Buy Low, Sell High

Buy Low, Sell High by Bill Roberts

All the stock market pundits echo this mantra but then they advise just the opposite in their specific recommendations. When prices are going down they say "SELL" and when prices are going up they say "BUY."

The technical analyst looks for a "breakout" formation before he recommends buying a particular stock or any stocks for that matter.

What does this mean? It means that the stock has come off its low and has BROKEN THROUGH a line on his chart that he labels as "RESISTANCE." What this means is that everyone has jumped on the bandwagon so you might as well jump on too. You are not going to get the best price but at least the price is moving up.

Then he advises selling when the price falls below another support line. So you have missed selling at the top. You sell, along with everybody else only after you have lost significant profits.

What kind of advice is that?

Well it is bad advice in my opinion. Especially if you transfer that kind of thinking to the real estate market. But that is what everybody does.

How often have I heard "I want to wait for the bottom before I buy"? Well the only way you are going to know when we have a bottom is when prices start back up. When prices "break" that support line. The same thinking as the bad advice from stock market technical advisors.

My advice is just the opposite. I say BUY when prices are going down. That's when you get bargains. But because real estate is a long-term investment I don't recommend selling when prices are going up. I may recommend "trading up" to maximize your Return On Investment (ROI) because most real estate is financed and you get the benefit of "leverage" on your investment. Keep your ratio between your invested equity and the value of your property to the maximum you are comfortable with. Over time you will become very rich.

Not The Stock Market

Remember, the real estate market is not the stock market. People speculate in the stock market because prices go up and go down on a daily (or inter-day) basis. Real estate prices have been trending up since the beginning of time.

They can and do issue more stock, especially when prices are going up, but they aren't making any more land to speak of. As populations grow and shift the demand for real estate grows (in certain areas). It is the job of the savvy real estate investor to figure out where the demand will increase and buy there sooner.

Historical note: Oklahoma is called the Sooner State because of the people that "jumped the gun" on the land rush and got there SOONER to stake their claim. Now don't tell me it doesn't pay to be sooner.

So my advice is BUY LOW (NOW) and KEEP.

If you are interested in maximizing your wealth through the intelligent use of real estate and real estate finance contact Bill Roberts 619-244-4610.