It's Time to Purchase Like It's 1999
If you believe the US economy is never going to recover, grab some canned food and a gun and head for Montana. But if you do, it’s probably time to invest. Or at least spend.
As I point out in the accompanying news story, prices on some major assets are priced like it’s 1999. And if past is prologue that means there’s money to be made. Perhaps major money. I live in South Florida, so many of the recession’s effects may be amplified here. But we’re seeing housing prices not seen in this century. I just looked at a house for $300,000 that sold in 2005 (note: this was at least a year before the market peaked) for $570,000. Commercial properties that made no economic sense just a few years ago now present a better cash-on-cash return than most other investments, and they come with tax write-offs that make them even more appealing. And stocks? As the market tanked earlier this year, I started buying. Since January, I’ve invested about $90,000, and as I write this I’m up about $31,000: an unrealized gain of about 35%. (I’ll share my exact portfolio in future posts.) And if you think the stock train has already left station, check this out: even after gaining more than 50% from this year’s lows, the stock market today is still below where it was in January of 2000. If you could go back 10 years in time and be able to buy stocks, wouldn’t you want to?
And if spending sounds more fun to you than investing, you’re still in fat city. Boats…especially used boats… are way cheaper than they were a few years ago. It’s much easier to drive a hard bargain on cars, both new and used. Same with motorcycles. And if travel’s your thing, hotels, planes and cruises are a lot easier on the pocketbook today than they were a few years ago. They’re also less crowded.
The media loves to shout the blues with headlines about how life sucks when the economy tanks. Don’t get me wrong: it does suck for those who can’t find work. But for those who do have a job, a healthy savings account and some optimism about the long-term, it doesn’t get any better than this. Opportunity in the form of lower prices doesn’t knock all that often: if you have the wherewithal, my advice is to answer the door.
I leave you with the words of legendary investor Warren Buffet. Be fearful when others are greedy and greedy when others are fearful.
Are you making smart buys in this recession? If so I would love to hear about your picks and tips in the comments!