by recentricrealty | Jun 3, 2011 | Capital Markets, Uncategorized
As talk of a double dip in pricing for the national housing market increases, it is clear the United States economy may be moving towards the perfect storm. While this perfect storm does not involve hurricanes and fishing boats, the convergence of wages decreasing, cost of goods increasing, and the housing sector continuing to falter is equally as frightening. On top of this, the federal, state and many local governments can not pay their bills due to a lack of required tax revenue. Today’s job report is not helping them.
Hence, the perfect storm may deliver a potentially devastating blow to an already fragile economy. So, how do you protect yourself in case this happens? Here are a few ideas:
1) Invest in commodities: Inflation is defined as an increase in the prices of goods and services over a period of time. Commodities such as rice, wheat and corn, for example will increase in price with inflation. In addition to the possibility of inflation, I witnessed first hand in Nebraska that corn growth is behind schedule. If the corn industry does not produce the required yields, there may be a severe shortage in supply, hence a big increase in pricing! While you should consult your financial advisor, here are a few options to research: iPath Dow Jones AIG Commodity Index Trust(DJP), iShares S&P GSCI Index Trust (GSG) and PowerShares DB Commodity Index Tracking Fund (DBC).
2) Short bank stocks: Banks have an incredible amount of exposure to real estate. The Markit ABX AAA 2007-1 index, a tradable derivative based on sub-prime loans, has fallen about 20 percent in just over three months, reflecting weakness in housing and the very poor recovery rates banks are able to get from foreclosed houses. Pending home sales, released last week by the National Association of Realtors, fell by 27 percent in April compared to the year before, an 11.6 percent fall in the month. Additionally, house prices have hit a new post-bubble low, down almost a third from their 2006 peak, according to data released on Tuesday by S&P Case-Shiller. Again, your financial advisor should be able to consult you on shorting stocks, as it can be complicated.
3) Invest in real estate instruments: As a passive investor (which means you do nothing except provide equity), real estate instruments such as REIT’s (Real Estate Investment Trusts) and RELP’s (Real Estate Limited Partnerships) can provide a strong hedge against inflation. REITS are openly traded on the major market exchanges and there are approximately 170 currently registered with the SEC. You can buy them and sell them whenever you desire. It offers the flexibility of cashing out when you need and provides dividends, but does not tell you typically which properties you have invested in.
RELP’s (Real Estate Limited Partnerships) are a more direct approach to investing in real estate without requiring your time or expertise. You get to choose the exact property you wish to invest in based on the fundamentals presented to you by the General Partner. Typically, you must be an Accredited Investor to participate, which provides an advantage over non-accredited investors to access these opportunities. If you would like to learn more, please let me know.
While there may be a fair amount of uncertainly in the world today, one certainty is your ability to make informed decisions about your financial future. In the near future, RRC will be starting a series of webinars to help to educate our audience on these options. Please stay tuned for more information.
Darren Nakos, CCIM
Resort Realty Capital
111 Main Street
Frisco, CO 80443-0630
(720)-663-1430
THIS IS NOT A SOLICITATION FOR INVESTMENT – THIS INQUIRY IS TO FIND OUT IF YOU ARE INTERESTED IN RECEIVING ADDITIONAL INFORMATION. NEITHER RESORT REALTY CAPITAL, LLC, IT’S AFFILIATES AND REPRESENTATIVES MAKE ANY REPRESENTATION REGARDING THE RISKS OF INVESTING IN COMMERCIAL REAL ESTATE. YOU SHOULD CONTACT YOUR OWN PROFESSIONALS TO MAKE THE DETERMINATION AND ASSESS THE RISK OF INVESTING. AS WITH ANY INVESTMENTS, THERE ARE INHERENT RISKS AND NO GUARANTIES OF RETURNS. PLEASE CONSULT WITH YOUR OWN PROFESSIONALS IN DETERMINING THE RISKS ASSOCIATED WITH INVESTING IN COMMERCIAL REAL ESTATE.
by recentricrealty | Feb 5, 2011 | Capital Markets, Uncategorized
Michael Jordan was one of the greatest basketball players ever, partly because he knew where the ball was going. The recent State of the Union address delivered by President Obama gave everyday folks some insight on where the money will be flowing. Here is a breakdown of the address.
