Real Estate Investments Or The Stock Market? - Posted by Nick

Posted by JPiper on May 09, 1999 at 18:34:08:

When I turned 21 I sold mine to another guy who wanted to drink beer illegally. Nice profit in that business!

Wish I still had it…think I would pass for 23?


Real Estate Investments Or The Stock Market? - Posted by Nick

Posted by Nick on May 08, 1999 at 11:42:35:

Hello everyone;

Which investment vehichle would you prefer?

The stock market (it does not matter, index funds,
going for growth and income, high tech, the dogs of the dow
theory, etc…) or real estate investments?

Also why did you choose that investment vehichle?

Re: Real Estate Investments Or The Stock Market? - Posted by Bud Branstetter

Posted by Bud Branstetter on May 11, 1999 at 11:01:22:

If you spent as much time involved with the stock market as we do with real estate you could make money. The major drawback of real estate is liquidity. Sell a stock 10-15% under market and its gone. Not always in real estate. Value becomes much more subjective.

Some of the answer lies in what your objective is. If it is to provide cash flow short term both can do that. My son made more than his salary last month in covered calls. Once you make the cash the question becomes how to keep it coming without any more involvement. There are plans like Fabian’s mutual fund investing that have excellent return over time. Generally mortgages and other real estate investments can give you excellent passive returns with safety.

I constantly have discussions with my son about which is better or safer. I do real estate because I like the interaction and the “art of the deal.” He is enjoying the stock market because it is his job to do it every day.

Re: Real Estate Investments Or The Stock Market? - Posted by Mark (SDCA)

Posted by Mark (SDCA) on May 10, 1999 at 10:44:19:

Real estate for 2 reasons: leverage and tax benefits.


Re: Real Estate Investments Or The Stock Market? - Posted by JPiper

Posted by JPiper on May 09, 1999 at 15:01:34:

I made my first investment in the stock market 33 years ago?.at the age of 20. I wasn’t old enough?.so I used a fake drivers license (the same one I used to drink beer illegally) to open the account. I didn’t have any money either? I used borrowed money from my brother. My first foray turned out well?.I bought Studebaker at $25 per share?.sold it a few days later for over $40 amidst a buy-out attempt by a guy from Hawaii.

Since that time I’ve traded everything there is to trade (I think). Stocks, options and commodities. I spent some time as a local trader on a futures exchange (a painful period of my life), a private trader from my home, a stock broker, a heavy options trader, and always an interested observer (even to this day). I personally know a number of people who’ve done quite well in this arena?..LONG BEFORE the Dow hit 11,000. I know a guy who made his first couple of million trading wheat during the 70’s during the grain embargo, when he was in his early 20’s. He had an outstanding “feel” for the markets, great instincts, and an ability to put his net worth on the line time after time. He went broke 3 times AFTER the first fortune, and made it all back each time.

These days there are a lot of geniuses in the stock market. Why not? The bull market has been going since August of 1982?with the Dow at 750. I think it’s safe to say the stock market is no longer cheap. I think it’s also safe to say that part of what drives markets is psychology. So while earnings growth MIGHT be the determinant over the long term, in the short term psychology rules. I’ve seen a lot of people lose a lot of money in the short run. Crowd psychology is difficult to predict AT BEST.

If I were going to focus on the stock market?.I would become an expert on technology?..and in particular on the internet. I would then figure out who the weak players are?..which players in the internet craze will not have the ability or financing to succeed. Then I would attempt to sell them short at some propitious time. Fortunes will be made on the collapse of some of these hot-aired balloons. But this is not a low risk activity.

Meanwhile?.YOU need to do some self-evaluation?.see what you’re made of. The stock market requires certain kinds of traits. Do you have them? Real estate requires different traits. Do you have them? You seem to be moving pretty slow?..I’m starting to wonder whether you’re going to make a move of any type. Decisiveness and action are required in either endeavor, neither of which are you showing much of. You can be successful in either area?..which area is best depends on who you are and what you enjoy.


Re: Real Estate Investments Or The Stock Market? - Posted by Chris ~ TX

Posted by Chris ~ TX on May 08, 1999 at 21:51:38:

In addition to my other post below, I’d also like to add these thoughts. If you do decide to invest in the stock market, DO NOT invest in index funds and DO NOT follow the dogs of the dow theory. Both are flawed.

The dogs of the dow theory has been around for quite a while actually, known as the Dividend Yield Theory. The rationale is flawed though. It’s argued that because their dividend yields are not in sync with the rest of the Dow stocks, they will change to match them, and for that to happen the Dogs’ prices must rise. That’s where it’s flawed though because the company can cut it’s dividend, thereby giving another way for the dividend yield to fall. And it DOES happen, enough that it should keep you from following this theory. And that’s just ONE reason not to use this theory in the stock market.

