Let us take a look at some recent news. In the March 17th, 2008 edition of the California Real Estate Journal, a journal to which every California real estate investor should subscribe, there are two related articles of note. The first is a page one headline, The Globalization of Real Estate: Associations Pave the Way to Establishing International Standards, by Tony Grant and the second is buried in the finance section on page six. The article titled Fed Takes Further Steps to Ease Credit Crunch by Jeannine Aversa outlines last weeks bank bail out.
The first article points out the developers, investors, buyers and sellers are working on a more international scale, as if this wasn’t always the case. So the author warns that associations attempting to understand the future of real estate should be looking at the globalization of trends. As Grant pleads the case for associations to stay relevant to protect the jobs of the members of those associations, presumably real estate agents, another tumultuous event is being explained further into the journal.
On page six, Aversa is pointing out that $200 billion in Treasury securities is supposed to be made available at the end of March for banks to trade for their debt, that’s the average mortgage holder, for extended Treasury securities. So the banks’ selling off their mortgages, can make more funds available to, you guessed it, the average mortgage holder. This might sound circular in logic and slightly absurd to the lay person on the street, but to sharp investors it sounds like big opportunity. However, if you call your local loan representative he, or she, will tell you that the underwriting guidelines have changed and one needs a higher credit score and more money down in order to obtain a loan. Yes interest rates are low but getting a loan is difficult. Now if this blog was to rail against “the man” here is where I would insert the and what about so and so.
The authors above have done more than their job of pointing out events that have occurred and their opinions on who, what, why, when and where and they are yet they are mostly recounting “in the past events” with speculation on an outcome they desire, if shrewd, or they believe will come if, in fact, they don't know. (The professional press influencer/manipulator will often disguise the writing to seem as if he, or she, doesn't know. In another entry I will discuss how to discern this type of writer at length.)
The key to utilizing this information for monetary gain is not joining a side in the argument. That could take decades of hard work. That is called a job not an investment. The object is to take in all the observable events and calculate to see who, what, where are affected and who, what, where will be motivated to move or act. (See below entry March 17th 2008, Bail Outs). Then the work of positioning one’s self, i.e. making contacts and taking action to move one’s self into the culling line, begins. Tomorrow’s entry on risk management should help clarify how to identify who is most likely to make a move.
3.18.2008
3.17.2008
Bail Outs
Back in the late 1980’s there were a bunch of bail outs. The Savings & Loans began writing mortgage paper and their underwriting guidelines became less stringent as the market burned on and then up, but this was the end result of other events. One of the major factors that promulgated this event was the then Chairman of the Federal Reserve, Paul Volcker, announcing that interest rates would fluctuate and the money supply would remain constant. This act spurred the infiltration of gambling into the once conservative bond market. The volitility of Wall Street in the 1980’s is exemplified in the book of the month, Liar’s Poker. I bring this up as President Bush lauds the current Federal Reserve Chair, Ben Bernake, for working through the weekend of March 15th 2008 to prepare a policy to bail out one of the largest banks on Wall Street. What is going on?
If there is any correlation in History it is only that market makers are trying to find a new way to disguise an old money maker, volatility. There is no real profit to be made for the opportunist in a steady or regular market. (Mind you don’t confuse regular with regulate, regulation and deregulation are both small indicators of volatility. One marks the beginning and the other marks the end and they both mean money)
Let me use a somewhat harsh analogy to try and loosen your perceptions of reality a bit. The military unit I served in loved to train us in this shocking way so that the lessons we learned were impressed quickly, of value, and also, in and of themselves, under suspicion. This is designed to cause one to constantly question, not in a Socratic way, but in a more aggressive and proactive way which may see its way to opportunity. That is to say a way to create a reaction wherever one can be created, or to exploit an opportunity if one exist.
So on to the analogy. Let us say that a couple gets married and they are a good looking young couple. A few years pass and there love grows and blossoms into the desire to procreate so they conceive a child. As the woman becomes more hormonal and her body changes she convinces her husband that she is less than the woman he married. By the final trimester he begins to entertain the idea that she is insane and entirely correct in her beliefs. All is well that ends well and a child is born. (For those of you with ADD or a compulsory addiction to explain what isn’t here I will not name the gender.) Suffice it to say that the child is healthy and the parents are both suitably and ever so slightly overweight for the ordeal but wiser and more content. As time wears on the woman struggles to “lose the baby weight.” The husband’s friends chide him and in all he keeps the winter coat as a badge of contentment. However, the wife loses the weight. She looks good again and yet her self image is still low. She imagines the weight is still there. The stresses of the new baby make her feel as if she is no longer attractive or a “woman”. So she has an affair.
When everything was going along fine nobody cared about the couple. When the husband had a crisis nobody cared about the husband, even the husband did nothing. When the wife had a crisis somebody noticed and seized the opportunity, but the wife was complicit. What did we learn? A simple minded person might leap to the assumption that all women can’t be trusted. A Neanderthal might suggest one keeps more control over the other spouse. And a thoughtful person might suggest only that many opportunities existed in the scenario above and the only two people who capitalized on them were the cheaters. Get my drift.
