Up-markets reward risk. Down-markets reveal fraud.
(This one needs a big fat disclaimer: I’m not a CPA, licensed securities professional, an attorney, or anything like that. I’m a real estate broker. I shoot straight, but none of this is legal or financial advice. You should consult the relevant professionals in those fields should you have questions. All of this is for informational purposes only.)
Now that the attorneys are off our back:
Real estate cycles run longer than stock market cycles.
That’s because real estate isn’t liquid.
When stocks fall, you can still sell. There’s always new retirement money flowing in, keeping things moving.
(yes, it’s by design that the least sophisticated investors basically have no other option but to sink their 401k money into the stock market. He who has ears to hear, let him hear.)
But in real estate, when the market turns, the buyers disappear.
And that’s when you find out who was actually making money because they were good — and who was just making money because prices were going up.
We’ve been in an expansion phase for a long time.
For most people in the business today, the only market they’ve ever known is a rising one.
That creates a specific kind of confidence: The kind that comes from never being tested.
The people who look the smartest in an up-market aren’t usually the best operators.
They’re the ones taking the most risk.
Leveraged to the hilt. Borrowing against deals to buy more deals. Investors nodding along because so far everything has worked.
And yes — some promoters are already doing things their investors don’t know about.
(I don’t know about anything specific so nobody call their lawyers…it just happens all the time)
When everything goes up, nobody asks questions.
When everything stops going up, everyone asks questions at once.
That’s when the tide goes out.
And then you’ll hear the stories:
- “We didn’t know.”
- “Nobody could have seen it coming.”
- “We trusted the wrong guy.”
And some of those investors really will lose everything. Because they either didn’t ask enough questions, or didn’t want to hear the answers.
Warren Buffett said:
“You don’t know who’s swimming naked until the tide goes out.”
He’s right.
But the part people forget is this:
The down is always faster than the up.
So pay attention to who you’re trusting — not just what the deal looks like.
Because a good deal with the wrong manager is a bad deal. And if you aren’t sure they’re trustworthy?
Assume they aren’t.
There are plenty of good deals out there.
Make sure you’re in one of those.
PS: I offer free value analysis on any land or lot property (not houses).
You’re probably not looking to sell today —
but the time to prepare is before you need to.
There’s no charge, and there’s no downside to having current market info.
Is it ever a bad idea to start getting to know honest people who deal in what you already own?
Click below:
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