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Reply #80: oh please [View All]

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Home » Discuss » Archives » General Discussion (1/22-2007 thru 12/14/2010) Donate to DU
selador Donating Member (706 posts) Send PM | Profile | Ignore Sun Mar-09-08 04:49 PM
Response to Reply #6
80. oh please
Edited on Sun Mar-09-08 04:51 PM by selador
"But the second point - that is new the idea that one is buying for a very short period of time, and with the goal of "making money" on the sale. Where did that attitude/practice come from - that isn't a long-standing behavior of homebuyers, except perhaps for those in jobs that involve constant relocations."

this is a common practice in nearly ALL markets that go through parabolic rises.

what amazes me is the ignorance of people who don't understand that this has happened for CENTURIES, in all sorts of markets.

it would be surprising if it DIDN'T happen, given the parabolic nature of this last real estate bubble.

and it poses veery little risk to homeowners that didn't overextend themselves by using BASIC rules like not buying homes that are excessive multiples of their income.

period.


you need, and others who think is something new, to study the history of speculative markets. this has happened for CENTURIES. the reason it happened in real estate is the same reason it happened in dutch tulip bulbs CENTURIES ago, in boiler room stock deals at 10:1 margin in the late 1920's, etc. etc.

see also: the greater fool theory.

i am sorry but anybody who buys an asset that is worth multiples of their yearly income based on the prediction that the price will go up, and he can sell it for more (especially in a shorter timeframe) is taking risk, and risk is... RISKY

it's one thing to put 5% of your portfolio into a speculative investment (or trade) . fortunes have been made that way, and at most you are risking 5% of your investment portfolio. i have a friend who bought Google at IPO and realized 700% gains in a few years. that's the market.

but real estate is an illiquid investment (let alone trade), and we are not talking a small speculative nibble here, we are talking people taking out mortgages for 7 or 8 times (or more) their yearly income?

and they are suprised when prices go down and they lose money?

cry me a frigging river.

this is NOT new. it's ALWAYS happened in markets, and always will. and there is nothing wrong with it.

if you are going to take extraordinary risks with massively overleveraged specultive purchase(s) you have ONLY yourself to blame when and if you lose massive amounts of money.

it just never ceases to amaze me that people think this is some kind of new phenomenon. to paraphrase the bard, there's nothing new under the sun.


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