Wall Street’s Lost Decade

A Decade of Negative Returns

Last week, the S&P 500 Index made news by hitting a 4 year high. While Wall Street shamelessly hyped this grand achievement, here is the reality: At a time when tens of millions of Americans are nearing retirement, their portfolios have seen no real gains in the last four years. $10,000 invested in an S&P Index fund in 2008 is still worth $10,000. When you factor in the effect of inflation, investors have actually lost money over a four year period.


Taking a longer view of Wall Street’s performance, the data only looks worse. The S&P 500 in 2012 is trading at the same levels as it did in 1999. In effect, a 13 year investment has provided zero return(and in reality, negative returns once management fees and inflation are factored in) for the hundreds of millions of Americans who use Wall Street to steward their retirement funds.

For years, investors have been told that mutual funds are the safest and surest way to save for retirement. Yet, 5 out of 6 mutual funds have performed worse than the market itself, meaning most investors would be happy to have a portfolio that showed flat growth over the last 13 years.
[Read more…]

Investor Intelligence – The Housing Market Paradox

March 5th, 2012

Welcome to the latest edition of Investor Intelligence.buyingconditions

This week, we look at the latest reports from the housing market, changing attittudes about renting vs. buying, and a broad look at the multifamily market.

Your feedback is important. If there are any topics you would like us to cover please let us know.

Thank you for being part of the 37th Parallel family.

Kieran J. Donohue

Director, Communication and Education

The paradox holding back the economy  Housing has not been this affordable in more than a decade, and interest rates are at historic lows. Yet, strict lending rules and a negative perception about home ownership are keeping the housing market in the doldrums.

Renting replaces owning as a wealth-building strategy  Given the article above, it is no surprise that attitude about renting is shifting, as more Americans see renting as a smarter move than home-ownership in order to build wealth.

Multifamily seeing strong performance across the board. Several “lesser known” markets are enjoying strong performance.  Plus we see continued reinforcement of Austin and Houston – two of our favorite markets. 

New Kids on the Block

The Other Side of the Coin

If we had a nickel for every article written about the Baby Boomer generation, we would most likely be living in the Caribbean sipping umbrella drinks and thinking about an afternoon nap. The ubiquitous Boomers have influenced modern America like no other generation and continue to do so as they move into retirement. As we have noted before, Baby Boomers will have a significant impact on apartment investing as they are now moving into a stage of life when they are more likely to become renters and remain that way for the rest of their lives.

But for apartment investors looking to capitalize on demographic trends, the Baby Boomers are only half the story.

Is there an Echo in here?

There is a second generation of Americans not as frequently mentioned but just as impactful on the future of housing in America, specifically in the apartment sector. The mainstream media might not be talking about them as much as their older counterparts (yet), but apartment investors should pay heed to this new generation. They are called Echo Boomers and they are just now entering the housing market. Industry experts predict that 15 million Echo Boomers will enter the prime “renter age” of 18-34 this decade.

The Echo Boomers are coming and they are going to be staying for a while.
[Read more…]

Texas Triangle Presents a Historic Opportunity

Not All Lists are Created Equal

If you want to be successful apartment investor, selecting the right market is one of the most crucial decisions you will make as you manage your portfolio.

Each year, we see just about every major publication release it’s version of the 10 best cities for.. .(fill in the blank) and then watch as inexperienced real estate investors flock to these areas in search of the next great opportunity.

Truth be told, these lists drive us crazy.

Frequently, the methodology used for these splashy rankings is never disclosed, or worse, uses metrics that are worthless to the careful apartment investor.
[Read more…]

The 3 Most Crucial Investment Diversification Tests

Apartment investing diversification

Diversification and the goal of having a diversified portfolio in general is an overly abused concept.  It is an ideal made popular through a strong push by the equity investment, investment publishing, and journalism communities.

Diversification isn’t inherently bad either. It’s just the wrong focus.

What we advise our clients to do is to consider diversification as they look to invest capital, but never make it the end goal.

Warren Buffett, probably the greatest investor in the world, states unequivocally that,

“Diversification is a protection against ignorance. It makes very little sense for those who know what they are doing.”

[Read more…]