December 24, 2007
Perspective on Real Estate
What a lovely family day it was. Kids gathered from their campuses, their ambitions, to be with expanded family. Cameras flashed, capturing the smiles and laughs of cousins, mates, parents and siblings. Except for our Colorado clan, all were there. Helene, Herb, Fran and I are now the elders as children pass into their 50s. After being with the Radio City Rockettes on Monday, new memories were etched. Listening to a new generation of kids reflect their ongoing educations, the evolution of youth traveled onto newer vocabulary and lyrics.
So many giants have had to sell parts of themselves: UBS to the Singapore government; Citigroup to Abu Dhabi; Merrill Lynch to Singapore; Morgan Stanley to China Investment Corp; and Bears Stearns to Citic Securities (a total of $29 billion) This tells us that this serious sounding situation is serious!
Business Week (Dec 31-Jan 7, 2008) The special double issue of “Where to Invest” as the guesswork of a new year attempting to defy experts again, filling us with surprise as we repeat redundancy.
Biotech and energy are the new leaders. New investments are drying up because of the credit squeeze. Some wonder-boys will do anything for a fee—anything! Flying by the seat of their pants is the new rule of uncommon sense. This is a more sophisticated term for older men without any sense behaving like juveniles!
My feeling is that we haven’t gone through anything like this in many years, so there are few experts on what to do. If it weren’t for a stock market that never sees anything that will reduce stocks’ values except for non-sense, no sense and no common sense, there would little to have faith in. The housing market failings should unhinge many more real estate markets and commodities. Nothing depends upon credit more than real estate and the credit boys are unsure of what’s ahead either, except for deflation or inflation. We could easily lose faith in the politics of power when mistakes prove to be so costly as we are finding out now.
The way the price of oil behaves flirts with the reality; so much of it is pure speculation that makes billions in profits for people willing to assume risk; so much is and will become more classic supply versus demand. After all, one must factor new users, who are growing so fast, like India and China. Solutions are not matched by either the short range or the production, like biofuels made from crops, Canadian tar sands or steam.
One thing I instruct people whom I mentor is to fall in love with reading. Take a good book to bed and make love to it. You can’t get in trouble with a book no matter how sexy it proves, and sexy means that you get suggestions and ideas from it!
A couple of suggestions include The Toyota Way by Jeffrey Liker; Influencer: The Power to Change Anything by Kerry Patterson, Joseph Grenny, David Maxfield, Ron McMillan, and Al Switzler; The Starbucks Experience by Joseph Michelli.
The Economist (Dec 22 to Jan 4 ’08): There is a path out of the gathering banking crisis, but no guarantee that the world economy will find it. The beginning of 2007 showed no hint of the plagues that followed the New Year. This is often the case and I suspect it will continue this New Year, especially as denial becomes the usual cottage industry. whereby wisdom learns poorly only from repeated mistakes punctuated by enormous greed. Greed is now a profession called spinning and serves its political clients by lying—never the truth.
I watched the telecast of the Mormon orchestra and chorale. Here is a religion that attains perfection through splendid musical performance. I looked at the singers and players and didn’t see one black person. I may have missed a few, but I couldn’t find one. Joseph Smith had 26,000 followers at his death. Now there are more than 13 million, more than half outside this country. And they have a presidential candidate who looks like Jack Armstrong, the all-American boy. Could he be elected? Possibly, but not this new year. Will he, not a chance! Would I vote for him? That’s none of your business, but if I didn’t vote for him, it wouldn’t be because of his religion. Mormons believe that love is eternal through marriage, that even after death they are reunited in heaven and that’s why genealogy is so important to them. They tend to vote Republican since they are guided by tradition and they are conservative.
srg
