In a recent interview the following question was posed to Mark Cuban:
Is the subprime-mortgage scare likely to have lasting impact on the Dow? Do you believe Bernanke and the Fed have responded reasonably? Where do you think the markets are headed in the next few months? How should the average investor respond? Should any of this be of concern to a billionaire in the media, entertainment, or sports biz?
Cuban's answer:
I have no idea, and neither does anyone else. All I can say is to remember the months of July and August and how you felt every time you saw what the market was doing. Imprint the volatility and angst that most in the market felt in your brain. Then when one of these funds tries to come along and explain to you how wonderful buy-and-hold is and how it always works, think about these couple months. Then make a decision whether the upset stomach from watching the markets go up and down, plus the risk of losing some, or possibly all, your money, is worth the few percentage points you might make over the 5 percent or more a C.D. is paying.
This is a clear challenge to accept more than what the broker machine offers you. But it all ultimately comes down to what do you want: average or above average?
Comments
12:59 am
I'm a Real Estate agent in Southern California and I can tell you that what Mark Cuban says can be applied to the real estate market. The market is trending down, no doubt about it but not in all areas and not evenly. For example, prices may have fallen in Moreno Valley as well as in Los Angeles, but the extent of the drop is much more noticable in the San Benardino and Riverside counties. Not to say that prices aren't going down here in Los Angeles as well, but they just don't drop all at the same time, in the same month on the same day.
Also certain areas actually see an increase in prices, such as those with exemplary school districts and thus a huge demand, espcially before the school year begins. Before I start preaching to the choir, what I'd like to say is that when buyers tell me that they're going to wait for prices to come down, I tell them why didn't they wait just before prices were going to go up?
Their response is that "We didn't know it would go up so high?" and I tell them "Well, how do you know prices will go as low as you say they will 6 months from now?"
Their answer "Because the TV says foreclosures are increasing and sales are slowing so we're going to wait"
Fair enough, you have to buy when you feel it's the right time to buy for YOU, but to base it off of what the television, news article or next door neighbor says (Even a Realtor) kinda makes you want to know how is it that you can predict what has not happened yet?
Real estate, like its much more liquid counterparts (Stock,Bonds and Comms), is cyclical in nature and if you hold onto a property long enough you'll experience it eventually.
You make your money when you buy, in the case of a home you find your home when you pay at or a bit below market value and you get reasonable and agreeable loan terms and you can AFFORD the payment. Waiting for the market to do something for you can work at times but things such as the stability of your employment, interest rates, personal issues, macro economic conditions, your feelings, and a plethora of other factors greatly contribute to how much how you can afford with or without prices going up or down.
Waiting 6 months just might have been the solution and prices may have fallen within your price range but what if they fall futher? What if they increase? What if they remain stable? What if banks require 5% 10% 15% down? What if stated income no longer exists for you and you have go full documentation and your income cannot support the home range you wish to value?
Will you yet again be at the mercy of the market and wait for the market to come down to how You want it?
I cannot predict all things but what I do know is that the NOW moment is what counts and where you're at in that moment is much more important then the "Whats going to happen later" moment.