Friday, March 6, 2009

The Bottom of the Market is in All of Us!

All we hear about these days is where is the bottom? Where is the bottom of the housing market? Where is the bottom of the Stock Market? Where is the bottom of the bond market? and more to my business, where is the bottom of the restaurant value market? Assets around the world have collapsed in the past 6 months with practically every asset being devalued by 40-60% from their pike prices.

Every one is asking these questions and the answer is with all of us. As long as we continue to panic as a population, the bottom could be a lot lower than what it is today for all these assets.

I'm no economist, although I have 4 years of economics education in college, but when people sell an asset they are converting the asset into cash. And there is a whole lot of cash out there right now waiting to find a home. I heard a figure the other day os 14 trillion dollars of cash! Where could this cash find a home be is the million dollar question? Or better yet, when will the cash move to a home? And it will eventually find a home.

When the cash decides to move into a home (assets) the value of those assets will increase by definition. Simple economics of supply and demand.

What is amusing is the bottom of the market is in all of us. And what I mean is we need to stop the panic and be rational. As Warren Buffet says, when people are greedy, it's time to sell and when people panic it is time to buy unless of course you think this is the end of the world or of the U.S. as we've known it for 200+ years. And perhaps it is. But I'm certainly not convinced it is.

Think about the value of assets today. Housing is quickly approaching 1999 price levels. Stocks are at 1995 price levels. And commercial property is beginning to crash as well and should be at 2000 prices by the end of the year.

At some point all that cash will flow back into the markets and prices will be right back where we were a year ago. Will it take a couple/few years to get there? Certainly. But the point is if you're trying to time the bottom you'll likely get burned and left behind.

So lets all stop the panic and start grabbing some of these bargain price deals out there. If you've ever wanted to start a small business, the price to start hasn't been this low in more than a decade.

Let all get this economy restarted by investing in the American dream of owning your own business!

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