Tuesday, January 26, 2010

Don't wait for good news if you want to make great investments

We humans have a natural tendency to predict the continuation of whatever trend appears presently. When times are great, we are euphoric. We all look like geniuses with our investment skills as the rising tide of the markets raises all boats. And although we might pay lip service to knowing it won't last forever, for the most part, our actions would seem to indicate otherwise. And, of course it works in reverse when times are tough. We hoard our precious capital, convinced it is only going to get worse, and it is these folks' realizing they have missed the bottom that typically drive the sharpest upswings in the markets later on, as they all try to pile in at the same time. In other words, people are greedy when others are greedy, and fearful when others are fearful.


Arguably one of the best investors on the planet, Warren Buffett, has paraphrased his investment philosophy as follows: "Be fearful when others are greedy, and greedy when others are fearful." His track record speaks for itself. We humans, as a group, do tend to fix things over time. Markets cycle back. They normalize.

Right now in Austin, Texas, we have just closed out a year that saw a 108 percent leap in commercial property foreclosures over 2008. And the forecasts are anything but rosy going forward. With $500 billion in Austin commercial mortgages coming due for refinancing in 2010 and over $800 billion in 2011, it is hard to imagine how now could be the right time to put that precious hoarded capital back to work; however, if you can see it coming, other investors can too, and the market has likely built much of it into current valuations. In other words, by the time the market turns, the news is typically still getting worse. If you wait for the news to be bright and cheerful, you've almost certainly missed the strike point. Markets are, by nature, a forward-looking mechanism. They peak while the news is still great and they bottom out while the news appears dismal.

We have a very attractive general investment proposition here in Austin that will likely provide an underlying bid to our market that other places just can't claim. People really want to come here to live, because it's such a great place for it. And that attracts capital, all else being equal.

Investing isn't easy. If it is, start looking for the sucker at the table. If you can't find him, get a mirror. But if you are an investor, then it’s time to load the gun and go hunting. Great deals are around, and you don't want to be trying to buy them when everyone else is sprinting headlong for the entrance.

This article was provided by Janae Oliver of Regent Property Group providing Austin real estate services and providing information about Austin luxury homes for sale to those people searching Austin neighborhoods for purchasing or selling a home.



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