Property Grunt

Tuesday, October 03, 2006

Bringing sexy back?: The stock market

A recent Massey Knakal market reported they discussed the current state of the market cycle

“We are anticipating a drop in volume in sales back to the 2004 levels of 2.6% in 2006. We are also anticipating a market wide decrease in value of about 3.5%."


When a commerical brokerage group on level of Massey Knakal presents these facts, you better damn well listen. They are the Special Forces of commercial brokerage who close multi-million dollar deals like meth induced beavers in an Ikea. And although they are not screaming red alert, they are obviosuly aware that changes are underway for the investment landscape and one of those changes is occuring in the stock market.

Since last week the stock market is on the comeback trail that would make Rocky proud and has continued today.

NEW YORK (AP) -- The Dow Jones industrial average surged past its all-time trading high of 11,750.28 Tuesday, taking yet another step in its recovery from seven years of market turmoil.
The index of 30 blue chip stocks moved into uncharted territory after briefly passing its record high close of 11.722.98 on Thursday and Monday. Both records were set on Jan. 14, 2000, before the stock market began a precipitous decline caused by the dot-com bust and recession and worsened by the aftermath of terrorism and corporate scandals.


I know one person who specializes in distressed real estate who had a devil of a time finding investors for his deals during the dot com boom era because investors were getting much higher returns in the stock market. There is a distinct possibility that this scenario will return. If this trend continues the possibiltiy looms that more steam will be taken out of the real estate market as more investors transfer their money to the stock market.

Don't get me wrong. I respect the returns on a good real estate investment. But real estate is in hostile waters.Investors are starting to see it will be more difficult to get the returns they seek. Considering that playing the stock market is so much more easier and quicker to do it will not surprise me that more people will gravitate towards the market.

A commercial transaction takes a tremendous amount of time and effort to conclude. It is not uncommon for a commercial deal to take year to close. During that time other opportunities to put those funds slip away and it will be awfully for peopel to simply to commit a vast amount of money to an investment that will not yield as much as the stock market.

What do you think folks? Feel free to comment.