March 17, 2008
Monday Madness - Flaccid Folding Stuff ?
Is your American dollar weak and ineffective?
Every American with an extra dollar throbbing in his pocket is faced with the question of what to do with it. That dollar droops lower daily like a wax statue of David in a florist’s hothouse. Our dollar is laughed at around the world. It buys less gasoline, less food and less of the imported goods we love than it did last week. There is no reason to think it will firm up any time soon.
Meanwhile the stock market is stumbling, American businesses are stagnant at best, and the White House is dispersing dollars around the world while withdrawing funds necessary for our own well-being. We see economic chaos worldwide with the exception of the oil producing countries and companies.
So where do you put that limp dollar so that it can grow?
‘Commodities’ is the usual answer. You may recall the gold rush of the late 70s. The price of gold, silver, etc skyrocketed and was excitedly reported daily in all the news media. Other commodities you can invest in include wheat, pork bellies, oil and foreign currencies. Even your pathetic dollar is a commodity. Real estate is often considered a commodity. The price of commodities fluctuates, of course, but the value is fairly consistent. The value of an ounce of gold doesn’t change significantly from year to year but the price will change with the value of your currency and market demand. Inflated dollars buy less gold. Increased demand can raise the price of gold but has little effect on the long term value.
Real estate is similar to gold. Supply is fixed and prices fluctuate with the strength of the dollar and the variable demand from buyers. The actual value of real estate doesn’t change much. Your grandparents paid $5,000 for a house that was recently worth $500,000 dollars. Has the value changed? Yes, somewhat, but only because California land is in more demand now by a growing population. On the other hand the house itself is now old, not up to code and possibly a fire trap. It is worth less than it was, and yet it can sell for 100 times more of our shriveled dollars.
Thrust your dollar into a hot eager market !
Your dollar will get excited about this opportunity to grow in hard times. Television is a prime measure of public interest with at least a dozen series and as many specials on topics like “Flip this House”, Flip that House” and “Flipping Out”. Your daily newspaper and your news magazine will feature frequent stories of woe and of success in real estate. The internet is awash with more on every aspect of the real estate ‘crisis’, but you won’t have any problem finding tales of opportunity. The millions of dreamers who watch this stuff will soon get off the couch and start buying.
The people suffering are those who bought high and are selling low. They got caught in the frenzy of the market hype of recent years. Like the Dutch tulip fable of the past, they pushed prices and demand beyond reason and paid in the end. The smart investors don’t follow the crowd–they buy low and sell high. The crowd will soon pour back into the real estate market. You may want to get there first.
Why is this man smiling?
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