Steven Bauer: Real Estate has been the place to be and I was there for quite a while. That has changed. I often talk about “TOPPING” and for that matter “BOTTOMING.” In a five year Bull Market it is only prudent to be looking for Topping and that is what I began doing in 2013. Real Estate is one of those Industry Groups to have “Topped” early in 2013. In your valuation of my work / analytics you may look and ponder a bit – is at this Industry Group is my 20-year Chart with 12 years for the Industry – (see below). It remains DOWN from its highs during the current General Market – euphoric rally of 2013. That tells you everything you need to know about the coming months and perhaps longer. Yes, it has doubled and more in this past year – BUT – – YOU are being “warned” to exercise prudence and caution in holding many of the component securities. There are over 100 component Companies in my Real Estate Universe and many are going the wrong way. Taking a Profit is “Wise” advice and no Investor has ever gone broke taking profits.
Forecasting is an essential First Step to consistent annual profits. It often provides me / you with a long preview or ability to do the necessary Analytics very well. I have a graphic of an iceberg that I often use in my articles on my longer-term performance. It is a wonderful metaphor for understanding that most often investors, financial analysts and asset managers do not Dive Deep Enough into their research / analytics and come up short of the profits that are readily available and they deserve. Just so you know, the water is very cold and there are many hidden places to explore (research). The rewards are well worth the “Dive” but you had better have lots of experience and the proper equipment (investment tools).
The Second Step is implementation of my Forecasting. That is even more complex because it integrates the General Market, its Sectors and these very important Industry Groups I write articles about. Then there are the above mentioned “Components Companies.” There are the Best and there are the Worst. It is that simple and my Analytics accurately determines one from the other. Then at or near an Inflection Point I Email my Clients my Formal Recommendations.
My work includes ETFs which is very similar to any Sectors, Industry Groups. It requires much more time than individual Companies because there are often many component companies that require grinding analytics, but it is also a very profitable task. Without my Forecasting Methodology, making timely and “Wise” investment decisions just leaves those (would-be profitable) Companies and ETFs on a long list somewhere and not in your portfolio where they should be.
All this work / analytics has to do with what I refer to as my “Rotation Model.” Within the realm of my Forecasting, the risk as well as the reward can be accurately calculated, so the rhetorical question is: why not invest in those securities that offer the lowest possible risk and the highest possible reward? You might like my article “Risk and Reward” discussing this aspect of my work / analytics.
Some Analysts do their jobs well and others do not, it is just that simple.
My Basic Views on Real Estate
All “Sector and Industry Group” Analytics is pretty much the same. As mentioned in my above Rotation article they all move from Bullish to Bearish and back again to Bullish just like the U.S. Indices and most all Companies and ETFs. There are always current Big Winners and unfortunately Big Losers – the trick is to be able to sort the current Favorable from the current Un-Favorable (please see the below table). The above “Risk and Reward” article explains this very well.
My focus is first – the “What.” “What” are the currently most Favorable Companies / ETFs and “What” is the probability of enjoying superior profits. Next is my Forecasting for identifying the “WHEN.” “When” is it prudent to own a Company / ETF for the ride UP? There is also the “When” for ride DOWN that needs to be carefully analyzed! A third “W” is almost never considered. It is the “WHY” and my work / analytics tells me WHY every time I ask.
Real Estate has been (note the past tense “has been”) a great place to have invested your money in recent years. However, my Forecasts suggest that these good times are over and caution is advised.
Real Estate has performed brilliantly. It has also taken some major hits of over 50% and that will occur again. I will keep you posted. Please scroll down to my twenty year chart, it tells you quite an interesting story. The story is all about risk and reward.