Is the sky falling on asset prices or should we just wring the neck of that screaming chicken to shut him up?

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Is the sky falling on asset prices or should we just wring the neck of that screaming chicken to shut him up?

“The U.S. Treasury’s Office of Financial Research noted this week that stocks have reached today’s valuations “only ahead of the three largest equity market declines in the last century.”

Certainly NOT what I wanted to read while sipping my first cup of coffee this morning.  WTF???

But….as in all good thought-provoking pieces it’s valuable.

Yes, a bit of a butt-puckering scary article but still valuable.

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Here’s why I think it’s valuable:

  1. If asset prices plummet, we will see opportunities to pick up new properties from distress situations.  So perhaps keep some of your powder dry to seize these rare market fluctuations.
  2. It’s time to re-evaluate each of the properties in your portfolio in a kind of stress-test scenario.  For example, do you know what the Break Even rent value is for each of your properties?  (Hint:  If you don’t know how to calculate this, send me a message and I’ll walk you through it.)  I also suggest you re-evaluate your rental prices and the NOI for each property to determine if you should keep the unit in your portfolio or if it’s time to ring the register and sell it now–while asset prices are peaking.
  3. Evaluate your contractor base that work on your properties.  If the market goes to Hell-in-a-Handbasket, then guess what happens to contractors who are involved in your market?  They go away, too, due to immediate cash flow constraints put on them by their customers who stop payments or cancel job orders.  How many duplicate, trustworthy contractors do you have in your current Rolodex to call?

Here’s the link to the full WSJ article:  asset prices wsj

Be careful drinking your coffee while reading it.



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