Thursday, May 30, 2013

Bubbles as Far as the Eye Can See via the Blog of the Real Estate Center

Thanks to the “accommodative” stance of the Federal Reserve, low interest rates have created highly priced assets as far as the eye can see. When does a highly priced asset class become a bubble? Nobody knows the answer to that question. I do know that you usually don’t make much money buying assets at record high prices.

As I surveyed the investment alternatives available to anyone with money to put to work, I immediately started thinking about one of my favorite TV shows, “The Lawrence Welk Show.” Of course,+ I watched it for the edgy avant-garde musicians, but I also clearly remember the cascade of bubbles.

Most of the investment asset classes in America currently look to me like one big Lawrence Welk Show. How much return do you usually get when you buy an asset at a record high? How much return on investment do you get when you buy an asset way above previous record highs?

Read more...Bubbles as Far as the Eye Can See | the Blog of the Real Estate Center

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