We don't believe real estate is a good hiding place either

Recently, a newsletter guru (who shall remain nameless) listed several reasons why he believed real estate would be a great place to put cash.  We were surprised because we don’t believe real estate will be a haven after another major washout in global markets if global demand doesn’t materialize soon. 

It just so happens a good friend of ours, his name is Clive, agrees.  We have printed below Clive’s well-reasoned and articulate responses to said newsletter guru’s consensus rationales for buying real estate.  We couldn’t have said it better ... thanks Clive. [Note: read the dialogue by clicking on the link below ...] 

Unless we see a rebound in US demand, coupled with a rise in real income, it seems unlikely to me that real estate will sustain recent gains given what Clive calls “funny money” going into real estate.  A break in financial assets means a fall in collateral as many leveraged funds have to sell collateral to cover stock margin.  There is big “fund” money now invested in real estate, and much of that investment has been subsidized by our government—you and me, in other words ...

Currency Currents 25 June 2013

-Jack Crooks

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