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2/19/12: Lessons Real Estate Investors Can Learn from the Stock Market

Dogs and cats.  Labor and Management.  Geeks and Suits.  Democrats and Republicans.

Do you see the similarity?  No?  Exactly.

So when someone (whom you’ll meet shortly) suggested that stock market day trading could teach valuable lessons to real estate investors, we said, “Riiiigghht.”

But being the open minded guys we are (remember: your mind is like a parachute – it only works when it’s open!), we decided to jump on a plane (actually, we rode inside) and fly to Salt Lake City.

Barking into the microphones for this episode of The Real Estate Guys™ radio show:

  • Your Big Dog host, Robert Helms
  • Your hissy co-host, Russell Gray
  • Special Guest, Rich Dad Paper Asset Advisor Andy Tanner

One of the reasons The Real Estate Guys™ radio show and podcast exists is because virtually all of the major media and personal finance gurus look at real estate investing as owning a home.  When it comes to wealth building, conventional “wisdom” is to buy and hold stocks, then hope and pray they go up over time.

We think real estate is the PERFECT investment (if you overlook tenants and toilets) because you can buy it with mostly the lender’s money, make the payment with the tenant’s income, put the extra cash in your pocket each month (when properly structured), get favorable tax breaks (keep more of your money), AND you’re hedged against inflation over the long term.  In fact, you could say that you benefit from inflation over the long term.   And even if the value drops, as long as it cash flows, sooner or later it will be paid off (if you’re into owning free and clear rental property).  What’s not to like?

Compare this to buy, hold, hope and pray stock investing, where most stocks don’t pay you cash each month.  There’s no tax advantages, unless they’re in your tax “advantaged” retirement (you know, the one that trades deferred taxation for converting your low taxed capital gains into highly taxed ordinary income – what a deal!).  And, unless you’re into options (which isn’t really buy and hold, it’s trading), you have to purchase your stocks with your own (often AFTER tax) money.  Ugh.

So you’re entire bet with most buy and hold stock investing is long term appreciation of the stock price, which is something over which you have NO control.  Have you ever tried to put new paint and landscaping on a stock to increase it’s curb appeal?

So, with this admittedly huge bias, we show up with our mobile microphones in Andy’s office.  He’s in trouble.

Then we meet Andy.  All six feet eight inches of him.

What do you say to a 6′ 8″ guy?

“Um, hello, sir” we say sheepishly as we reach out and watch our hands disappear into his huge paws.  “What would YOU like to talk about today?”

Now Andy is one of the nicest guys you’ll ever meet.  So before the microphones are on, we have a little back and forth, and before we even do the interview, we’re fans.

We talk technical analysis, fundamental analysis, diversification, cash flow, retirement accounts, the European debt crisis, and the investor’s mindset.  We have a GREAT time!

So listen in to the conversation and pull out some precious pearls of paper asset wisdom that you can apply to your own real estate investing.  And if you listen all the way through, Andy tells you how you can get exclusive access to his new book, 401kaos.  We haven’t read it yet, but we like the title!

Listen Now:

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources that help real estate investors succeed.


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