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A big trend in the US economy is trading down.   This has led to steadily growing real estate prices in Ecuador as many Americans leave  the US.

In America, since 1979 most income groups have barely grown richer, except the top 1 percent.  This top group has seen their income expand by four times.

Since the 2008-2009 recession 95% of the gains from the recovery have gone to that richest 1%.  The share of overall income of these top earners is near its highest level in a century.  According to one study by the OECD America is the fourth most unequal country in the rich world behind only Chile, Mexico and Turkey.

This is a distortion that creates a real estate value trend in Florida rentals as well as Ecuador.

L1050220

This rental house is one of Merri’s and my new investments in the Florida real estate value trend.

One recommendation at this site, since 2009, has been to buy and rent Florida houses.

A March 9, 2014  Wall Street Journal article “Share of Housing Construction as Rental Apartments at Highest Level in at Least Four Decades” by Conor Dougherty reveals a bit more about this trend.

Here is an excerpt: The share of new homes being built as rental apartments is at the highest level in at least four decades, as an improving jobs picture spurs younger Americans to form their own households but tighter lending standards make it more difficult to buy.

Residential construction—a pillar of the economy and employment—is starting to ramp up again overall, but in previous years the growth was driven by single-family homes. Last year, according to census data, construction was started on a little less than one million new residential units, and about one in three of those was a rental in a multifamily building, the highest share since data began in the mid-1970s.

This trend of buying Florida real estate to rent is losing value now.  Ecuador real estate also costs a lot more now then when Merri and I arrived and began buying Ecuadsor real estate in the 1990s.

Many big banks, hedge funds and construction companies have jumped into the fray.  This is pushing up prices and reducing the return on rent.

Benjamin Graham’s great book “The Intelligent Investor” explains in Chapter Eight why the intelligent investor realizes that investments become more risky, not less, as their prices rise.  They become less risky, not more, as their prices fall.  Intelligent investors dread a bull market since it makes investments more costly to buy.   On the other hand the intelligent investor welcomes a bull market since it makes investments a better value.

Merri and I are still buying but prices are much higher now.  Rents are not rising to keep pace with these increases.  This is good for the houses we purchased earlier.  This means we have to work harder to find good value deals and we pass on many more places than we offer on.  When we offer the offer price is usually too low.

Bargains can still be found by knowing a market, continually watching and hard negotiating on the deals.  Do not fall in love with investing in property or any single property.  Always keep the numbers in mind.  The rental income, after costs, vacancies and tax is the driving value force.

Gary

The Intelligence of Value

Here is a trick, that when it comes to investing, business and self publishing, can make you smarter than the smartest man in the world.

sir issac newton

Sir Isaac Newton is widely regarded as one of the most influential scientists of all time.  His role was key in the scientific revolution.

His book “Mathematical Principles of Natural Philosophy” laid the foundations for mechanics.

His supplied a foundation to optics.

He helped develop modern calculus.

Newton formulated the laws of motion and gravitation and confirmed the heliocentric model of the cosmos.

Newton built the first practical reflecting telescope.

His theories about color and cooling and the speed of sound were spring boards in physics.

In math, Newton contributed to the study of power series, the binomial theorem to non-integer exponents, and a method for approximating the roots of a function.

He is said to have been the greatest genius who ever lived!

But Sir Issac Newton also lost his shirt in the stock market.  His comment was “I can calculate the motions of the heavenly bodies but not the madness of the people.

Sir Issac forgot the Intelligence of Value.

The never ending search for value is a vital part of any successful investment, business or self publishing activity.

You can find value by spotting distortions that lower the price of what the market wants, but currently does not know it wants.

Finding value does not require exceptional intelligence or education.  As we saw, Sir Issac Newton, was smart and educated.  He was also connected as a member of the Parliament of England and the Master of the Mint, a position he held for three decades. Newton was in charge of minting Britain’s currency and of minting the country’s coins. in a stock market bubble.  Yet Newton with all these qualifications was caught in the great South Sea Bubble.  His great intelligence, his great education and the importance of his contacts were all swept away in a tsunami of greed and emotion.

