A client remembered an article I posted back in 2009. He suggested I repost it in order to remind people of the extraordinary opportunity that is before us. Prices being as they are give more people the opportunity to take advantage of the market...
Not sure who Sir John Templeton was? He was one of the greatest pioneers in investing we have ever seen. Sir John grew up in Tennessee and graduated from Yale in 1930. At the age of 27, he started his own investment firm (which he later sold to Franklin at a value of nearly ¾ of a BILLION dollars) and ultimately made BILLIONS more. I thought I would share his philosophy with you.
Sir John possessed two qualities that we all need in order to be successful - he had Focus and Discipline. Sir John was well known for his ability to watch the market and to buy low and sell high. Whether it was a stock or a piece of property, if it was hot he sold and took profits at the height of the market when everyone else was buying like crazy. Sir John understood that by following the herd you would suffer the same pitfalls as the herd. Like lemmings to the sea, when one person lost money, they all lost. If there was blood in the street, Sir John was there to clean it up. He knew that when one person loses money that someone else will make that money. It is important to remember Money does not disappear - it merely travels from one place to the next. I believe that Sir John was a master at understanding what I refer to as the “velocity of money”.
Money, like cars, must always travel at a certain safe speed to be at peak performance over the long haul. Money cannot travel too slow or too fast from one hand to another. When money travels too slow, economic channels become clogged and it becomes a financial strangulation of everyone in line, too fast and false values take over and basic business principles are abandoned. Both will have the same effect: a loss of confidence by the herd, causing uncertainty.
In 2005, the real estate market did just that, it boomed. We saw price increases of nearly 80% in Hilton Head. People were building and buying faster than homes could be produced so the existing homes sky rocketed up in price. There was a frenzy of buying that became unsustainable. We simply could not continue at that pace and, as predicted, we simply ran out of steam. People collectively stood up and said "no more." Buying slowed, credit got tighter, Hurrican Katrina hit, there was a Mortgage meltdown and the market turned.
I have to think that if Sir John was still with us in 2005 he would have sat patiently on the sidelines and waited. While the herd was enjoying buying at the higher prices and riding the crest of the wave (but every wave hits a beach somewhere), Sir John would have been selling and taking whatever profits there were.
Now here we are in 2012 with one of the best opportunities the investment community has ever seen. There are few people that will realize this - they are the people that will give the herd back their buying frenzy over the long haul. They will reap profits of the herd at a staggering rate. In any successful economy there must be a herd and a shephard to guide them and give them what they want.
Here is Sir John in his own words:
Now the U.S. has this extraordinary thing - I think in some places we see 50% to 100% gains on the housing market. Other places across the country might be up 25% to 30% in just a matter of three to four years. Incredible gains
When you invest in stocks, you get the same value all over. The same stock sells at the same value, no matter what nation you're in. But that's impossible in real estate. Real estate value depends on locality. If you're going to be a real estate investor, focus on location, location, location.
So when you're trying to invest in real estate, you have to do a lot of serious research on whether this location is likely to be popular in the long run. That's why I wound up believing beachfront property is a good investment. I don't think there's ever going to be any more beachfront than there is now. Now people are getting bigger and the amount of money is getting bigger. So beachfront is pretty sure to go up in value. Owning a home on the ocean is better than owning one that's not on the water. But there are large tracts of oceanfront property still available in South and Central America in countries where there is a rule of law. You used to be able to buy land at very low prices. But still there are some good deals.
According to Sir John’s philosophy, it is really quite simple - choose your location wisely; buy low and sell high. It is time to get back to basics. Hilton Head has always had some of the least expensive oceanfront property on the east coast. And now it is priced even better. I am not sure who will be the next Sir John Templeton, but there will be someone who steps into those shoes and leads the way. Is it YOU?
If you would like more info on this or any of your real estate needs just let me know This e-mail address is being protected from spambots. You need JavaScript enabled to view it. or call me 843-422-5933. I am looking forward to hearing from you. See you at the TOP!!!!