Energy: The word “energy” was used 17 times. With the recent developments in Egypt, it has brought to light again, our dependence on foreign countries to provide us with our energy needs. This has to change, and the President has made it clear this is a priority.
David Carter, chief investment officer of Lenox Advisors, suggested investors might want to approach investing in clean and alternative-energy companies as if they were venture capitalists. There is a lot of technology and business risk associated with the companies in this sector, he said. “You should invest in ETFs because many [companies] will fail and one or two will succeed and we don’t know which ones will work out,” he said.
Health Care: The word “health care” was used 6 times. “Emphasis on reducing health-care costs by improving electronic medical records benefits health care information technology companies” says Jeremy Zirin, Cheif Equity Strategist at UBS Wealth Management Research.
Investments: The word “investments” was used 4 times. Three out of those four times were used in the sense of public investments vs. private investments. This is also known as government spending. Given that the US deficit is roughly 90% of our total gross domestic product and we are still talking about raising the debt ceiling is a clear sign that the threat of inflation is still real.
How do you hedge against inflation? As I spoke about it in my previous blog “Wondering how to profit from excessive government spending?” posted June 30th, 2010, investing in hotels is a great way to hedge against inflation. Generally speaking, as inflation begins to rise, so do the price of hotel room rates. “Since 1967, the rate of increase in the industry’s average daily hotel rate has exceeded the change in the consumer price index except during two periods: 1973 to 1975 and 1988 to 1993,” according to Hotel & Motel Management.
Given that President Obama is an avid basketball player, we now know where the ball is going. The question now is whether we have a scoring opportunity or not.
Darren Nakos, CCIM
Resort Realty Capital, LLC
111 Main Street
Frisco, CO 80443-0630
(720)-663-1430
THIS IS NOT A SOLICITATION FOR INVESTMENT – THIS INQUIRY IS TO FIND OUT IF YOU ARE INTERESTED IN RECEIVING ADDITIONAL INFORMATION. NEITHER RESORT REALTY CAPITAL, LLC, IT’S AFFILIATES AND REPRESENTATIVES MAKE ANY REPRESENTATION REGARDING THE RISKS OF INVESTING IN COMMERCIAL REAL ESTATE. YOU SHOULD CONTACT YOUR OWN PROFESSIONALS TO MAKE THE DETERMINATION AND ASSESS THE RISK OF INVESTING. AS WITH ANY INVESTMENTS, THERE ARE INHERENT RISKS AND NO GUARANTIES OF RETURNS. PLEASE CONSULT WITH YOUR OWN PROFESSIONALS IN DETERMINING THE RISKS ASSOCIATED WITH INVESTING IN COMMERCIAL REAL ESTATE.
by recentricrealty | Jan 3, 2011 | Capital Markets, Uncategorized
Originally Posted: December 6th, 2010
“The house always wins” is a favorite Vegas saying. This is the takeaway for me from the latest allegations that the stock market may be facing the largest investigation in scope and magnitude into insider trading ever.
Earlier last week, the U.S. Securities and Exchange Commission requested more information from asset management giants Wellington Management and Janus Capital as well as hedge fund titans SAC Capital and Citadel Investment Group regarding insider trading.
While this investigation is on-going and will surely be extended to more companies and individuals, it will likely further erode the confidence in the system. U.S. stock mutual funds, which are largely funded by retail investors (like you and me), have seen a net $50 billion disappear so far in 2010.
“While the rule isn’t that everyone has the same information, the rules do say it’s not a rigged deck,” said Tom Gorman, a former staff member at the Securities and Exchange Commission’s Enforcement Division. “How many times do you want to hear the deck is rigged before you decide you don’t want to play?”
There are other options out there that can level the playing field. Diversifying into other alternative investments will provide a more balanced approach to your investment goals without the worry of the stock market’s volatility or cloud of suspicion. More investors are flocking to these opportunities. .
