Finally, Reality Gets Some Recognition

I have talked to many a person, probably even blogged about it, but the media is finally letting the news out. That is about the reality surrounding foreclosures.

We have heard time and time again about the rampant increase in foreclosures and we even hear the government talking about the need to "protect the homeowner". The problem we keep hearing is that of the typical "family losing their home" scenario, driving into us the emotions that it just isn't fair that they are losing their home and now they are left on the street.

Today, MarketWatch writer Ruth Mantell took on the task of letting out the reality of many of the foreclosures that are occurring. Yes, there is another side to the story, and one that does not have a very sad ending.

The fact is that investment properties constitute a major portion of the foreclosures happening, at least in the four states which she mentions, Florida being one of them. Is it not coincidental that these were the same four states that were among the fastest appreciating over the last five years?

Yes, those "flippers" out there, fueled by infomercials, greed, and even TV shows on how to make a quick buck, got stuck. As happens way too much, people who have no business getting into an investment do it anyway and lose it all.

Can you forecast the demise of a market? Yes, there are some interesting ways you can see a destructive pattern occurring as I mentioned in this post. Or you can just look at what the "herd" is doing.

As with every cycle, markets rise and fall in patterns and you can see that when there is a herd mentality heading into a market, it is most likely time to sell and get out. That is because of all the amateurs that look at the rates of return and say "I can do that" and jump right in. It is at this point when the pros start selling to the amateurs and get out, sometimes after developing "systems of success" and marketing those systems to the amateurs.

Yes, there are many families that are losing their homes in this crisis, but it goes without saying that much of the current dilemma was brought about by amateur investors as well.

Interestingly enough, I will be speaking in Tampa on September 26th and 27th about "flipping" and how to do it with a higher degree of success.