As human beings we are all vulnerable to the inertia of the here and now.  We can forget that average in a sick society is sick and that the repetition of an error does not make it right.

Our protection from this human vulnerability is a dogged recognition of attraction and dedication to value.  Value is the foundation that anchors our intelligence when a tsunami of irrationality sweeps away the public’s common sense.

Whether buying real estate in Ecuador or the US r wherever, or any investments make the process a continual search for value.   Harness your emotions.  Think for yourself rather than be led by the thundering herd.

This is why we have created a four part, interactive Webinar which teaches the foundations of value.

Gary

Finding value

New #4 Webinar Series: “How to Spot Distortions & Trends that Create Value in Investing, Business and Self Publishing”.

Merri and I have been conducting International Economic Update Seminars every three to six months for over 30 years.  Now for your convenience we are adding “Economic Distortions & Trends” Webinars.

The first in a series begins next week and I would like to share the first webinar with you FREE.

This first webinar is one hour and 15 minutes and covers:

Global Economic Update:  How to Spot Value From the Past & Present for the Future covers the following:

* How to Spot Distortions & Trends in:

Equity Markets
Currencies
Countries
Bonds
Real Estate
Technology –Economies & Business
Commodities
Self publishing

* The Global Economy Since the 1800s
How to see the Future Now and get the wind behind your back

*  How, Why and When to gain the Five Point Command Posture

Live in One Country
Bank in a 2nd Country
Invest in at Least Three Currencies for Diversification
Earn in a 4th Country
Embrace Change

*  The Importance of Resource & Productivity Transition thru Technology in:

History & Politics
Communications
Consciousness & Mindset Transition
Demographics
Cycles

What the Six Major Technological Eras Mean to Investing and Business Now

*  How to Invest to the Importance of the Real Fuel Shortage beyond Fossil Fuel

*  The Importance of Demographics in Business & Investing

*  How to Spot Repeat Bull and Bear Cycles

*  How Cycles Affect Business and Investing

*  What to do When History Repeats Itself

*  The Micro Self Publishing Addition

Self publishers do not write in a vacuum.  The search for value also reveals the national psyche… the secret connection in society that everyone desires to know, but no one can see.  These Webinars show how changing values in the global economy alter how self publishers focus, position and adjust the marketing of their publications.

4 Webinar Series: “How to Spot Distortions & Trends that Create Value”

Each webinar lasts one to one and a half hours.  The webinars are $49 each, but when you enroll in this new webinar series, the first is free.  In addition, if you enroll in all four webinars the fourth is only $1 more.

When you enroll now, you’ll receive the first webinar right away.  Each future webinar will arrive in approximately two weeks.   Enjoy Webinar #1.   If not entirely satisfied, just let me know and I’ll provide a prompt refund.  To thank you for your time and trust, I’ll send the 2nd webinar at no cost as well.

5th Interactive webinar FREE

At the conclusion of each webinar we will be open to questions and after the series, we will conduct a fifth session that answers questions.   You can attend this webinar live or recorded.

Enroll here.

Webinars #1 and #2 $49

Webinars  #1, #2  and #3 $98

Webinars  #1, #2, #3 and #4 $99.

New Home Building is Shifting to Apartments

Trading down story

“The Intelligent Investor” written by Benjamin Graham and Jason Zweig with Warren Buffet as a collaborator is the classic book on value investing.  This investment book outlines no-fail value strategies without gimmicks. The book is filled with wisdom about investing.

Intelligent Investor

You can order this at Amazon.com here.

You can also order the Sandalwood Investing Report. Though the shares are up over 50% in the last month this share has plenty of built-in value with potential for a $10 price over the next 10 years.

Screen shot 2014-01-28 at 5.28.13 PM

You can learn all about the TFS sandalwood share investment in the Sandalwood Investing Report at  Amazon.com

Spotting economic contrast and trends that create value is a sure way that investments and savings can grow faster than the loss of purchasing power.  Ignore what the market is doing. Examine instead the potential value.