I'm not sure why but there seems to be a trend for people lately to be absolute in their investments. Funnily enough I'm not sure there's a rule that says if you invest in real estate you may not also invest in stocks or bonds. There is no rule that says this. Yet over and over I hear people say that stocks are bad and real estate is guaranteed.
Most of the successful investors I have known are very financially literate and very comfortable with both kinds of investing. Real estate is simply another vehicle for turning money into more money. One is not better than the other, each kind of investing has advantages and disadvantages.
In all cases buying at the top can erode returns for years to come. The price you pay and when has more to do with amount of return than any other factor. Yet both tops and bottoms are impossible to predict with any degree of accuracy. The best one can say is that an asset seems overbought or oversold. In the case of income producing real estate calculation can predict with a fair degree of accuracy what the return will be unless you are using a more sophisticated and unpredictable technique such as subdividing or severing lots or rehabilitating property etc.
On the other hand with real estate you are much more in control of the investment than stocks. You get to pick where it is, who you rent it to, what improvements you make. You have the opportunity to add value by leveraging your own skills and judgement. You can add sweat equity. It will take time to "manage" this. If you have extra time it can be a very worthwhile "hobby" If you make good decisions it can work out very well, if you make bad ones...well it's not pretty.
With stocks you have no control but it takes virtually no time. You only control when you buy or when you sell. You will never get to pick the location of the next Apple store, or electronic device they manufacture. You implicitly trust the executive of the company to make better decisions that you could. You are also very unknowledgeable about the inner workings of the company. You will only find out when the scandal comes to light and you lose most of your investment.
There are advantages and disadvantages to both methods. My experience is that good investors are good at investing and real estate is part of that. Spotting a bargain on the MLS and spotting a bargain on the TSE require many of the same skills.
Anyways... has anyone else noticed this trend lately or is it just me? Thoughts?