According to Callan’s 2010 Alternative Investments Survey fund sponsors’ total portfolio allocations to alternative investment strategies nearly doubled from 11% in 2005 to 20% in 2010 as they sought greater diversification and improved returns. That percentage is expected to jump to 24% by 2012.
Survey respondents overwhelmingly chose real estate followed by private equity (69%) and hedge funds (52%). The survey is all inclusive covering commodities, infrastructure, portable alpha, socially responsible investments, timberland, TIPS, and agriculture.
While the Grinch may have stolen the stock market, our Santa has plenty of alternative investments in his bag this holiday season.
Regards,
Darren Nakos, CCIM
Resort Realty Capital
111 Main St
P.O. Box 630
Frisco, CO 80443-0630
(Office) 720-663-1430
(Fax) 866-210-0465
by recentricrealty | Jan 3, 2011 | Capital Markets, Uncategorized
Originally Posted: October 4th, 2010
What if you could make an investment that was in no way tied to the stock market’s performance in the next 10 years? Such an investment could do well during extended declines in the stock market and do well if there is a market recovery. The investment could also perform poorly in all three cases, but such an investment is narrowly impacted by the stock market. This ability to achieve returns independent of stock market performance is the essence of alternative investments.
According to CFO Magazine, “Alternative investments, such as hedge funds, private equity, and real estate are slowly gaining sway with corporate pension fund managers. A recent survey by J.P. Morgan Asset Management of about 150 corporate pension plans found that alternative investments constitute about 11% of their assets, on average, and that the plans intend to increase that allocation to 14% within the next three years.” (October 1, 2010).
Not only do alternative investments give plenty of interesting options to invest into but there are some smart and sophisticated people making a lot of money with these investments. At least 61 alternative investments titans crowd this year’s Forbes 400 list of the wealthiest Americans. And the most well-off among them-the 18 that made Forbes’ top 100-for the most part got richer over the last year.
I would highly recommend speaking with your financial advisor to make sure you have a well rounded and diversified portfolio which includes equities and bonds. However, it would also make sense to speak to your advisor about incorporating alternative investments into your portfolio.
Here is a list of some of the alternative investments you can make:
1) Gold – Gold is a good hedge against inflation, and a weak dollar. Between 1976 and 1980, Gold appreciated 369%. To compare, Gold has appreciated 109% from 2006 – 2010. Nowadays, you do not have to buy the gold bullions to get on the bandwagon. You can buy through Exchange Traded Funds such as SPDR Gold Trust (NYSE: GLD) or via options and derivatives.
2) Real Estate: If you want to take advantage of the opportunities in commercial real estate, but don’t have the expertise of buying and managing commercial real estate, a real estate investment group may be the solution for you. The sponsor company will buy or develop a property and then allow investors to buy into the company (thus joining the group) typically from $50,000 to $500,000 per investor. The sponsor company operating the investment group collectively manages every aspect of the property, such as acquisition, property management, leasing, asset management and disposition. The sponsor is responsible for distributing the cash flow and profits from the proceeds of the sale of the property to the investors, according to binding legal documents. If buying REITS, or owning an individual property is not for you, but you want the benefits of real estate, the power of group investing is worth looking into. Please see http://www.powerofgroupinvesting.com for more information.
3) Wine: Yes, wine! Today the wine market has become as sophisticated as the commodity itself; several indices now exist to track baskets of wine prices. According to wineprices.com, the Fine Wine 250 Index has improved nearly +75%, while the DJIA has been flat comparing returns of the Fine Wine 250 Index against the Dow Jones Industrial Average during the last 15 years.
Now, I am not suggesting that you go out and spend your retirement on a collection of wine, but it could be a great way to store your money in uncertain times. I highly recommend http://www.winebid.com. (I started this company back in 1997 and still love to buy wine from it!)
These are only a few of the many options you have to invest alternatively to the stock market to help boost your returns. In my previous blog entitled: How will Americans build wealth following this recession? , I touched on the Self-Directed IRA. Alternative Investments coupled with Self-Directed IRA’s are a great way for Americans to start taking matters into their own hands to build wealth for their families futures.
