Mass Foreclosures in Canada`s Future

[Jack]

QUOTE With RE the investor has the option to ADD value to their investment at any time (ie. distressed properties made nice, additional suites, modify the zoning, condominiumiztion etc.). This value-added process can be quite lucrative AND hands-off if the right relationships are forged
ABSOLUTELY!

Control of investment/change of use is one of the best allures of real estate. On that note, let`s get one thing straight - I am not debating "real estate" as an investment vehicle! If I didn`t think that it could provide me a quicker path to wealth & free time, there`s no way I`d be paying $200/month to be a REIN member, that I can assure you. My only debates surround Alberta. To so many members here, it`s pretty much the only province/option in Canada, and I think that`s the wrong attitude. Here I am offering a more bearish opinion on the province, with some pretty good supporting evidence, and I get slammed, sometimes at the personal level.

 

[tbarcier]

QUOTE (Jack @ Dec 12 2008, 05:54 PM) I get slammed, sometimes at the personal level.

Why do you think that is?

 

[ZanderRobertson]

I think you`ve shown a pretty strong acumen for analyzing the numbers of the moment. i.e., you`ve been pretty convincing that prices likely have a ways to go down in Alberta still due to affordability etc. you`ve failed to convince me that there`s a stronger and longer growth trend anywhere else in Canada. as you`ve pointed out manitoba has better affordability numbers and potential for yield in the near term. long term i haven`t seen anything to suspect a boom in growth better than alberta? is this fair? do you think manitoba is poised for a demand driven boom anywhere near what alberta has in the past and will in the future when the "economic meltdown" is over? or it just lagging alberta`s cycle and therefore likely to flatten soon and stay flat longer?i don`t condone personal attacks certainly, but you have to admit that being a contrarian will always bring about counter arguments.

i can think of two public economic commentators/investors who can be quite contrarian: 1) Peter Schiff has brought about a lot of detractors due to his style and bearish predictions, but he`s often been right! 2) people are forever predicting that Warren Buffett is dead wrong this time, but due to his track record he gets a lot of breathing room these days

you`re far from being either one of these characters,so reasonably expect strong counter-arguments when you decide to be the only bear in a room full of bulls. And by the way, THANKS, we definitely need that. If nothing else, it helps me personally to think PRUDENTLY about investing. reasonable levels of leverage should be sought, and we definitely should be looking for below market prices now due to potential for further depreciation, cash flow has to be strong etc.


by the way... thomas where are you? i haven`t seen your posts around much lately!

QUOTE (Jack @ Dec 12 2008, 03:54 PM) ABSOLUTELY!

Control of investment/change of use is one of the best allures of real estate. On that note, let`s get one thing straight - I am not debating "real estate" as an investment vehicle! If I didn`t think that it could provide me a quicker path to wealth & free time, there`s no way I`d be paying $200/month to be a REIN member, that I can assure you. My only debates surround Alberta. To so many members here, it`s pretty much the only province/option in Canada, and I think that`s the wrong attitude. Here I am offering a more bearish opinion on the province, with some pretty good supporting evidence, and I get slammed, sometimes at the personal level.

 

[Jack]

QUOTE as you`ve pointed out manitoba has better affordability numbers and potential for yield in the near term. long term i haven`t seen anything to suspect a boom in growth better than alberta? is this fair? do you think manitoba is poised for a demand driven boom anywhere near what alberta has in the past and will in the future when the "economic meltdown" is over? or it just lagging alberta`s cycle and therefore likely to flatten soon and stay flat longer?

OK, but define "long-term". How long? I`ve never done a JV deal in my life, but, from what I`ve read on these boards, they tend to be sold as 3 - 5 year holds. Do you consider that L/T? Or, are you talking 2030, 2040, etc.?

"Booms" don`t really exist in Manitoba. Winnipeg has a fantastic 10-year average annually compounded appreciation rate of 7.3%; above inflation (2.3% average over the same period), so the gains are real, but not too far above that it shifts the affordability fundamentals. Contrast that to Calgary`s 10-year rate, which is an unsustainable 15.0%, especially when compared to the average annual CPI increase of 3.4% over the same period. This just adds proof to my bearish opinion on values in the city over the next few years, which sucks, because this is where my holdings are, too! I don`t hate Alberta, I`m just free of bias! Trust me, I don`t like losing net worth by the day, either!

