Friday, September 11, 2009

Real Estate Optimism at Decade Highs

It's been a loooooong time (and a 20% S&P500 rally!) since we last blogged.

We've been investing and training financial advisors - among whom, as you might imagine, there is a huge (and long overlooked) need for psychological tools to use for the benefit of emotional clients in volatile markets.

We thought you'd find the below graph interesting. Optimistic discussions of real estate are rising to decade-long highs in the mainstream financial media (in this case: WSJ, NYTimes, Financial Times, and Barrons). IYR is the iShares Dow Jones Real Estate Index. The chart demonstrates the time period from January 1, 2001 until today.

Such charts are important to consider in context. Many investors are still "shell-shocked" - trapped in negative views of real estate and the markets and waiting for the next "correction." It's important, after a distressing year such as we've had, not to be stuck in the mental habit of pessimism. We're seeing and hearing much more pessimism than optimism among money managers, yet the key is to try to remain flexible and adaptable to new information - which is always the most difficult thing.

Happy Investing!

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