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Summary: You want to buy investments when times are hardest. Currently, Real Estate is presenting as the most attractive investment. If you want to learn how to make money, keep on reading!
The first two quotes should be bundled together. The best time to be buying any investment is not when the market is hitting new highs. People who bought Real Estate in 2006 have gotten hurt very badly, in some cases losing over 30% of the value of their houses in 1 year. The time to buy is not when the Dow Jones Industrial Average is hitting new highs like in 2007 when it reached 14,000. The time to buy is when the market is down, when the market is hitting multi-year low prices. Right now, you can buy houses in Sacramento for less than the costs of building the same house new. You can buy houses where rents cover your mortgage, property tax, and insurance costs. The time to be buying is when fear is the highest!
"I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful."-- Warren Buffett
"Opportunity often comes disguised in the form of misfortune, or temporary defeat." -- Napoleon Hill
Second, never let someone tell you "This time it's different." I remember when I first started investing experts were saying on CNBC that the technology rallies of the 1990s were different. This time the economy had changed. The growth of these companies justified unprecedented prices never before seen. What happened in 2000? 99% of the technology companies that had unseen prices before went bankrupt. It's never really that different...
"The four most expensive words in the English language are, 'This time it's different.'" -- Sir John Templeton
Finally, I hate to cite Bruce Berkowitz three times in the same day, but the man is a talented investor. He says when he goes to work everyday, he tries to prove that the theories he formed when he bought his stocks are no longer valid. He tries to prove himself wrong everyday. The last quote emphasizes the trap most investors fall into. When they buy a stock, they hold onto it even when the fundamentals change. No one likes to be wrong, but the most successful investors know when to cut their losses because they are ALWAYS trying to prove themselves wrong!
"The moment a person forms a theory, his imagination sees in every object only the traits which favor that theory." -- Thomas Jefferson