 

[Lucas]

QUOTE (Jack @ Dec 12 2008, 06:05 PM) OK, but define "long-term". How long? I`ve never done a JV deal in my life, but, from what I`ve read on these boards, they tend to be sold as 3 - 5 year holds. Do you consider that L/T? Or, are you talking 2030, 2040, etc.?
"Booms" don`t really exist in Manitoba. Winnipeg has a fantastic 10-year average annually compounded appreciation rate of 7.3%; above inflation (2.3% average over the same period), so the gains are real, but not too far above that it shifts the affordability fundamentals. Contrast that to Calgary`s 10-year rate, which is an unsustainable 15.0%, especially when compared to the average annual CPI increase of 3.4% over the same period. This just adds proof to my bearish opinion on values in the city over the next few years, which sucks, because this is where my holdings are, too! I don`t hate Alberta, I`m just free of bias! Trust me, I don`t like losing net worth by the day, either!

I wasn`t attacking you personally or questioning whether you are for or against RE as an investment option...I was just bringing to light some of the advantages RE has in a downward trending market, regardless of the city, province or country.

Relax...breathe...ahhhhhhhhhh....

In Edmonton, I have been apart of 3 multiple offer scenarios...within the last 2 weeks!!! In my opinion, for what its worth...and I am not trying to attack you Jack, we are nearing bottom...in Edmonton anyway. Possibly 1.5 to 2 years of flatness and/or a decline in prices and rents and things will start becoming normal again.

However, as Thomas posted, there are real ways to make money in a flat or declining Real Estate market. My stance is and always has been that to realize these profits you have to DO SOMETHING...and in a difficult market, sometimes that "something" is more than just purchase a property.

Lucas

 

[VicChung]

QUOTE (Lucas @ Dec 12 2008, 06:19 PM) I wasn`t attacking you personally or questioning whether you are for or against RE as an investment option...I was just bringing to light some of the advantages RE has in a downward trending market, regardless of the city, province or country.

Relax...breathe...ahhhhhhhhhh....

In Edmonton, I have been apart of 3 multiple offer scenarios...within the last 2 weeks!!! In my opinion, for what its worth...and I am not trying to attack you Jack, we are nearing bottom...in Edmonton anyway. Possibly 1.5 to 2 years of flatness and/or a decline in prices and rents and things will start becoming normal again.

However, as Thomas posted, there are real ways to make money in a flat or declining Real Estate market. My stance is and always has been that to realize these profits you have to DO SOMETHING...and in a difficult market, sometimes that "something" is more than just purchase a property.

Lucas


In life, nothing is guaranteed. In the book by Donald Trump "How to get rich", he writes that if you want smooth sailing, you should move to the mediterranean.

My viewpoint is that the truth is that we are all right. In 1929, during the first phase of the depression, millions of people went broke. After two years of depression, in 1931, many smart people thought that the depression was over and they bought back in the markets. As a result, all those smart people lost their money, mostly in the stock market. So, Jack is right to be cautious.


However, during that same time, many investors made tons of money as they managed to negotiate numerous good deals as is the case right now. There are lots of good deals.

I believe in positive thinking as you have nothing to lose, but more to gain. If you are negative, you spend a lot of time worrying and that will eventually KILL you. However, if you are positive and are aware of the negatives, you can make the right choices.

Cash flow is king these days and making it through the downtown. I personally have to thank REIN to keep the positive perspective as opposed to the negative.

 

[tbarcier]

To quote Garth "Long live the king!"

 

[htimoffee]

QUOTE (rymac @ Dec 11 2008, 03:40 PM)
The problem will come from people who went 5% down and need to refinance.



Say someone went 5% down and your purchase price was $400k. They were able to pay their mortgage no problem but the market went down and the home lost 3% of it value. So its now worth $388k.



This person has to refinance but the bank will only finance 95% which is $368.6k.



Home owner their original down payment and $3k of principle pay down which is $23k, and they lost $12 from the market. But they need a 5% down payment to get a mortgage which would be $18.4k dollars. Here's the pickle. The difference being: 23-12= 11, 18.4-11 = 6.4. So they're short $6400 cash.



Where is that going to come from? Visa at 20%, personal loan for 3 years at 10%. Top that up with a car loan and the mortgage on $368 house and people will be hurting.






Yes, I agree. The people who have purchased with zero or 5% down may have trouble, but hopefully the banks will work with them so they aren't forced into foreclosure, especially if they have been consistently making their payments. Banks do not want properties on their books.



