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1/ Only stock guys complain about illiquidity in private assets.
As if liquidity has some magic about it? First of all, there is an illiquidity premium, meaning private assets tend to outperform public assets, broadly speaking. Secondly, liquidity creates volatility and chaos...
As if liquidity has some magic about it? First of all, there is an illiquidity premium, meaning private assets tend to outperform public assets, broadly speaking. Secondly, liquidity creates volatility and chaos...
2/ ...and some people can benefit from this chaos, but let's be honest — the overwhelming percentage cannot. Look at JP Morgan's 20-year annualized return for asset classes and compare them to the average investor. Also, take a peek at Morningstar's fund manager performance... 
3/ ...and notice that between 93% to 96% of fund managers have underperformed their benchmark over 5, 10 and 15 year periods. Unless you're Stanley Druckenmiller at his prime, you don't need to worry about liquidity and VOL because you probably won't benefit from it, at all.
4/ What you will benefit from, though, is the premium and safety of illiquidity — as long as your selection is right and you invest in sound fundamentals. This is much easier to do in the property market, where you want to buy below market price (margin of safety).
5/ Illiquidity, which only the stock guys look at as a negative, is actually a positive. You want illiquidity because you won't be shaken out & private assets don't swing around, as investors panic on a weekly, monthly or quarterly basis.
Look at $SPY. Last quarter was...
Look at $SPY. Last quarter was...
6/ ...the worst since The Great Depression & this year is the best start to the year in decades. A whole lot of VOL, but not much progress. S&P is not much higher then it was in Oct 2018.
I can tell you, the real estate deals I did, are. And they don't swing around like stupid.
I can tell you, the real estate deals I did, are. And they don't swing around like stupid.
7/ When Wall Street publishes charts of the stock market against real estate, you always see a misinformed and one-sided chart like the one I included here.
The truth isn't even close. The most important thing for Wall Street is to make sure you keep your money in their funds...
The truth isn't even close. The most important thing for Wall Street is to make sure you keep your money in their funds...
8/ ...and 401k's so that they can continue to earn their 1%, 2%, and all other hidden fees. The last thing they want you to do is to leave so their year-end bonuses go away.
9/ Investment in real estate isn't about buying an off-the-plan condo and holding it for 10 years while you earn your rent. Buying a finished product means that you made money for a guy who built it, renovated it and finished it for you. S/he made the return — you paid a premium.
10/ The proper way to profit from real estate investing is finding deals where you can add value to an existing piece of property & re-sell it for a premium, or be extremely opportunistic & create something completely new on an empty parcel of land and keep it / sell it off.
