Does it seem like everyone is “making a killing” in real estate but you?
Should you rush in before it’s too late?
If you have these feelings, I’d like to tell you a story about Merrill Lynch co-founder Charlie Merrill. It contains a lesson so valuable that it could make or save you many thousands of dollars.
The 1920’s was a boom time in America and the stock market skyrocketed. Stories abounded of investors who were getting rich quick.
The best part was that an investor could buy stocks with very little money, putting just 10% down (today it requires at least 50% down) and easily borrowing the rest.
As 1928 began, there were widespread predictions of record breaking stock prices and nothing but great times ahead. But Merrill saw stock prices being paid that made no economic sense to him.
Worse yet, he saw the stock market was emotion driven as investors wanted in before prices rose higher.
So early that year, in gentle words, he said something that shocked the investment community.
He told investors to “take advantage of present high prices and put your financial house in order.” In other words, he advised them to sell a sizeable portion of their stock portfolios.
That’s what he had Merrill Lynch do with its portfolio.
At first, this advice looked terrible. The stock market again rose sharply and those foolish enough to listen to Merrill lost out.
By early 1929, as the stock market kept rising, Merrill had sold most of his firm’s stock portfolio and publicly urged President Calvin Coolidge to speak out against rampant speculation. Coolidge did not take Merrill’s advice.
Then on October 29, 1929 the stock market crashed and thrust America and the rest of the world into the Great Depression. Investors lost much of their money.
But because Merrill had earlier sold his firm’s stocks, he had plenty of cash to buy-up shares of prominent companies for pennies on the dollar and of course, he “made a killing.”
Success Tip of the Week:When you invest, please consider what Charlie Merrill did and invest unemotionally. Do your homework and if you can’t justify the prices being paid for real estate or any other asset of interest to you, patiently save your money and then take advantage when the market corrects itself.
In the next KazanToday, Great tips for health and happiness from a 90 year old body builder.