It will also be difficult to refinance our rental properties with the values going down. Also, the banks may come back and say "we financed you based on a 25% down payment. You need to come up with more money because the mortgage is worth 90% of the property value and not 75%. I think the best thing is to just keep making mortgage payments, treat our residents very well and wait til the values are back. I hope it's not going to be 10 years!

 

[GarthChapman]

QUOTE (htimoffee @ Dec 15 2008, 08:30 PM)
Also, the banks may come back and say "we financed you based on a 25% down payment. You need to come up with more money because the mortgage is worth 90% of the property value and not 75%. I think the best thing is to just keep making mortgage payments, treat our residents very well and wait til the values are back. I hope it's not going to be 10 years!




As long as you are making your payments you won't have any problems. The banks don't come back to their borrowers and ask for more cash to top up the equity positions on their mortgages.



You last suggestion is exactly what we all should be doing.

 

[chargerharry]

QUOTE (Jack @ Dec 12 2008, 05:05 PM) OK, but define "long-term". How long? I`ve never done a JV deal in my life, but, from what I`ve read on these boards, they tend to be sold as 3 - 5 year holds. Do you consider that L/T? Or, are you talking 2030, 2040, etc.?

Look at this "long term" hold thing a bit differently, Jack. When you buy a property, once everything settles, you have a 3-5 year term on your mortgage. Once that term comes up for renewal, you have to do something. The typical scenarios are that you sell the property and deal with the profits as laid out in your JV agreement. Both you and your JV partner are happy as you have both hopefully profitted from the transaction.

Or you can have the prop reappraised at hopefully a higher price and then buy out your jv partner and refinance at the increased value. Your partner is happy with their profits and you have a property providing rental income that you can hold til the cows come home. That is why the JV`s are structured with such a time frame. Also, from my perspective, it gives the investor a clear exit strategy for when and how his money will be returned. As has been mentioned before, the goal of business or investing is to get out of the business, not to get in.

My real estate investment time frame is another 20 years. In that period of time, I will hopefully have many investors that have profitted from my expertise and either reinvested with me or taken their profits and done what they wanted to do. I have made a clear vision of where I want this business venture to take me and I work that plan. Hope that makes some sense.

BTW, what do you think of Bernard Madoff`s little Ponzi scheme? Gawd!!! What I could do with $50Billion.

Harry

 

[eskilover]

"I`m on no mission at all, my two properties are both in Calgary, so, of course, I want it to rebound as much as anyone else does. I just don`t like what I`m seeing from the numbers - affordability, CPI, WTI, tax hikes, etc. It`s hard to say how long it`ll take for home values to rebound back to where they were in 2007, but most signs are pointing to a slow recovery."
Jack, the CEO of Google was on TV the other day and he was talking about a speedy recovery. Time frame was the next 6-9 months. That being said, I don`t think you should be trying to "time" the RE market. I am well-aquainted with the market in Edmonton, so I will speak about that particular market. (Calgary & Edmonton do tend to perform similarly however) In the last 60 years in Edmonton, if you bought a property and held it for 10 years, the worst thing that would happen is you would have broken even on the property value. If you take a longer term outlook and buy properties that cash-flow you will do very well.

For example, if you buy Lucas`s townhouse in SW Edmonton for $200k today, you put 20% down, rent it out at 8% of the price annually, ($1333/month), you get a 4.99% mortgage rate and assuming 30% expense to rent ratio, in the first year you lose $13 dollars on cash flow. If your rent and expenses go up by 3% a year over the 10 year hold, however, you produce net cash flow of $16,266 and you will pay the mortgage down by $46,733 for a total profit of $63,000!

That my friend, works out to be about 10% annually! With no capital appreciation! So your argument about cash flow and mortgage paydowns being offset by taxes and closing costs seem to be off a bit too.

If you are out in the marketplace today, there are some seriously motivated vendors out there. Remember, the average guy doesn`t know what`s really going on, they only get their information form the talking heads on TV and all they are hearing is doom and gloom. As a REIN member, you get tons of info that the average guy has no idea about. So don`t let yourself get "paralysis by analysis" and stop you from doing something. If you are in this thing for the long haul, it really doesn`t matter that much if you overpay by 5 or 10 per cent. The cost of doing nothing far outweighs the cost of overpaying, if indeed you are overpaying.

That being said, thank you for your thoughts on this. Blindly following anyone`s advice is crazy, so thank you for making me pause and think about what you have posted.
Randy Christenson

 

[Jack]

QUOTE BTW, what do you think of Bernard Madoff`s little Ponzi scheme? Gawd!!!

There are no two better words in the English language than "Ponzi Scheme".

