Will this Bull Market last forever? Sadly it will not. After the painful crashes of 2008, 2000, 1994, and 1987, you would think that investors would not get caught up in these frothy markets ever again, yet here we are doing the exact same thing. This time will be worse as the stampede starts. Money must flow somewhere else quickly. Traditionally, money would pour into Bonds, Treasuries, cash, or other paper instruments in a crash. The problem is bonds are collapsing from a 30-year bull run, treasuries are practically junk status, and to convert into cash, you lose close to 2% a month when you factor in taxes, inflation (oh, I forgot, there is no inflation.)
Some gold bugs are telling us to buy physical gold and silver to hedge against this coming crash. I agree with this to a degree, however, talk about manipulated markets! Metals historically are the most manipulated markets, due to the central control gained when you have such a rare commodity. The Roman empire was a Republic and thrived economically for over 400 years until one day some guy named Julius Caesar decided he was now completely in charge. This was when Gold coins came on the scene, and a total dictatorship controlled all the gold and there went the 400-year economic boom. Don’t get me wrong I do like metals; however, I like one thing even better! COMMERCIAL REAL ESTATE.
Oh, my goodness, commercial real estate. That’s yucky! You have to fix things that break, collect rents from tenants, pay property taxes, do physical labor once in awhile, deal with people on a regular basis, and worry about your buildings. That’s Right! But, but, I would much rather sit on my computer, and ride the coattails of the high-frequency traders, listen to talking heads on MSNBC, pay ATTENTION TO THE FED CHAIRMAN DAILY TO SEE IF I HAVE A PERMISSION SLIP TO LIVE TODAY, and then, collect some cash, and go party!!!
Of the richest individuals and families on this planet, over 70% of their wealth is in commercial real estate. During the depression in the United States, a few smart individuals held onto their commercial real estate or ran around buying properties for pennies on the dollar. These individuals become some of the wealthiest individuals in the world.
I think it is very important in unstable financial times, to invest in something you can touch and see, not pieces of paper that become toilet paper overnight or in an hour. There is always a tenant, even in the roughest of times. Will you get rich in a depression, no, however, you can hold onto your properties and break-even. The economy will come back someday, and you will control some pieces of property on the Monopoly board game, collecting rents, and getting rich the old-fashioned way.
Bill Witter
Commercial Real Estate Broker
Equity Pro Realty, Inc.
