Why is REI better than investing in the stock market?

[Porter Rappleye]

Hello Everyone!

I'm trying to convince my finance/MBA friend why REI is a better business decision than investing in the stock market and I'm not sure he's convinced. What is the best article on BP you've read that compares the two? I'd like to send him one that eloquently describes the concepts of Leverage and Forced Appreciation. He received a 34% return on his stock portfolio last year and I want to show him how he can receive a higher return through these two concepts using Real Estate.

Thanks for your help!

[Jeff S.]

Here's 10 years of the Dow:

Stock market investors, of which I was one for many frustrating decades, have short memories. Anyone invested in stocks on October 12, 2007 when the Dow was at 14093, would have watched their portfolio drop continuously by over 50% until March 6, 2009 to a low of 6626. It would have taken until March 1, 2013 to break even. That is, between October 2007 and March 2013, over 5+ years, you would have come out even. Even!! What happened to the 34% return? Short term, you can always find some peaks and valleys to show how well you're doing. The media is great at this.

No thanks.

We've been out of the market for years and couldn't be happier with notes. I can tell you to the nickel what the value of our portfolio will be in six months and the returns are in the high teens, unless we get paid back sooner, which increases our return. This is all secured by property. I defy any stock investor to tell me how they will do ten minutes after the market opens tomorrow, yet alone on the day they want to retire or make a major purchase. This is not investing, it's gambling. Scary.

It delights me to no end that Wall Street has the retirement community almost completely locked-in, uneducated, and with no control. I know they like that. Only 3% or so of retirement funds are self-directed.

Let's keep this as our little secret.

Jeff