Stockbrokers Can't Predict Stocks, Realtors Can't Either!

When you hear a Realtor telling you that the market will go up, don’t believe him/her. He makes money if he sell you on buying, and he will be long gone if you lose your shirt. Meanwhile since 2004 I was giving out shirts that said it was probably a bubble:

Sure Realtors might be able to see a 1-3 month window and mini-trends like what happened in Arlington when there were 10x the number of units on the market versus the year before. A high school Supply and Demand class could see that coming. But besides that, we don’t really know.

Why don’t we know? Well it isn’t just us, it happens with all investments. Stocks, Oil, Gold etc. Sure some people are quoted for being dead on, but how many were overlooked and were way off? Most.

I came to this approach when I was reviewing my mother’s finances. She had a ton of individual stocks. Some skyrocketed, some tanked, etc etc. And then she had these mutual funds. I looked into them and read, they like to expose investment myths.

I found that 75% of the time, these funds didn’t even beat the index! , the average of the stock market (S&P 500). So a fund manager gets paid $500,000 a year to pick stocks and charges a 1-2% per year management fee and only 25% of the time they beat the average? Um, I’ll just take the .01% no cost index fund and if I want to invest in stocks, I’ll be fine with the average. Far lower risk, lower fees and an average return (or far above average if you compare it to beating 75% of mutual funds) Disclaimer: I’m not a financial adviser, have him tell you this stuff.

So if money managers can’t predict stock values, how can we be expected to predict the short terms direction of the housing market? We can’t just look at data since I can find you 5 reports saying things will go down, and another 5 reports saying it will go up. Both make great arguments.

So what do you do?

You stop making your home purchase all about being an investment!
Instead, if you decide to buy, buy what you like and plan to live in for many years, and if you make money after a while, great, more power to you.

New thought:
When a stock brokerage company shows charts on what the fund has done, why are they required to put a disclaimer that “Past performance is not indicative of future results.”? Yet NAR and Realtors never once during the bubble thought to use this type of disclaimer.

– Written by Frank Borges LL0SA- Broker/Owner

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Keywords: Real estate, Virginia, Alexandria, 22201, 22314, Fairfax Va, DC Realty, Realtor

  • 16
  • January
  • 2007

4 Responses to “Stockbrokers Can't Predict Stocks, Realtors Can't Either!”

  1. Anonymous says:

    and their behavior was to the contrary w/ that brilliant PR campaign “Real estate only goes UP!” and “Buy now or be priced out forever!”

    how EVERY govt regulatory body overlooked agents touting “instant equity” and “great investment!” is a crime.

    but now that the sub-primes are dropping like flies and foreclosures are on the rise, it’s apparent the damage is done.

    viva la inflation!

  2. FRANK LL0SA Broker says:

    Hello Anonymous,
    Thanks for your comment.

    I don’t think the damage is done. The propaganda machine is out in full force, now trying to predict the bottom.

    I don’t know if this is a bottom or not, but to rush somebody into buying now without understanding that the future is uncertain, is a crime. And not it isn’t common sense. People actually believe the statistics that they produce to PROVE their theory.

    One day somebody will sue NAR after losing their shirt. They will prove that their advertisements were misleading, had biases in the data that were not corrected (seller subsidies???). You heard it here first. Somebody will sue NAR one day.

  3. Anonymous says:

    i don’t think you’re going too far out on a limb by predicting NAR on the business end of a lawsuit. some ARM holding, soon-to-foreclose lawyer w/ a litigious disposition or a major bank on the verge of losing many millions thru MBS buybacks due to defaults will blame the brokers and/or NAR… and then it’s a battle between their respective lobbyists to see who can pay off the most politicians to avoid federal scrutiny. my bets on the lenders… but heck, even NAR might be able to deflect it to the appraisers. i hear they don’t have anyone representing them on the hill.

  4. tchaka owen says:

    Hey, I was your first client…why didn’t I get a Mr. Housing Bubble t-shirt?

    – Tchaka Owen

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