 

[CalvinPeters]

I completely agree with Jack on the ROI`s of buying in this market. If the values go down, you ROI takes a leveraged drop as well. As a yield investor, that is bad. If you are able to realize cash, it might be prudent to take it, then put it back into (perhaps the same property or close to it) at the reduced rate...and then ride the exact same uptick, only this time returning leveraged profits...think of what adding two years of zero growth to the time value of your ROI does. From a yield perspective, this makes complete sense...and I can say that I was quite happy to hear Steve McKnight acknowledge a yield model, that was kind of refreshing.

That being said...

It takes time to put deals together, and raise funds and close and turn over properties to management...and do this on a large level moves into the territory of a full time job. Therefore, I can honestly say that I am participating in aquisitions ALL THE WAY DOWN to whereever the bottom is. I will surely lose some equity value over the short term, but I value my time so I dont want to sell immediatly, either. My rational is that I am dollar averaging DOWN every time I buy a property for less (or more cashflow) and that applies to my whole portfolio...yes I care about the entire thing, not just the ONE property I am working on. So given these conditions, I continue to buy, knowing full well (and the only thing it seems everyone agrees on is that the market will eventually go up) that a rising tide raises ALL boats...but this time...

I WANT TO HAVE A WHOLE GREAT BIG BUNCH OF BOATS!!!!

you know what I mean?!!!

 

[Jack]

QUOTE For example, if you buy Lucas`s townhouse in SW Edmonton for $200k today, you put 20% down, rent it out at 8% of the price annually, ($1333/month), you get a 4.99% mortgage rate and assuming 30% expense to rent ratio, in the first year you lose $13 dollars on cash flow. If your rent and expenses go up by 3% a year over the 10 year hold, however, you produce net cash flow of $16,266 and you will pay the mortgage down by $46,733 for a total profit of $63,000!That my friend, works out to be about 10% annually! With no capital appreciation! So your argument about cash flow and mortgage paydowns being offset by taxes and closing costs seem to be off a bit too.

Are you using a 25-year mortgage term in this example? At these terms, with a $160,000 mortgage, that`s about the only way you`d wind up with $46,733 of mortgage paydown after only ten years. In fact, it`d need to be a mortgage with about a 22 or 23-year term. Which is fine, but, as we all know, what you sacrifice in having a shorter term-to-maturity on your mortgage is greater cashflow today.

So, I`m going to assume that you made a mistake in your calculations, and redo everything at a 35-year amortization term.

With these numbers and terms, after ten years, you`d still owe $138,094.15 on the house. So you`ve actually only paid down $21,905, not $46,733. And you`ve earned $16,266 of passive cash over ten years, which, when discounted by an assumed risk-free market rate of 4%, is worth $10,989 today.

So, you invested $40,000 of your own money, and your pre-transaction cost gains are:

-$21,905 (paydown)
-$10,989 (PV of cash inflows earned over 10 years)
=$32,894

So, you`ve turned $40,000 into $72,894 over 10 years. 10% annually? No. The correct answer is 6.2% annually.

But, now we have transaction costs and taxes. Given that said that there was no capital appreciation, we have the following costs to cover:

-$10,000 (commission - 7% of first 100K, 3% of remainder)
-$1,000 (legal)

So, you`ve immediately wiped out the cashflow and a portion of the paydown. You`re now left with $21,984 of net profit from the transaction.

So, you`ve actually turned $40,000 into $61,984 over 10 years, which certainly isn`t a 10% annual return, and it`s actually a pretty grotesque, paltry, uninspiring 4.5% annual yield.

QUOTE If you are out in the marketplace today, there are some seriously motivated vendors out there. Remember, the average guy doesn`t know what`s really going on, they only get their information form the talking heads on TV and all they are hearing is doom and gloom. As a REIN member, you get tons of info that the average guy has no idea about. So don`t let yourself get "paralysis by analysis" and stop you from doing something.

If doom and gloom isn`t reality, what is? Are these prosperous times? I`d love to hear "what`s really going on".

QUOTE If you are in this thing for the long haul, it really doesn`t matter that much if you overpay by 5 or 10 per cent. The cost of doing nothing far outweighs the cost of overpaying, if indeed you are overpaying.

Sentence one is incorrect, and I disagree with sentence two.

But, please, fill me in on "what`s really going on". Are all of these brutal economic indicators just facades?