The Federal Reserve, the rich, capitalist, liberals, Democrats, Republicans, private industry, corporate America and all groups, affiliation and so on, none of these really have control over the actions of one another. They may barely if at all have control over themselves. They are all, similarly, players on the same field with particular interests, (and they often carry the conviction they represent the interest of others who believe as they do), in some phase of execution. Making a move may be counter intuitive to them. If they do not make a move on their own behalf, however, they may be “sweetening the offer” for an outside party to act.
If you get mired in motivations of others and the ramifications of their actions you will cease to see opportunity and begin to analyze. Now when was the last time you heard a woman say she had an affair because she planned it that way? Chances are she will proclaim it out of some illusory illogical response underlying her low self esteem.
However, there is a dark and forbidden philosophy of exploitation practiced by opportunistic men who look for unavailable women with low self esteem. Hmmm! So somebody is out there with a big picture of how to get lucky based on some common events and a few small signs. Tell you what, follow the link provided and order a copy of Liar’s Poker. Read the book once through without notes or underlining. Read it as quick as you can to get a general impression. Then look at the headlines of the newspapers and the lead stories on the news. (This works for more than just the economy but let us focus on the economy for now) Come back to this blog, post your comments so we can open a conversation. Then read the next entry to continue to learn how to make things happen instead of letting them happen to you.
If there is any correlation in History it is only that market makers are trying to find a new way to disguise an old money maker, volatility. There is no real profit to be made for the opportunist in a steady or regular market. (Mind you don’t confuse regular with regulate, regulation and deregulation are both small indicators of volatility. One marks the beginning and the other marks the end and they both mean money)
Let me use a somewhat harsh analogy to try and loosen your perceptions of reality a bit. The military unit I served in loved to train us in this shocking way so that the lessons we learned were impressed quickly, of value, and also, in and of themselves, under suspicion. This is designed to cause one to constantly question, not in a Socratic way, but in a more aggressive and proactive way which may see its way to opportunity. That is to say a way to create a reaction wherever one can be created, or to exploit an opportunity if one exist.
So on to the analogy. Let us say that a couple gets married and they are a good looking young couple. A few years pass and there love grows and blossoms into the desire to procreate so they conceive a child. As the woman becomes more hormonal and her body changes she convinces her husband that she is less than the woman he married. By the final trimester he begins to entertain the idea that she is insane and entirely correct in her beliefs. All is well that ends well and a child is born. (For those of you with ADD or a compulsory addiction to explain what isn’t here I will not name the gender.) Suffice it to say that the child is healthy and the parents are both suitably and ever so slightly overweight for the ordeal but wiser and more content. As time wears on the woman struggles to “lose the baby weight.” The husband’s friends chide him and in all he keeps the winter coat as a badge of contentment. However, the wife loses the weight. She looks good again and yet her self image is still low. She imagines the weight is still there. The stresses of the new baby make her feel as if she is no longer attractive or a “woman”. So she has an affair.
When everything was going along fine nobody cared about the couple. When the husband had a crisis nobody cared about the husband, even the husband did nothing. When the wife had a crisis somebody noticed and seized the opportunity, but the wife was complicit. What did we learn? A simple minded person might leap to the assumption that all women can’t be trusted. A Neanderthal might suggest one keeps more control over the other spouse. And a thoughtful person might suggest only that many opportunities existed in the scenario above and the only two people who capitalized on them were the cheaters. Get my drift.
The Federal Reserve, the rich, capitalist, liberals, Democrats, Republicans, private industry, corporate America and all groups, affiliation and so on, none of these really have control over the actions of one another. They may barely if at all have control over themselves. They are all, similarly, players on the same field with particular interests, (and they often carry the conviction they represent the interest of others who believe as they do), in some phase of execution. Making a move may be counter intuitive to them. If they do not make a move on their own behalf, however, they may be “sweetening the offer” for an outside party to act.
If you get mired in motivations of others and the ramifications of their actions you will cease to see opportunity and begin to analyze. Now when was the last time you heard a woman say she had an affair because she planned it that way? Chances are she will proclaim it out of some illusory illogical response underlying her low self esteem.
However, there is a dark and forbidden philosophy of exploitation practiced by opportunistic men who look for unavailable women with low self esteem. Hmmm! So somebody is out there with a big picture of how to get lucky based on some common events and a few small signs. Tell you what, follow the link provided and order a copy of Liar’s Poker. Read the book once through without notes or underlining. Read it as quick as you can to get a general impression. Then look at the headlines of the newspapers and the lead stories on the news. (This works for more than just the economy but let us focus on the economy for now) Come back to this blog, post your comments so we can open a conversation. Then read the next entry to continue to learn how to make things happen instead of letting them happen to you.
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