Bob O'Brien
Head Instructor
bobrien@mywealth.com
I will never forget early August of 2007 when I met someone who was bragging about how he was in the Real Estate business. I was watching CNBC at the time and they were debating over who was to blame for the defaults with sub-prime mortgages. Was it Greenspan, Bush, FNMA, SEC, etc?? The stock market had just started to feel the effects of the sub-primes, and a lot was still not known! The Dow was still around 14,000.
This “self proclaimed” real estate investor told me he owned three properties (with very little money down!) and that the values were starting to come back up! (The real estate market had just started its decline at this point and he was trying talk it back up!) I had to stop myself from being rude and calling him a complete idiot! I politely said to him, “I would sell them immediately!”
He then asked me what they are talking about on CNBC. I said, “They are debating about who to blame for the entire sub-prime mortgage defaults”. He then asked me, “Is Greenspan still the head?” I just said, “No, It’s Ben Bernanke”
I was saddened even worse by that question and knowing that this was not just one isolated real estate investors that was this out of touch with what was going on and yet risking hundreds of thousands of borrowed dollars on real estate. (Ben Bernanke had been the Fed Chief for a year and half already.)
You should not be in the Real Estate game unless you have eye on what’s going on in the currency market!
I realize that many real estate investors are not this much in the dark and do not risk money this foolishly! They realize who the Fed chief is and the incredible effect that they can have on all markets and especially real estate through the changing of interest rates. It is also important to realize that there is an even bigger game that will help you protect your real estate and other assets!
The currency market is investing in the underlying currency of a country based on how well, a country manages its finances, just a like a person, company or a government. The currency market will help you forecast future economic events much more accurately, regardless of the market you are in.
Take a look at how the US Dollar fell off a cliff while the Real Estate market was red hot!
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The people that saw this were the ones that got out of real estate, postponed buying their first homes and why I told my friend to sell his investment homes immediately!
Many people had heard that the US dollar was weak long before this financial mess showed up and it was a great indicator as to why our economy was in so much trouble.
The Dollar stunk because we in (U.S.) were borrowing recklessly into our future with no sign of retreat or being able to pay off our debts!
This borrowing was not just the consumers and real estate buyers. It was also the local governments, many companies, and of course brokerage houses like Lehman, Bear Sterns etc…
This borrowing was fueled by low interest rates, and a poor savings rate. These numbers just did not add up. Domestically, things did not seem that bad and for real estate people things were never better! But from a macro perspective in “universal dollars” (for lack of a better word) things were just horrible and the currency market knew it!
People that understood the currency market had a “heads up” about the economic mess that followed, which translated into our economic reality today.
The people that are smart will brush off their mistakes, get through this rough period and start educating themselves for the future!
We all make mistakes, especially investing mistakes, but I tell this story because it is an example of how incredibly sloppy some people were in this market (and with borrowed money none the less). Some of the people investing in the real estate market were like “highly leveraged children playing with blow torches.”
I am not saying that you should just collect data your whole life and never take action. You can open up a free demo account and take our currency course.
Real estate should be an eye opener and show that there are no sacred cows out there and the real estate market has been a great “false sense” of security for too many people for nearly fifty years.
Understanding what is going on the currency market is a must if you are serious about building and protecting your wealth!
I look forward to seeing you in the course!
Sincerely,
Bob O’Brien
Sr. Instructor
