Stock Market vs Real Estate

By Al Thomas

I have made my living for many years trading in stocks and commodities as a broker, exchange member, floor trader and brokerage company owner.

Each year I have seen the market become more difficult. One of the reasons remains is brokers are still not taught how to protect customers money.

When the market crashes funds in the “safe” mutual funds lose 40 or 50 percent of client money. They listen to pundits like Jeremy Siegel who only knows one philosophy, BUY AND HOLD. It has been proven many times it does not work.

Lately I have been listening to many of the real estate gurus. Almost all of them are selling some type of plan to buy and sell residential houses.

If you get sucked into this mantra the investor ends up with many single income properties. When a renter moves out the income ceases. It may take several months until a new renter is found. The secret of real estate investing is steady profitable cash flow.

This always bothered me and is the reason I have not participated in buying individual units. There is a better way to have income and property appreciation in what I consider a safer investment for real estate.

It is to buy multifamily buildings – apartment houses.

Investors do not realize it is not much more work to buy a 35 unit apartment building than it is to buy a single family house. Paper work is very similar. Due diligence requires a more intensives search.

It has not occurred to most stock traders that there are cycles in real estate just as there are in the stock market. All are local cycles. Boston may be going up while St. Louis is going down. These individual cycles last from 3 to 7 years and many times are flat for long periods.

There are entrepreneurs who will (for a price) tell you where they are about to take off. Some of these gurus will show you how to buy properties in other states without leaving your home.

I have investigated many. Almost all recommend single family houses which I consider too risky. Don’t take the free advice in Fortune magazine or any publication until you check their past performance. It is as bad as their stock picks.

There are a couple of legitimate gurus, but they are expensive and you must be willing to invest time to educate yourself. Then work at it.

Owning your own home is not what I am talking about. I don’t know how the little guy can buy a house working 29 hours a week. Cheap houses will be built. No more McMansions. Low interest rates help, but it is a steady job that builds a nice home. It is cheaper to live in an apartment until the economy improves.

At the moment it looks like the stock market is going higher. Janet Yellin is going to print money even faster than Ben. There is no place for that money to go except in the market.

….while we wait for the next crash.

Al's new ebook (32 pages) is available on Amazon for 99 cents. It explains the Golden Cross and the Death Cross. These are well known methods of determining long term trends in the market. If you only learned one method of technical analysis this would have kept you out of the 2000 and 2008 crashes and will keep you out of the next one that is coming soon. Search by Never Lose Money In The Stock Market Again. Copyright Williamsburg Investment Co 2013