Real Estate Market

I recently finished the book, Trump Strategies for Real Estate: Billionaire Lessons for the Small Investor. One thing I thought was particularly timely was a small section in the last three pages of the book. Under a section titled Exit Strategies the authors suggest selling a property when 1) interest rates are low but indications are they are going up; 2) stock market and bond market show low returns; 3) dollar sinks against foreign currencies; 4) inflation rate increases.

Interest rates have been climbing for a while now. Recently the stock market has reversed gains from earlier this year. The dollar has definitely been sinking in the currency markets. Inflation has been moving up largely due to oil prices (IMHO anyway). Now not all of these changes have lined perfectly, but it does make one wonder is now the prime time to sell real estate. Have rates perhaps gotten "too high" already and we are off peak prices. Interest rates seem high compared to the last few years, but they are still a little low in historic terms.

So this leaves the potential investor wondering if it is a good time to sell, or if we are sliding into a good time to buy. The prime question is do you think interest rates have peaked for this economic cycle. Secondary question, is whether inflation is under control or just about to pick up?

Investment Books

I have finished reading a second book on Warren Buffet. This one was Robert Hagstrom's The Warren Buffet Way. I liked it much better than The Warren Buffet Portfolio. If you only have time to read one of the books, this is definitely the one to read. It is a new addition and mentions several investments made after the year 2000, so it is fairly up to date.

This book involves more details on how Buffet picks his investments with only a small section on the Focus Portfolio approach. I think that is the right balance, as its more important to buy the right companies at the right price than to have the right sized portfolio. (Something tells me Buffet would agree, while stress both are important for beating the market.)

I've moved on to almost finish a book about Donald Trump's real estate investing practices, Trump Strategies for Real Estate: Billionaire Lessons for the Small Investor. This book was "picked out" by my 16 month old daughter who grabbed it off the library shelf and ran across the room with it. While I do invest in real estate as well as stocks, I would not have sought out this book. However, having read most of it I have recommended it to several people.

Of the two approaches these men have taken to become famous billionaires, I have to say it appears what Warren Buffet does is easier. (Warren certainly makes it look easier.) Real estate investing as Trump does it takes many skills and loads of vision to pull it off successfully. Where as stock investing the Buffet way requires basic math skills, time to read through annual reports, and occasionally buy stocks. The hard part is over coming the fear that makes most people do stupid things like buy high and sell low.

I'll review the Trump book when I finish it.