 

[TIMWEMBLEY]

QUOTE I am well-aquainted with the market in Edmonton, so I will speak about that particular market. (Calgary & Edmonton do tend to perform similarly however) In the last 60 years in Edmonton, if you bought a property and held it for 10 years, the worst thing that would happen is you would have broken even on the property value. If you take a longer term outlook and buy properties that cash-flow you will do very well.

Very True

A little while back RedlineBrett posted a great document in "Calgary historical market analysis, 40 year info on the Calgary market + a little something special" (dont know how to link it )proving in a five year period Real Estate almost always is positive I have used in JV presentations. (great work Brett) It is calgary but Edmonton does mirror Calgary except on CUPS.. Go OIL!

Tim Blake

 

[tonyla]

QUOTE (Jack @ Dec 17 2008, 06:50 PM)
Are you using a 25-year mortgage term in this example? At these terms, with a $160,000 mortgage, that's about the only way you'd wind up with $46,733 of mortgage paydown after only ten years. In fact, it'd need to be a mortgage with about a 22 or 23-year term. Which is fine, but, as we all know, what you sacrifice in having a shorter term-to-maturity on your mortgage is greater cashflow today.



So, I'm going to assume that you made a mistake in your calculations, and redo everything at a 35-year amortization term.



With these numbers and terms, after ten years, you'd still owe $138,094.15 on the house. So you've actually only paid down $21,905, not $46,733. And you've earned $16,266 of passive cash over ten years, which, when discounted by an assumed risk-free market rate of 4%, is worth $10,989 today.



So, you invested $40,000 of your own money, and your pre-transaction cost gains are:



-$21,905 (paydown)

-$10,989 (PV of cash inflows earned over 10 years)

=$32,894



So, you've turned $40,000 into $72,894 over 10 years. 10% annually? No. The correct answer is 6.2% annually.



But, now we have transaction costs and taxes. Given that said that there was no capital appreciation, we have the following costs to cover:



-$10,000 (commission - 7% of first 100K, 3% of remainder)

-$1,000 (legal)



So, you've immediately wiped out the cashflow and a portion of the paydown. You're now left with $21,984 of net profit from the transaction.



So, you've actually turned $40,000 into $61,984 over 10 years, which certainly isn't a 10% annual return, and it's actually a pretty grotesque, paltry, uninspiring 4.5% annual yield.







If doom and gloom isn't reality, what is? Are these prosperous times? I'd love to hear "what's really going on".







Sentence one is incorrect, and I disagree with sentence two.

But, please, fill me in on "what's really going on". Are all of these brutal economic indicators just facades?


Sorry but to be nit picky you should use present value of an annuity since there are payouts over the entire 10 year term.



PVoa = PMT [(1 - (1 / (1 + i)[sup]n[/sup])) / i]



Which would roughly give you a present value for cash flows of $12781.72.



Also if you are moving all dollars to PV you should move the transaction costs (commission and legal) to PV also so you get an apples to apples comparison. But many people are not selling after the first year so those transaction costs are moved even further out.



Overall I follow your logic and do agree investing in a flat to declining asset is going to have a poor yield. If you believe that RE is going to be flat to declining over the long haul then it's definitely a poor investment.

 

[Jack]

QUOTE Sorry but to be nit picky you should use present value of an annuity since there are payouts over the entire 10 year term.

PVoa = PMT [(1 - (1 / (1 + i)[sup]n[/sup])) / i]

Which would roughly give you a present value for cash flows of $12781.72.

True, I was too lazy to calculate what the monthly PCF number would be. I just discounted the total figure which he presented.

QUOTE Also if you are moving all dollars to PV you should move the transaction costs (commission and legal) to PV also so you get an apples to apples comparison. But many people are not selling after the first year so those transaction costs are moved even further out.

Bringing TX costs and taxes to PV wouldn`t make sense, because they don`t take effect until year 10 and they`re a one-time charge without the effect of time, whereas cash flow starts from month 1 and, like you said, is an annuity.

If I were to do that, then I`d also need to PV the mortgage paydown, which just gets silly.

QUOTE Overall I follow your logic and do agree investing in a flat to declining asset is going to have a poor yield. If you believe that RE is going to be flat to declining over the long haul then it`s definitely a poor investment.

Indeed.

 

[ZanderRobertson]

What's really going on:



1) Speculators with no cash flow are being shaken out of the market

2) People who bought at the peak and can't afford their mortgages are looking for someone to blame

3) Real capitalists are adjusting their business to the new realities and pushing forward

4) Housing starts are down, but they are still building, indicating that everyone hasn't died. Only the weak are being shaken out.

