REAL ESTATE 2002:  “Is this another safe bet that the experts are touting, or are we shoring up an industry that’s on the verge of collapse?  Depending on whom you talk to and what you’re buying, you might be buying a front-row ticket to the next financial roller coaster ride that’s about to hit its peak and come flying down."

(http://midwestbusiness.com/news/viewnews.asp?newsletterID=3975&page=1 )

WELL DID YOU GET YOUR FRONT-ROW SEAT??

Looking back to this July 2002 column I wrote right after the demise of the NASDAQ and the subsequent crash of the Blue Chip stocks with ENRON,WORLD-COM and others leading Congress to pass the Sarbanes-Oxley Act, many financial “experts” were touting that there was a fourth asset class besides Stocks, Bonds and Cash that average investors should be diversifying into.

I questioned it at the time (2002), but few people heeded the warning:

Listening to some of the many experts on the different financial channels, I learned that some are considering your house as a new asset class.  Most identify with the trilogy of cash, stocks and bonds as bona fide asset classes.  The new asset class being identified is your house, and an alternative investment is to go out and buy a second house.

The market is hot for houses and condos.  Interest rates are dirt cheap.  Many are buying second houses and condos.

Is this another safe bet that the experts are touting, or are we shoring up an industry that’s on the verge of collapse?  Depending on whom you talk to and what you’re buying, you might be buying a front-row ticket to the next financial roller coaster ride that’s about to hit its peak and come flying down.

Is the housing market being artificially shored up?  With thousands of people in the tech sector still laid off, there are many thinking about selling their house and their other assets.  There is still a market out there, but there are also a lot of houses that have been slow to sell.  Part of the problem is there may be more for sale in certain areas than there are buyers.

FINANCIAL EXPERTS?  AN OXYMORON

Those who put all their faith into financial experts screaming, “now is the time to buy” seem to have been led into a slaughterhouse several times in the last decade.

When tech stocks fell, the right investment was blue chips and mutual funds and “that’s where you should have put your money,” they chastised everyone.  When they Blue Chips fell to a point where the market almost lost all its credibility and Congress had to pass Sarbanes-Oxley Act to get investors to regain faith, the experts were shouting “Diversify into real estate.  That’s the new asset class!”

Now, real estate has collapsed and some are saying Gold is where to invest, many are skeptical – but many more are rushing to buy.

At this point, some are just trying to pay their mortgage.  Some are trying to get out of paying their mortgage because all that ghost equity has vanished.  Their houses are actually worth less than what they owe.

What’s left of your investment money?  Instead of buying Gold, maybe you should be buying up real estate or tech stocks.  What do I know, I’m not a financial expert but there is enough proof that when the experts say “buy” you’ll be saying “bye-bye” to your cash.

CARLINI-ISM :  If you’re a financial expert, I’m Nostradamus.