Another Great Depression

I’ve been getting a lot busier lately, so I haven’t had the time to ponder larger issues, but when I do get the chance to think about our future, I get very concerned. This crisis will affect our whole generation, much like the Great Depression affected people from that era. This is why they were buying bonds even though America was embarking on one of the great economic booms in history. This crisis is going to be bad, but you better force yourself to be bullish when everyone else leans bearish if you want to succeed.

The best time to buy is when things look the bleakest. I’m pretty sure most people who invest know this. The Great Depression was followed by a boom for the ages. The Depression of 1920 was followed by a decade-long boom. The prolonged recession of the 70′s and 80′s led the greatest stock market rally in our history. Most of us know things will be bad, but how many of us will be logical and buy when things look the bleakest?

People are telling me real estate is never going to recover. They read one article and tell me I’m nuts. I just shrug my shoulders because this is exactly what people told me when I said real estate was going to collapse. This is the same thing people told me when I said gold was going to explode. The masses by definition aren’t early on trends. This will be a countertrend rally within the context of a bear market in real estate. A lot of people’s thinking is not nuanced enough to understand what I’m trying to say. Everything must be black and white.

Real estate is the current example of overbearishness. Take it as a case study. Sooner or later, no one will want to buy stocks or bonds for that matter. Train yourself to go against the herd. Our entire generation will be scarred by this crisis. See the opportunities and take them. There will be plenty when volatility rises into 2016 or so.

Share this article
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  • Xue

    The chinese real estate bubble is starting to burst, no wonder more and more chinese now buy properties in California where real estate already reached its low.

    • http://www.expectedreturnsblog.com Moses

      I see it more as a correction in a long-term uptrend. 

  • http://www.learcapital.com/exactprice haljett

    Another great post, Moses, that is encouraging for the future. Thanks for showing that there is a positive look we can take. It really is how fortunes can be made.

    • http://www.expectedreturnsblog.com Moses

      Thanks Hal. We all need to maintain our perspective as this crisis unfolds, and those who stay the most balanced should do the best.