5) Action takers who see opportunity are making transactions that will pay handsomly in the future

6) Commentators are commenting that this is the worst of times

7) Real capitalists are gleeful right now as they are setting themselves apart from the pretenders.

8) People who spend all day posting on MyReinSpace should worry about their jobs in this fearful environment



What is a recession? Growth stops for a time, BUSINESS does not!



Andrew Carnegie started his first steel company during the time of a massive financial panic, probably worse than the one we're experiencing now. His strategy? Build up productive capacity at all cost. His competitors? Reduce capacity and wait for better times? Who do you think prospered when the good times came?














QUOTE (Jack @ Dec 17 2008, 05:50 PM)
Are you using a 25-year mortgage term in this example? At these terms, with a $160,000 mortgage, that's about the only way you'd wind up with $46,733 of mortgage paydown after only ten years. In fact, it'd need to be a mortgage with about a 22 or 23-year term. Which is fine, but, as we all know, what you sacrifice in having a shorter term-to-maturity on your mortgage is greater cashflow today.



So, I'm going to assume that you made a mistake in your calculations, and redo everything at a 35-year amortization term.



With these numbers and terms, after ten years, you'd still owe $138,094.15 on the house. So you've actually only paid down $21,905, not $46,733. And you've earned $16,266 of passive cash over ten years, which, when discounted by an assumed risk-free market rate of 4%, is worth $10,989 today.



So, you invested $40,000 of your own money, and your pre-transaction cost gains are:



-$21,905 (paydown)

-$10,989 (PV of cash inflows earned over 10 years)

=$32,894



So, you've turned $40,000 into $72,894 over 10 years. 10% annually? No. The correct answer is 6.2% annually.



But, now we have transaction costs and taxes. Given that said that there was no capital appreciation, we have the following costs to cover:



-$10,000 (commission - 7% of first 100K, 3% of remainder)

-$1,000 (legal)



So, you've immediately wiped out the cashflow and a portion of the paydown. You're now left with $21,984 of net profit from the transaction.



So, you've actually turned $40,000 into $61,984 over 10 years, which certainly isn't a 10% annual return, and it's actually a pretty grotesque, paltry, uninspiring 4.5% annual yield.







If doom and gloom isn't reality, what is? Are these prosperous times? I'd love to hear "what's really going on".







Sentence one is incorrect, and I disagree with sentence two.

But, please, fill me in on "what's really going on". Are all of these brutal economic indicators just facades?

 

[Lucas]

QUOTE (ZanderRobertson @ Dec 18 2008, 01:38 PM)
What's really going on:



1) Speculators with no cash flow are being shaken out of the market

2) People who bought at the peak and can't afford their mortgages are looking for someone to blame

3) Real capitalists are adjusting their business to the new realities and pushing forward

4) Housing starts are down, but they are still building, indicating that everyone hasn't died. Only the weak are being shaken out.

5) Action takers who see opportunity are making transactions that will pay handsomly in the future

6) Commentators are commenting that this is the worst of times

7) Real capitalists are gleeful right now as they are setting themselves apart from the pretenders.

8) People who spend all day posting on MyReinSpace should worry about their jobs in this fearful environment



What is a recession? Growth stops for a time, BUSINESS does not!



Andrew Carnegie started his first steel company during the time of a massive financial panic, probably worse than the one we're experiencing now. His strategy? Build up productive capacity at all cost. His competitors? Reduce capacity and wait for better times? Who do you think prospered when the good times came?





Excellent post...



Very insightful...Thanks!!!



Lucas

 

[invst4profit]

[Andrew Carnegie started his first steel company during the time of a massive financial panic, probably worse than the one we`re experiencing now. His strategy? Build up productive capacity at all cost. His competitors? Reduce capacity and wait for better times? Who do you think prospered when the good times came?]

This is inspirational although individuals must be very careful in not becoming overly optimistic

Carnegie may have been successful with this approach but how many thousands of other investors attempted the same approach at the same time and failed.
Because one person is successful with there approach at a given point in time does not mean that there approach will work for others. Success is very complicated.

As far as answering the question "Who do you think prospered when the good times came"? I would have to say some of both depending on the individual skills and abilities of there management groups.

Depending on a investors skills and abilities, good times or bad, success or failure is possible.

Reality is not always inspirational but not all investors (including REIN members) have the same abilities simply because they have the same training. In my opinion there will be some on here that will lose everything in the next few years (maybe many) the same as with those investors not involved with REIN.