This is one of the most widely known cycles in the stock market. I am not sure how anyone could look at something like this that has outperformed the market as a whole by this magnitude, and conclude that.
There are many people, myself included, that have track records of beating the market. These types of tools are what you use to do it. The reason why they do continue to work, and always will, is that the average person thinks their arbitrary opinion of the economic conditions at hand supercede cycles. What if your opinions are wrong? What if we do not have a big recession, and a big RE selloff?
As a result, they will kick this info aside and “wait until it is safe” to go in. March 2000 was the last “safe” time. The “safe” point they choose is typically where people like me are exiting (selling).If everyone acted properly in accordance with cycles like this, they would probably diminish in their effectiveness.
Timing RE is much harder due to having much less historical data, and also that nature of the asset and it’s lack of liquidity. I do sense in here in general, a very obstinate nature in opinions. It is one thing to have strong opinions as most of us do, but what about considering the other side occasionally. I am constantly forced to do this due to the nature of my business. I have to maintain the flexibility in my thinking to admit to a trade being no good, and getting out of it. Often at times that can mean, completely reversing my position based on the facts at hand.
I share the same view many of you do about the fate of RE in the next few years. However, I will venture to bet that most of you will be afraid to buy when the bottom falls out for fear of it going further. I would argue, that will be the exact time you should buy. Waiting for it to be “safe” is not a way to get ahead of the herd.
In conclusion, what about just for the moment considering that the second most powerful stock market cycle that has provided a great timing edge for over 50 years, might actually have some value? Economists make money selling you opinions, not investment advice. Most of them cannot trade their way out of a paper bag, and wouldn’t even try to. And to top this off, in the spirit of being flexible, I could be wrong! I am willing to take the loss if I am wrong and move on to the next high probability situation. There are no guarantees in life the last time I checked.
