I tend to agree with you.
I still think the financial markets can be a good place to invest, if one knows what they are doing.
However, similar to you, I have more comfort in the real estate markets currently.

I guess that I am biased as I witnessed so many people have their life savings cut in half or wiped out entirely due to this current recession.

The people who had their savings wiped out were obviously invested in the financial markets.

Our real estate markets in many parts of Canada stayed quite strong even through the recession. In fact, many markets continued to appreciate quite well.

Best Regards,
Neil.
.-= Neil Uttamsingh´s last blog ..Business Life Story Part Four =-.

I am in the real estate field and have been since the top of the market (about 07). Since the market crashed I have been heavily involved in all aspects of real estate and have made it my bread and butter. However, increasingly, I have been interested in trading securities.

However, since the beginning of this year, I have been taking trading classes at a local community college. The teachers are all finance professionals that know what they’re doing (very rich, self made). Specifically, the class I am taking is Introduction to Technical Analysis, and Introduction to Fundamental Analysis. Along with this, I have immersed myself in books and websites, and have been practicing trading in a simulator. The classes concentrate more on both futures and stocks, though the concepts we use can be applied across a whole variety of asset classes, including real estate. The techniques I have learned in these classes are used by traders that profited in the market crash, and even predicted it before and while it was happening (technical analysis).

In my learning in the simulator, I would have to say that real estate is much easier than trading. I have done some learning in the real financial markets, but honestly, it was the fastest $5000 I have ever lost. Real estate is straightforward, and is something you can do right now. Furthermore, in real estate it can be said that it takes your own human ingenuity to control the situation. Trading is very risky and if you have no idea what you’re doing you might as well be betting on coin flips.

However, I do recognize that there are many professional traders, including the dwindling number of locals and floor brokers on the floors of exchanges, as well as electronic online traders, that make insane amounts of money! Trend trading is a reliable way of making money (holding for a few weeks or months). In trend trading, the basic idea is that you execute trades based on what the trend has been. You are not trying to catch market bottoms or tops, but trying to catch the bulk of the trend on the way up or down. Day trading is even more difficult and I think that it takes years of skill and practice.

Another major difference between real estate and securities, is that you can’t sell short real property other than a REIT (just to clarify, selling short is not short sale). This is huge! Selling a stock or future short would’ve made you bagillions of dollars when everyone else was getting beat up.

I believe that real estate investing in general, is much easier than trading. I hope to learn more and practice trading over the next few years but I don’t think that it will replace my real estate business. By avoiding “day trading,” it doesn’t have to be a full time job. You can trade daily, set stops and/or set up a system which doesn’t force you to sit and watch the markets like a monkey. You can come home every night, check out how the markets are doing, whether you are still in a trade, or automatically taken out by your stops.

If you are interested in trading and want to see a PBS documentary about it (from the 80s), check out Paul Tudor Jones loose $5 million, and then make it all back and more. IN those days it was very exciting, since you are on the phones and shouting at the broker on the floor etc…. nowadays you’re just punching in buttons in the computer….

PBS: Trader
http://www.tudou.com/programs/view/XH5W4vffBbY/

Pete

A very good article on the age old debate of stocks vs. real estate.

I once believed in the financial markets when I began investing in general.

I lost faith in the financial markets once I started to invest more in real estate

Currently, my feelings on the Financial Markets is that they are a good place to invest.

However, as with any investment, you have to exercise your due diligence.

I think that as real estate investors, we often show the financial markets ‘no love’. (when I say ‘we’, I am talking about real estate investors in general)

I think that most real estate investors don’t like investing in financial markets.

However, there are some real estate investors that like the financial markets, and invest in these markets.

Which market is better to invest in? I don’t know.

What I do know is that, whichever market one decides to invest in, if somebody does their research, is very diligent, invests wisely, and has luck on their side, there is no reason why they should not succeed.

Thanks for this great article!

Regards,
Neil.

The stock market is more controlled by a few than the real estate market, especially residential.

Pette