Index funds are a bad idea also. First of all, there are over 125 index funds (and they’re suposed to mirror the s&p 500? lol). There is NO such thing as a fund that mirrors the S&P 500 Stock Index. The S&P, like all market indexes, is a theoretical concept…a mathematical formula. It’s a tool that observers use to help gauge the stock market’s performance. Because it’s a mathematical formula, it’s impossible for a true index fund to perform identically to the index. The index IS NOT adjusted for commissions or taxes, which index investors incur. And as far as them being tax efficient goes, you can’t suggest that they do not incur any trading at all. When the S&P committee decides to change one stock for another, within a day EVERY index fund will do the same, simultaneously selling the old stock and buying the new one. And it’s not even necesarily because a certain stock is doing bad, it’s because the 8 person committee decided they wanted to do it. What happens when everyone buys the same thing at the same time? The price goes up. And when everyone sells the same thing at the same time? The price goes down. Because they’re (all the index funds) are buying and selling at the same time, they end up buying high and selling low (aren’t we suposed to buy low and sell high? ). There’s a list of other reasons not to buy into the index funds, but that right there should be enough to discourage anyone, I HOPE. =)

Chris ~ TX

Re: Real Estate Investments Or The Stock Market? - Posted by Rob FL

Posted by Rob FL on May 08, 1999 at 19:18:34:


Your question of what do you prefer is somewhat ridiculous. Obviously on a board about creative real estate everyone is going to answer that they prefer real estate.

I have invested in both. I have several rental properties as well as other income from RE. I also have stocks and mutual funds. I treat any income I make from the stock market as pure gravy. The reason why I believe so much in real estate is the leverage thing stated below.

If I have $10,000 how much worth of stocks can I buy? If I bought them all on margin probably $20,000. In real estate you can use little or none of your own money and buy or CONTROL millions of dollars worth of real estate. Case in point. I just acquired control via a lease option of a house worth roughly $70,000. It cost me roughly $900 total to achieve this and I make $3000 up front option consideration (mine to keep) and $125 a month cash flow. How could you even compare that kind of return to the stock market? My calculator shows a 500% annual return on investment. Nuf said.

Re: Real Estate Investments Or The Stock Market? - Posted by Gary_OK

Posted by Gary_OK on May 08, 1999 at 17:34:53:


I agree with the comments about RE giving you control and an above average return. I disagree with the opinions that the stock market involves guess work and luck. It involves the same thing as RE, a fundamental understanding of the underlying business and how the numbers work. In my opinion, there is no stock market equivalent to a “flip”. Although many people make money on short term price moves, I think the average investor should approach it from a get rich slow perspective. Buy quailty leadership companies and let the management do the rest. Earnings growth drives a companies stock price (with the exception of the current internet stocks). I depends on your goals and objectives. Individual stocks have been kind to me and luck has nothing to do with it just as luck has nothing to do with REI success. I am a new RE investor and look forward to the rewards of the business. My 5-7 year goal is to get out of my 9-5 job and RE is my ticket. Would individual stocks do that for me? Yes, but not in 5-7 years. Another benefit is that I can use someone elses money to secure my financial freedom in RE (LEVERAGE!!!).

Decide what your goals are and go for it!


Re: Real Estate Investments Or The Stock Market? - Posted by PBoone

Posted by PBoone on May 08, 1999 at 15:34:15:

We use the vehicles of Real estate and small business for the same reasons Ed identified CONTROL. We can analyze with a reasonable estimate of outcome. Stock relies on quesswork.

Re: Real Estate Investments Or The Stock Market? - Posted by Ed Garcia

Posted by Ed Garcia on May 08, 1999 at 12:38:41:


There is no comparison. Real-estate is the way to go.

The reason being, CONTROL.

I have a reasonable amount of Control when I invest in Real-estate.
I virtually have none when I invest in the Stock Market.

In Real-estate I can analyze and adjust, and my efforts can make a

In the Stock Market you often hear investors say what a genius move
they made when they bought a stock that is doing well, and then they
act victimized by the stock market when the stocks tumble.

Robert Kiyosaki, who is the author of Rich Dad Poor Dad.
Tells us that the rich think differently than the poor.
He says that the poor invest in stocks and mutual funds, and the rich
invest in businesses and real-estate.

I?m inclined to agree with him.

I?m afraid the Stock Market has too many variables for me.
I realize that those who are investing in the Market and are doing well
will disagree with me, and that?s what this forum is all about.

But we both know that those that disagree with me, don?t know what
they are talking about.


Ed Garcia

Re: Real Estate Investments Or The Stock Market? - Posted by phil fernandez

Posted by phil fernandez on May 09, 1999 at 17:19:04:

Geez Jim,

I must have your fake drivers license. I did the same thing. Drinking beer illegally.

I’ll show you my fake drivers license if you show me yours. LOL.

Re: Real Estate Investments Or The Stock Market? - Posted by Chris ~ TX

Posted by Chris ~ TX on May 08, 1999 at 21:18:39:

I definitely agree that real estate is the way to go. I mean, after all if you buy stocks and they then proceed to drop in value, then you lose. You have no recourse. If, however, you buy real estate and then sell it, but the person doesn’t pay, you can still foreclose and get the house back. It’s that security that makes real estate the better choice in my opinion. Howerver, on a side note and in all fairness, you can use leverage in the stock market also. It’s called buying on margin, but of course you’re only allowed to borrow up to 50% against the stocks, whereas in real estate you can leverage the entire deal giving you an infinite return.

I’ll always feel that real estate is DEFINITELY the way to go, though. =)

Chris ~ TX