The State of Real Estate in 2008
The opening of 2008 brings a new and vibrant market in hard asset investments. Following a year in which many real estate investors have seen decreases in their investments.
Using Real Estate as Diversification in Asset Allocation
Throughout the last three decades, “financial planning” has developed from non-existent to hot button marketing for hundreds of firms. Where did all of the terminology come from that lead investors to a barrage of confusion? Confusion that lead to “financial planners,” telling their clients what was right for them. Let’s start with the 1990s.
The Case- No Support in the Stock Market
Many investors feel that sinking feeling in the pit of their stomach as they look at their 401(k) and IRA statements. Since an all time high of 14,164 on October 9, 2007, the Dow Jones Industrial Average has steadily gone down. On October 19, 2007 support levels in the market began to decay creating a demarcation day as the market began its steady decline, a day I will call the first Black Friday of the 21st century. The market is now quickly approaching a 20% drop from this date.
The Great Depression
Dateline, October 9, 2008. One year ago today the Dow Industrial Average was 14,198. We have just experienced a 40% drop in one short year. Scarier is the 25% drop in the 200 day moving average of the Dow. The volume was the highest since September 19, 2008 when the market started its free fall.
Mixed Portfolio Theory Revisited
In the June 2006 Insights I established the basis for a theory I called at the time “Independent Portfolio Theory.” I have since honed this idea more and developed it into “Mixed Portfolio Theory.”.
I have long been a student of the markets and economic conditions. I have been speaking in the last year and looking at several economic indicators and I have realized that we may already be in a re-stagnation scenario similar to “The Great Recession” of 1974-1980. I am seeing more and more economists beginning to use the term stagnation in their writings.
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