Regards,
Darren Nakos, CCIM
Resort Realty Capital
111 Main St
P.O. Box 630
Frisco, CO 80443-0630
(Office) 720-663-1430
(Fax) 866-210-0465
by recentricrealty | Jan 3, 2011 | Capital Markets, Uncategorized
Originally Posted: September 1st, 2010
I often ask myself, what will be the next driver for this economy? If people can no longer count on their homes for equity growth, and the stock market is no longer a “buy and hold” long term strategy, how will average Americans grow and accumulate real wealth?
On the heels of bad news for both the housing market and the stock market, it is evident that these two wealth generators cannot be a dependable source for Americans. According to Bloomberg, Aug. 25, 2010 — “Sales of U.S. new homes unexpectedly dropped in July to the lowest level on record, signaling that even with cheaper prices and reduced borrowing costs the housing market is retreating.” I believe housing will get worse, which does not bode well for the ability for homeowners to rely on their homes to generate wealth. As far as the stock market, I have limited hope for appreciation as I pointed out in my previous blog entitled “Will the stock market get you to the finish line?”
Many Americans are feeling the need for higher than average returns in order to reach their retirement, savings or college tuition goals. There is a new vehicle available for retirement funds called the Self-Directed IRA. This essentially allows you to move cash out of your 401K or IRA, and roll it into an account that you control. You can get involved with almost any type of investment such as a business, investment real estate, lending money secured to real property or purchasing interests of an LLC which owns real estate also known as group investing. There are several companies offering these investments such as Guidant Financial, or IRA Financial Group. Your financial advisor should be able to provide more information.
If you want to take advantage of the group investing opportunities in commercial real estate, but don’t have the expertise of buying and managing commercial real estate, a real estate investment group may be the solution for you. The sponsor company such as ours, will buy or develop a property and then allow investors to buy into the company (thus joining the group) typically from $50,000 to $500,000 per investor. I am in the business of acquiring resort market real estate for my investors. I have very seasoned real estate partners providing access to attractive insider real estate deals. And, yes, I invest alongside my investors in each deal.
The point is that unless Americans start to look outside the box to generate higher than average returns in areas that provide controlled risk, along with strong upside, accumulating wealth in this climate is going to be very difficult.
Regards,
Darren Nakos, CCIM
Resort Realty Capital
111 Main St
P.O. Box 630
Frisco, CO 80443-0630
(Office) 720-663-1430
(Fax) 866-210-0465
by recentricrealty | Jan 3, 2011 | Capital Markets, Uncategorized
Originally Posted: May 30th, 2010
I have been investing a portion of my portfolio in the stock market over the last 10 years, and I have not seen any appreciation in that time period. Granted, I am a buy and hold long term investor and believe that the mutual fund traders cannot beat the long term averages of the S&P. However, the S&P is now at 1,089, and exactly 10 years ago it was at 1,477. Between world events and corporate raiders, I have concluded that the stock market will not get me where I want to be at retirement.
If I had invested that money in real estate that was purchased correctly, leveraged correctly, held the correct tenants, and was managed correctly, I am certain that over a 10 year period, I would have seen strong appreciation. (In next month’s newsletter, I will focus on real estate appreciation and how responsible leveraging of real estate can provide excellent returns on your investment.)
With real estate, I feel much more in control than investing in the stock market. I can drive by my real estate whenever I want to check on it. I make it my business to know my partners, my tenants, my market and my investors. I can react when necessary and make changes to affect my outcome. With the stock market, the only control I have is to sell. And by then, it is usually too late.
Is real estate investing right for you? I am in the business of acquiring solid real estate for my investors. I have very seasoned real estate partners providing access to attractive insider real estate deals. And, yes, I invest alongside my investors in each deal.
Regards,
Darren Nakos, CCIM
Resort Realty Capital
111 Main St
P.O. Box 630
Frisco, CO 80443-0630
(Office) 720-663-1430
(Fax) 866-210-0465
