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Posted almost 16 years ago

As Investors what should we hope for????

So I am torn on the following question and would appreciate your feedback.

 

First off I think is more than obvious that the government has their finger prints all over the single family home market via tax credits, loan programs, etc.  My question is as an investor do we want them involved???

 

If the government were to suddenly say no more help go figure it out on your own a couple of things would happen. Prices would collapse in many places, banks would be more inclined to reduce loan balances and the market would clear as economist say.  But it would likely be very-very painful!!!! But probably last no more than18-24 months as the seeds of capitalism would start to bloom again in the bloody aftermath of the market turmoil. 

 

The other option is the government stays involved.  This likely means less of a dramatic price drop but it also means the market is not working optimally.  I suspect this means that we will just bleed price drops and flat line at some point for years, perhaps as long as 5-8 years. 

 

But again as an investor do I want the violent price drop that would produce plentiful deals or the slow train wreck that will produce deals for years to come. 

 

I suspect the answer lines in how large a pile of cash you have today.  If you had access to lots of cash today you want the violent price drop but if you are like most investors looking to add deals as you secure capital you want the longest runway possible.

 

So in the end I guess I am glad the government is involved …. As a capitalist this goes against my nature but as an investor that wants the best for my family I need the long runway to secure lots of deals.

 

Good Investing


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