EMERGING MARKETS Part 2: EXACTLY When To Buy & Sell | Episode 126

Nothing else matters if the real estate you buy declines in value.  So EXACTLY when should you buy… and EXACTLY when should you sell?  Get ready to have your mind blow, my friends.  I’m Bryan Ellis.  This is Episode 126.

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Hello, SDI Nation!  I look forward to greeting you every single day, my friends!  Welcome to Self Directed Investor Radio, the PODCAST OF RECORD for savvy, self-directed investors like you!

I’ve got something special for you today, my friends.  We’re going to talk about a scientific and astoundingly accurate way to PREDICT THE FUTURE when it comes to real estate values.  No, we’re not going to get deep into the weeds on science or math, because as it turns out, this MARKET PREDICTOR is actually about PSYCHOLOGY – the psychology of all of the other people in the market who will drive up, or drive down, the prices of real estate.  So get ready to have your mind opened up and some earth-shaking knowledge poured into it!

But first…

Folks, I’m going to brag for just a moment, and I think you’ll be ok with it, because I’m bragging on YOU!

You folks have made this show grow so much, so quickly… I’m just amazed.  Last month was, far and away, the biggest month for this show, which was true for each of the preceding months as well.  And yesterday was the biggest day for this show ever, eclipsing a record that had been set about a week prior, which eclipsed a record that had been set about a week prior.  The point is:  This show is BOOMING, and it’s ALL because of YOU!  This show has more listeners than radio stations in many good-sized markets… and we’re barely 6 months old!

So, THANK YOU… and I’d like to extend a PARTICULAR thanks to those of you who actually spread the word about this show to your friends and colleagues.  Those of you who do that have a particularly special place in my heart, and I’m so very, very, very grateful to you.

I guess I’ll move on from gushing over you guys for now… but one final time… THANK YOU.  And remember – there are now 126 regular episodes and few special episodes, and every single one of them is worth your listening to and freely available at SDIRadio.com!

So, onward to the mind-blowing stuff!

YESTERDAY, which, by the way, was one of the most popular episodes of this show of all time, revealed one of two ways to analyze real estate markets.  This works for stocks too, but that’s not the best game in town, so we’ll focus on real estate.

The way you learned yesterday is called “Fundamental Analysis”, in which the astute investor considers factors like population growth and interest rates and unemployment and other such factors to determine whether there’s a rational case for the value of real estate to go up.

The idea is to buy into a market on the basis of a factor or combination of factors that’s not widely known.  And there’s real value to fundamental analysis, no doubt about it. 

But some people criticize fundamental analysis.  They’ll tell you that fundamental analysis isn’t worthwhile because there’s no clear tie from those factors to property values.  For example, everybody thinks that changing interest rates have a big impact on real estate prices, but history shows that’s simply not true with any consistency, so interest rates really aren’t a useful way to directly predict changes to real estate value. 

And there’s some truth to that.  If you have little-known knowledge about a market that should lead to appreciation, who’s to say that the market actually just doesn’t care about your reasoning?  That’s always a risk with fundamental analysis, which leads to the other way to pick strong markets… and even more importantly it’s also a way to TIME your entry to and exit from markets.

That other method is called Technical Analysis.  The basic idea is that we use past pricing history to predict future valuation.  An astoundingly simplified version of it is this:  Let’s imagine that in Poughkeepsie, New York, real estate values crash by 15% in January of every 5th year, but that the average annual appreciation rate is 8%.

Now, please keep in mind, folks:  This is a made-up example.  It doesn’t really work this way in Poughkeepsie, or anywhere.  But if one could find patters like that, what would it mean?  It would mean, very simply, that it would be very wise to buy real estate immediately when property values crashed in January of every 5th year, and to sell that real estate no later than December of every 4th year.  By doing so, you’re in the market when it’s good, and you’re out when it’s bad.

That’s a really simple example of technical analysis.  All we’re doing is looking for patters than show how values have historically changed so that we can make predictions about how the market will react in the present day, and in the near future.

Technical analysis is used very, very extensively in the financial markets.  Literally TRILLIONS of dollars’ worth of trade volume happens every single year in the currency markets, wholly as a result of technical analysis.  This is an area of math and science that is really quite well developed.

No, it is NOT perfect.  But using it wisely gives one a huge advantage over not using it.

Why haven’t you heard about technical analysis being used in the real estate market?  Because it’s really not used that much, and the reason is simple:  It’s very hard, and very expensive, to get the actual DATA to do this kind of analysis.  It’s not like the stock market, where every single transaction is funneled through one of a very small number of exchanges, from which one can derive a complete historical record of pricing.  Instead, we have over 3,000 counties in America where real estate records are recorded, each of them varying in terms of the systems they use and the data they can easily produce.  So it’s a huge, expensive challenge to have the data necessary to do this type of analysis.

But VERY HARD and VERY EXPENSIVE don’t mean impossible.  And given the proper data, one would absolutely have a huge advantage in being able to predict real estate market value changes.  In fact, many proponents of technical analysis suggest you can entirely DISREGARD fundamental analysis if you’ve got a good technical analysis, because at the end of the day, you might not really care very much about the core health of a market if you have a way to profit from the swings in it’s prices.

And that’s really what technical analysis is all about:  It uses pricing history to measure the PSYCHOLOGY of the market itself.  Mass psychology in financial markets is a fascinating thing.  Remember last week when the Dow Jones Industrial Average fell by over 1,100 points immediately upon opening, then rose by about 1,000 points, only to end the day down about 600 points.

Do you think that the REAL VALUE of those companies actually changed that much during the course of a single day?  Of course not.  But mass psychology was at work, changing market prices in a massive way… and it’s constantly at work in the real estate market, too.

What if you could see, very clearly, when a shift in mass psychology was happening in the real estate market?  More importantly… what if you could see it on a market-by-market basis?  Because as we know, there’s not really a NATIONAL real estate market… real estate is distinctly local.

So what if you could see markets from a totally different point of view… one where, as values change – and as the mass psychology about your specific market changes – you can clearly see the BEGINNING of trends and the END of trends as they occur?

THAT would be worthwhile.  THAT would give YOU as a self-directed investor a MASSIVE advantage… You’d be able to INTELLIGENTLY buy into good markets, hold on to those purchases for the 1-4 years that is the typical length of up trends, and then unload your investments BEFORE mass psychology turns against you, and your investment.

And what if you could do all of this without even understanding technical analysis?

I’ve got good news, my friends:  I’ll be bringing this to you very, very soon.  And it’s going to rock your world.

In the meantime, make sure you’re a part of the SDI Discussion Group by texting the word SDIGROUP to 33444.  That group gets advance warning about EVERYTHING… and for now, it’s free to join that group.  Again, just text the word SDIGROUP with no spaces or periods to 33444, or visit SDIRadio.com.

My friends:  Invest wisely today… and live well forever!

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