Tweet

Real Estate and Currencies: Is There a Connection?

Written by: Bob O'Brien

Article Overview: Veteran Financial Planner links the real estate market to currencies.

Real Estate and Currencies: Is There a Connection?

I will never forget early August of 2007 when I met someone who was bragging about how he was in the Real Estate business. I was watching CNBC at the time and they were debating over who was to blame for the defaults with sub-prime mortgages. Was it Greenspan, Bush, FNMA, SEC, etc?? The stock market had just started to feel the effects of the sub-primes, and a lot was still not known! The Dow was still around 14,000.

This “self proclaimed” real estate investor told me he owned three properties (with very little money down!) and that the values were starting to come back up! (The real estate market had just started its decline at this point and he was trying talk it back up!) I had to stop myself from being rude and calling him a complete idiot! I politely said to him, “I would sell them immediately!”

He then asked me what they are talking about on CNBC. I said, “They are debating about who to blame for the entire sub-prime mortgage defaults”. He then asked me, “Is Greenspan still the head?” I just said, “No, It’s Ben Bernanke”

I was saddened even worse by that question and knowing that this was not just one isolated real estate investors that was this out of touch with what was going on and yet risking hundreds of thousands of borrowed dollars on real estate. (Ben Bernanke had been the Fed Chief for a year and half already.)

You should not be in the Real Estate game unless you have eye on what’s going on in the currency market!

I realize that many real estate investors are not this much in the dark and do not risk money this foolishly! They realize who the Fed chief is and the incredible effect that they can have on all markets and especially real estate through the changing of interest rates. It is also important to realize that there is an even bigger game that will help you protect your real estate and other assets!

The currency market is investing in the underlying currency of a country based on how well, a country manages its finances, just a like a person, company or a government. The currency market will help you forecast future economic events much more accurately, regardless of the market you are in.

Take a look at how the US Dollar fell off a cliff while the Real Estate market was red hot!


The people that saw this were the ones that got out of real estate, postponed buying their first homes and why I told my friend to sell his investment homes immediately!

Many people had heard that the US dollar was weak long before this financial mess showed up and it was a great indicator as to why our economy was in so much trouble.

The Dollar stunk because we in (U.S.) were borrowing recklessly into our future with no sign of retreat or being able to pay off our debts!

This borrowing was not just the consumers and real estate buyers. It was also the local governments, many companies, and of course brokerage houses like Lehman, Bear Sterns etc…

This borrowing was fueled by low interest rates, and a poor savings rate. These numbers just did not add up. Domestically, things did not seem that bad and for real estate people things were never better! But from a macro perspective in “universal dollars” (for lack of a better word) things were just horrible and the currency market knew it!

People that understood the currency market had a “heads up” about the economic mess that followed, which translated into our economic reality today.

The people that are smart will brush off their mistakes, get through this rough period and start educating themselves for the future!

We all make mistakes, especially investing mistakes, but I tell this story because it is an example of how incredibly sloppy some people were in this market (and with borrowed money none the less). Some of the people investing in the real estate market were like


Real estate should be an eye opener and show that there are no sacred cows out there and the real estate market has been a great “false sense” of security for too many people for nearly fifty years.

Understanding what is going on the currency market is a must if you are serious about building and protecting your wealth!

I look forward to seeing you in the course!

Sincerely,
Bob O’Brien
Sr. Instructor

Related Articles
  A lesson learned at the mall
  Real Estate Commercial Loans?
  Purchasing Real Estate using the SBA 504 Loan
  The Right Real Estate Offer
  Commercial Properties Being Written Down by 50%

Article Tags: ben bernanke, cnbc, currency market, dow, early august, estate business, estate game, fed chief, fnma, greenspan, hundreds of thousands, money down, mortgage defaults, primes, real estate investor, real estate investors, risk money, stock market, sub prime mortgage, sub prime mortgages
Referred by: http://www.mywealth.com



Related Forum Posts
Re: No money Down real estate Webinar - I wish I could attend. I want to learn more about Real Estate investing although I have to have other priorities at the moment. Can you keep me updated about the next one though?
Re: Hi - Thanks guys! I have been helping Real Estate and Mortgage professionals generate leads from the Internet for 5 years now!. I'd be glad to exchange some ideas. Have a great day=)
Re: Hi All, - Welcome Aaron!! what type of Real Estate investing do you specialize in? in Toronto I am involved in purchasing properties at wholesale prices prior to the owners going into Foreclosure.
Re: Invest in Real Estate or Stocks? - You can consider investing in Real Estate Investment Trusts (REITs). Buy and sell shares like stocks so they are easy to buy and sell, diversify and management is included.
Here to Meet Great People! - Hi Matthew Ferry here! I am a life coach and also an entrepreneur. I work with people from all walks of life, Real Estate Agents/Brokers, Entrepreneurs, Businessmen. Great to be here in this forum! Looking forward to hear from you! Thanks!


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

TRADE SHOW FOLLOW-UP: HOW MUCH IS TOO MUCH?

Anger Solutions at Work: Why Customers Get Angry

The Death of the Sales Magazine

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.