Doom and Gloom? I Read a Book by David Wiedemer & Robert A. Wiedemer

[Jason Merchey]

I read Aftershock, the latest edition, by the brothers Wiedemer. It was fairly dark, much about our economy being a multi-bubble economy, the weakness in housing for various reasons (including the 50% or so cash transactions and the REITs buying up quite a bit), and inflation scares, our massive debt problem, the impending meltdown of the dollar, politicians being inept, and the prescription of getting out of real estate/bonds/securities and getting into gold and inflation-based securities, etc. Basically supply and demand followed by more about supply and demand. Some of it was over my head because of my conversance with economics, but I think I get the gist.

How do you all feel about the idea of being defensive, scared, and reacting as though s&it is about to get real, vs. staying the course with responsible use of leverage and so on? One other little caveat I heard was that there will be a major increase in the number of apartments coming online in the next year or so, and that those two things - the investor participation in the market and the expected reduction in demand - will negatively affect a buy and hold strategy.

I am a little scared. Obviously I don't want to be left holding the bag just like you all don't. And a little confused, because Paul Krugman counsels forgetting about the debt for now and getting our jobs house in order. Any thoughts?

[Darren Sager]

I was at the New York Real Estate Expo a few weeks ago and there was a panel that addresses a similar question. How do you protect yourself if the economy goes down. The panelists were called the Titans of real estate with each having holdings in the billions. Now, in NYC a Billion can be a single building however that's obviously a lot of real estate holdings. One of the best answers I heard was to make sure that you purchase the right property, even overpay for it said one of the panelists. His reasons were that the right property would be able to perform no matter what happens with the economy. When the real estate market goes up, all properties go up he said, but a great property will go up and perform even if the market goes down. So, as they say, location is everything. Make sure you purchase the right property in the right location and do the numbers on it. As long as you're comfortable with understanding your numbers you should be good. Let me add to this though. The panelists were all pro NYC and not other places in the United States. Their reasoning was that NYC was the only city in the US that foreign investment was a huge factor in its success. That keeps the NYC metro area going. This is not the case in other major metro areas. This is also the reason that keeps me investing in the NYC area and other places haven't lured me away.