Unrealistic Returns; From Facebook IPO To Pension Funds
Fri Jun 1, 2012 by Oppenheim Law on Florida Law News
Follow the smart money.
Armchair pundits, present company included, will continue to analyze the long term impact of the initial poor performance of the long anticipated Facebook IPO.
You will hear how it has further eroded confidence in Wall Street and American style capitalism, which it has.
The Facebook IPO only reaffirms what many smart, wealthy and Main Street investors already know: not to trust the suits!
They know whether it’s from JP Morgan’s 3 billion dollar loss, the mortgage securitization fraud, NASDAQ’s inability to process orders of Facebook stock, or just an uneven playing field, Wall Street is no place to try and earn 7 or 8 percent a year on their money.
In fact New York Mayor Michael Bloomberg is suggesting that pension funds come down to earth and stop trying to reach such lofty unsustainable returns.
However, I am seeing a quiet revolution of investing by foreigners and Americans who never for one moment trusted the bankers who sold risky mortgage bonds like they were prime steaks when they were really renderings being sold to soap makers.
These investors, many of whom have been at it for thirty years, are buying something that is tangible, that is real, that they can touch and no, I am not talking about gold that has limited extrinsic value other than for making jewelry, stashing it in the ground or in secret vaults in Switzerland.
You guessed it, I am talking about buying good old fashioned REAL estate. The word “real” is in capital letters for a reason.
Because it is tangible, unlike a piece of paper that allows you to break even if a company earns 100 times its current earnings (like Facebook).
And unlike a with a public IPO, people (usually) don’t go into a deal without their eyes wide open, and as such they won’t be surprised by any last-minute shenanigans.
So as the European markets give our stock markets a real chill, the lowest mortgage rates in decades will certainly add to a continued thaw of the real estate market.
In The Trenches,
Roy Oppenheim
Agreed — with real estate, depending on how you invest, you get to pick and choose each specific property you invest in. You’re practically shielded from the poor management decisions of others. That also means taking full responsibility for your own actions and returns, but I wouldn’t have it any other way. With real estate, you can do as much diligence as you want and then decide — for yourself — whether to say ‘yes’ or ‘no’.