The Walking Cane Theory of Investing

Henry Clews on the long term advantages of real estate.

A key advantage of real estate is that it's a wonderful asset class for the long term. Investments come and go but I have a belief that high quality residential real estate which is one of the most robust asset classes historically will continue to perform just as well for the future.

The following excerpt is taken from the excellent book "Fifty Years in Wall Street" by Henry Clews, first published in 1908! The stories are dated (such as dealing in civil war bonds) but the wisdom is timeless. Henry Clews had seen a lot by this stage in his life and he shares a profound investing truth, tucked away almost hidden in one of the chapters, this truth is just as relevant 100+ years after he wrote it and will be still valid 100 years from now.

Henry Clews and his great truth about investing and markets............

"But few gain sufficient experience in Wall Street to command success until they reach that period of life in which they have one foot in the grave. 

When this time comes these old veterans of the Street usually spend long intervals of repose at their comfortable homes, and in times of panic, which recur sometimes oftener than once a year, these old fellows will be seen in Wall Street, hobbling down on their canes to their brokers’ offices. 

Then they always buy good stocks to the extent of their bank balances, which have been permitted to accumulate for just such an emergency. The panic usually rages until enough of these cash purchases of stock is made to afford a big "rake in." 

When the panic has spent its force, these old fellows, who have been resting judiciously on their oars in expectation of the inevitable event, which usually returns with the regularity of the seasons, quickly realize, deposit their profits with their bankers, or the overplus thereof, after purchasing more real estate that is on the up grade, for permanent investment, and retire for another season to the quietude of their splendid homes and the bosoms of their happy families. 

- Henry Clews "Fifty Years in Wall Street"

>>> The summary is that speculating on securities and stocks is a case for buying cheap after a bust and selling dear and the best place to have your money parked for the long term is in real estate!