Posted by George on February 15, 2006 at 01:41:49:
My favorite economics site is http://safehaven.com/index.cfm . It basically gives you a glass half empty viewpoint. But considering that CNBC and the mainstream financial media gives you a generally optimistic viewpoint, Safehaven.com gives what I believe is a valuable other side of the story.
Get Ahead of the Curve - Posted by ray@lcorn
Posted by ray@lcorn on February 10, 2006 at 16:59:17:
Folks, the best free newsletter on the planet, John Mauldin?s Thoughts from the Frontline (www.frontlinethoughts.com), brought a book to my attention about two weeks ago that I am so head over heels impressed with I have to pass it on.
The name of the book is Ahead of the Curve: A Commonsense Guide to Forecasting Business and Market Cycles, by Joseph H. Ellis. Mauldin?s discussion of the book spans two newsletters, which can be found at
Page Not Found - Thoughts from the Frontline Investment Newsletter, and
http://frontlinethoughts.com/article.asp?id=mwo020306
For those of you that are as obsessed with analyzing economic and demographic data as I am, be warned that this book is highly addictive. It?s the best text I?ve ever read about the technical analysis of economic data, and before you decide that?s the biggest oxymoron of the year, let me assure you it is highly readable even if you hate math. True data junkies (like me) will find themselves peeking at the end pages to see the conclusions as if it were a thriller novel. Okay, so maybe I?m exaggerating, but it really is that good.
Those of you who have my book, ?Dealmaker?s Guide to Commercial Real Estate? will recall that Chapter 17 discusses the various components of the national economy and how to interpret the various statistics as they relate to business cycles. My foundation of evaluating local and national markets trends is built on using data only in annual form and only in context of multi-year trends.
Had Ahead of the Curve been written then I wouldn?t have bothered to write that chapter, and just referred you to it. What I put forth as gut instinct, Joe Ellis made into a science. I?m just glad to know I was on the right track.
Not only does he confirm the thinking, he also created his own methodology (ROCET: Rate of Change Economic Tracking) that is so far superior to any other analysis that it will change the profession of predicting economic cycles.
I highly recommend you read this book. It?s not specifically about real estate, but if you?ve ever found yourself sweating an investment decision because of uncertain economic factors or just curious about the direction of the economy, here are the answers you’ve been looking for. Ellis not only explains what data to look at and how to interpret it, but for those that want the Cliff notes version, he puts it in such a succinct form that anyone can grasp the thinking in an instant.
The heart of the book is in the charts, and Ellis has committed to keeping the charts updated on a monthly basis at his website, www.aheadofthecurve-thebook.com. The site has links to buy the book through all the major booksellers.
ray
p.s. And yes, his numbers confirm what Mauldin and others have been saying for a year? a recession is coming sooner than later. Here are the numbers that prove it: http://aheadofthecurve-thebook.com/10-07.html
Re: Get Ahead of the Curve - Posted by Bob Smith
Posted by Bob Smith on February 14, 2006 at 12:14:56:
How do you go from trends to real estate strategy? Real estate is, after all, not a stock, but Ahead of the Curve seems to concentrate on bull/bear stock markets.
Re: Get Ahead of the Curve - Posted by marius
Posted by marius on February 13, 2006 at 21:45:43:
I second that. Not that it needs it. And thanks for talking and recomending John Mauldin’s site a while back. What a treat indeed. The weekly letters, can’t wait to get them. And the books…wow!
Thanks !
Re: Get Ahead of the Curve - Posted by ray@lcorn
Posted by ray@lcorn on February 14, 2006 at 14:08:53:
Bob,
The book focuses on economic cycles, specifically the leading indicators that signal economic contractions. Bull/bear markets are just one of several factors examined.
The economic cycles play out in the real estate markets, but some property types are more affected than others. For example, the retail sector will feel the effects of slower consumer spending growth almost immediately via fewer retailer store openings or closures. That means vacancies will not fill as quickly, rent growth will not be as readily acheivable, and new projects may be stalled or cancelled.
On the other hand, multi-family properties usually benefit from economic contractions and rising interest rates. Occupancy increases as home sales slow, though rent growth typically will be minimal until the real earnings curve turns back up.
And in a more general way, the real estate capital markets are sensitive to the economic cycle. The market prices RE capital (debt and equity) relative to long-term bonds, and availability will ebb and flow in relation to those yields.
ray