The best seller is the one, who doesn’t have a choice. The efficient market theory would have us believe that there never was and never will be a seller, which liquidates an asset below its value, but that is completely false.
Not only was I personally involved in real estate transactions in 2009 and 2010, where the sellers practically gave me the property for free, but in desirable zip codes, where sellers always dictate terms, I was able to buy properties for less than the cost of construction.
We want to be ready for times when sellers MUST sell, not wish to.
Those special moments are rare – they come around once or twice a decade, and we’re approaching such a time, as we speak.
You want to be ready to buy at bargain valuations, as sellers will have guns pointed at their heads and will be forced to sell, no matter what the price is.
That’s the key.
Right now, hedge-funds are suffering. They’ve had a lousy Q1, and clients are threatening to withdraw funds. That’s not all. Investors are beginning to realize that the tax-cut impacts are starting to wear-off, and lastly, investors now have alternatives – yields for bonds are rising, commodities are looking better, and of course, cash is a viable alternative, as stocks are losing far more than just the cost of inflation right now.
In other words, we might have already seen the top for the stock market in 2018.
If this is true, each additional rate hike, such as the one that is baked in the cake for June, or sooner, more surprising if it takes place in May, would cause bonds to become even more attractive.
The bottom line is that unless new buyers are getting involved, stocks, in general, are stagnant.
When I refer to stocks, the focus is on traditional indices, since there are niche industries, which are still cheap, ignored, and even hated by investors, thus offering opportunities for high returns with low risk.
There is absolutely no reason to rush into new investments – real estate prices have dramatically increased since 2009. Stocks are enjoying the second longest bull market in history; for the most part, private businesses are booming, so bargains are scarce, even when looking to buy equity in family-owned enterprises.
In fact, later this year I’m traveling to both Asia and Europe in search of real estate opportunities.
One of the most significant paradoxes of investing is that most days we do nothing and it constitutes brilliant decision-making on our part. Inaction, or waiting, is a laborious task, which puts investors on edge, but it is critically important.
Investors are leveraged, funds are underperforming, and inflation fears are mounting – sit and wait for opportunities to come.
When they appear, they’ll be disguised as a risk. In other words, you’ll see quality businesses, such as Clorox and Colgate-Palmolive, giving up 10%-15%, and you’ll hear CNBC analysts warning that a repeat of 2008 is upon us.
Pay no mind to fear mongering.
Do your research, and know that Portfolio Wealth Global will be covering new positions to consider, as the first big buying opportunity in ten years is arriving.