Hurricanes Kill Housing Bubbles

Suicidal economic policies have held up asset prices for several years now. Savers are punished, and forced into investments they don't understand to obtain any sort of return on their money. Only this year we've seen inflation in items we use the most (but not represented in the CPI). A trip to any grocery store will show you that people are feeling the pinch. Bargain items are in short supply. Sure, the Obamas are living high. I'm not worried about them. I'm concerned about the Mom and Dad trying to provide a decent life for their kids. Some days, I think I'm the only one. Anyway.....

Spoke to roofers this week. Material shortages are pushing cement tile roofs out as long as six months. We only have two suppliers now. And, if you don't want increases, you pay upfront. Our big storms in South Florida were in '04 and '05, so those shingled roofs have some miles on their tires as do the tiled, and the tiled roofs that managed those storms might not stand the next. One roofer told me, "Hell, if I knew a storm was coming , I'd be planning a big BBQ! Now, if we get hit, you'll see tarps on South Florida roofs for two years. "

In 1926, the Miami Hurricane cut across the state like a buzz saw. You'll see Donald Ross golf courses in the middle part of Florida, but you don't see any built in 1927. The '28 Cane was a killer of tremendous magnitude, and it destroyed what was left of that bubble. In '29, the Marx Bros. were on Broadway with Coconuts, and Groucho, the Florida land auctioneer says, "Step up folks. You can get brick, you can get Stucco....Oh, can you get Stuck O!" So even then, before the market crash of October of '29, that market was softening to a large degree. Real estate is the tell.

We had four storms, I believe, in 2004, 2005. You had the Big Short culminating in 2008, but it was telegraphed by the stock markets as early as December of 2007. However those storms preceded the big event by 3 and 4 years. And they marked a top of sorts that took another three years to play out. Even in 2011 and 12, I saw houses with ceilings on floors as maintenance was delayed or ignored, roofs were installed without permitting, all those things we see with people fat and happy.

Where do we stand? At a top of sorts. Tops take a long time to play out. But if you look, you'll see signs everywhere. Easy money (banks don't make mistakes, right? At least they don't seem to have to pay for them). Excess optimism. Explain this one. Stock futures go up at night as much as 2 points, but stocks don't trade at night. Fundamentals? I hardly think so. Runaway inflation. However the White House says no worries. It'll be under control by next year. This, by a President who can't find the sidewalk.

There are always opportunities in stocks and real estate. Always. But, they take capital, enough to weather, pun intended, any downdrafts. They take research and planning. And the opportunities are fewer and farther apart. My best customer is now a partner. I can buy whatever I want, he'll fund it, and we split the profit. The last one I bought was 2019. Is that because I don't like money?

We 've got a storm coming. As it is, it's a Tropical. That means slow moving, and rain. Lots and lots of rain. It means flooding, and it means any roofs that are suspect will give way. That's my market. In yours, look for what can go wrong. Be more selective. If you own ten, sell a few, save the cash. You may need it. Be sure the others are in top notch condition. If you need a place to live, be sure it's that, not a monument to your ego. And be sure you can pay for it for at least five years.

A stock market advisor of renown said this week, "when it's time to sell, you won't want to. When it's time to buy, you won't want to do that either". I can add to that. If you don't plan, you won't have the capital to buy. Plan. Don't be victims. I don't care if you 're a small mom and pop, or you 're running 20,000,000. Same game.

Good luck.