 loan, her rate of return is WORSE than if she’d paid $10,000 cash in 1942.
MikeZ
smarten: “$7.5K actual out-of-pocket invested after 32 [NOT 65] years = $1.5M today.”
In 32 years, you paid no mortgage, no taxes, not a single repair, HOA or maintenance bill?
Do you still think that you only paid $7.5K out of pocket over those 32 years?
Derrick
How can you overlook the expenses of owning a home for that many years?
All those years of land tax, insurance, the repairs, etc.. etc..
ANYONE who actually owns a home would NEVER overlook that IMO!
Newsflash Smarten you are wrong, why cant you just admit it?
smarten
Derrick asks, “how can you overlook the expenses of owning a home for that many years? All those years of land tax, insurance, the repairs, etc.. etc.”
I guess your mind is made up Derrick because you still neither listen nor get it. THERE WERE NO EXPENSES!
And even if there were, unlike your favorite stock, they ended up paying for themselves many times over by: offsetting the income taxes the landowner otherwise had to pay; and, paying down the principal amount of his/her purchase money loan.
When you rent property, depending upon the amount you place as a down payment, there is generally negative cash flow for the first several number [5-7] of years of ownership. By then you’re generally able to increase your rents to the point where they pretty much cover your debt service [thus no cost].
Then maybe starting in year nine or so, break even turns into positive cash flow. It doesn’t take that long to recoup whatever negative you incurred the first several years, and again, that positive cash flow ends up being sheltered from income taxation because of decpreciation [thus again, no cost].
Thus if you can hold on for ten years [the period most stock gurus recommend you hold for the “long term”], thereafter it’s pretty much a steady positive flow of income which only increases.
And remember each month you’re satisfying debt service, you’re paying down the principal amount you borrowed with someone else’s money so it’s really not a “cost” per se. And if you really follow the process to its logical conclusion, you end up reimbursing yourself for your out of pocket down payment [meaning your capital cost becomes zero].
Since you can’t do any of this with your stock purchase; and I’m talking real world experience here versus the theoretical hypotheticals you read about in a book or on the web; what exactly is it you suggest I admit?
As you’ve told us many times before, when you’ve actually taken $7.5K; invested it in publicly traded stocks; and, after 30 years turned it into $1.5M of equity AND $3K or more per month in positive cash flow; I’ll listen to you. But until then, there’s nothing for me to admit.