There Will Be No Bell Rung

Watching the latest move in the financial markets reminded me of similar events that seem to be lost when having any discussion about business, finances, and more.

Using the markets as of this past Friday. (that being Oct. 18, 2013) The S&P 500® has reached a level so high, it has never before been seen in the history of financial markets. Ever.

All this with a backdrop of economic data points that point to an economic contraction – not expansion. Yet, “Here we are!” I will once again state for the record, and will use the current market as proof (ipso facto) the markets are nothing more than a place where elaborate “story telling” is the vehicle to enhance the “greater fool theory” for participation. If anything was based on pure 1+1=2 (as what was once taught in business schools) Then we can’t be here unless it’s a bubble. Period.

So on that note let me share with you both my reasoning as well as why I warn against falling into a lull or trap based on what is happening. I’ll use myself as well as the last fiasco that everyone said would never happen. When everyone I came in contact loved to tell me how I “just didn’t understand Real Estate.”

Like many we bought a home right at the beginning of what is now known as, “the great housing boom.” We chose a great town and within a years time the town itself exploded with business, roads, airport expansions, and property values. It just seemed we hit the timing perfectly. There was no bell that rang signalling Go! However, for reasons of our own, things lined up and we jumped in.

After years of living in what many call a picturesque New England town and home, we looked at each other and thought about moving. The reasoning is lengthy (we were contemplating retirement options and more) but, to sum up the over arching theme: We were done with traditional New England winters. aka, “Snow up the ying yang.”

This picture was taken the day I left my hometown in April. Just 2 day later I was in 83 degree weather signing on my new residence.
This picture was taken the day I left my hometown in April. Just 2 days later I was in 82 degree weather signing on my new residence. Snow can beautiful, or a pain, need I say more?

When I decided it was time I contacted a realtor that I had become friendly with via past business experiences. (I owned a business in this town myself) He had recently become one of the prestige brokers in the area. He himself just purchased and renovated a beautiful property in the downtown area and made it his flagship business location. It seemed everything was just perfect for anyone in real estate business. At least that’s how any questions I would ask were answered.

So, after looking and comparing different brokers I decided I might as well do business with someone I not only knew but, for all intents and purposes answered my questions as well as anyone else did. So I signed and put my home on the market.

Right out of the gate we had interest. (I had just renovated everything and the home itself shone like a jewel) I put time into my asking price, looking at comps, etc. I was hands on and he commented many times, “I don’t have anyone ask as many questions as you do.” (I get that a lot. Just sayin’)

In less than 2 weeks we had a solid offer and was right within my acceptable range. (Nearly full asking price) So, I accepted and the house came off the market and was to close in a little over a month. Everything seemed perfect. However, there was trouble in paradise…

At the time contingencies were always a factor. I had one where the buyer was selling their home as a condition. No problem at this point in time for the market was in high gear and homes were selling just as fast everywhere. Their house was already under contract as sold and, they were just waiting out the process of closing. Then they would close on ours.

No problem as anyone thought. Then out of no where the buyers for their home started to ask and need extensions in the closing time frame. The first delay was a week, then another, then out of nowhere I received a call stating they were unable to move forward and wanted out of the sale. All was within the cancellation clauses so I relented. Unhappy but, that’s business.

This was all during the summer and fall of 2006. Real Estate was by far the business that dreams were being made in. You didn’t need to know a thing about business. If you took a class then passed the realtors license exam: You were in business making gobs of money near overnight. It was truly breath-taking. Then the late fall of 2006 started feeling different from that early summer. At least to me. Everyone else seemed oblivious.

I kept my home on the market after the first buyer dropped off. The issue was I was now 3 months deeper or out of the peak selling season of spring/summer. It was now late fall and winter was right around the corner.

The calls for showings on our home dropped to near nil from what we had when we first listed. However, everyone (from professional to friends) told me that was normal. And, I would be better to take my house off the market entirely and wait till spring once again. For I would be just throwing away money if I tried selling in the winter time.

I (like I always do) decided to not heed what others were telling me. From my stand point and rationale I thought it would be best to continue with it on the market and see what the market brought.
(Once you’ve decided to move whether in business or in life there are times where you must keep the momentum behind your decisions going. Or, you’ll just may back off, or out, at exactly the wrong times, for exactly the wrong reasons. i.e., Indecision or fear that you’ve already conquered or dealt with earlier.)

As time went on (I’m now speaking in weeks) I started noticing ominous signs that nobody else seen as important. I read stories about banking or finance companies having issues. (All these were brushed off as outliers from both the financial media or press right down to people in the very business itself.)

Then it seemed out of no where everything changed. All of the sudden I could not get my realtor on the phone. I would go to his office and the only ones there were his staff. When he did finally return my calls it was more along the lines that “He was busy involved with doing some other projects.” (It seemed if you were successful in Real Estate at this time it was a “no-brainer” you should now be into “land development” building your own sub division.)

In less than 8 weeks after this phone call I could no longer get him or anyone from his staff on the phone. The beautiful renovated building that was usually landscaped and manicured to perfection lay a foot in snow with no clear path shoveled to the front door from the latest snow fall. Like a comic action hero, my “spider senses” started tingling. Something was definitely wrong. Not just here but, everywhere.

From this moment on I would never see my former realtor or hear from him. It seemed as if he vanished from the Earth. Problem for me was: He still had the listing bound by contract on my house! Too no avail could I find him. For what ever his own reasons were. He decided to vanish and not face anyone he had on his listings. (People will do foolish things when, or if, they find themselves in moments they never seen coming.)

Everyone I spoke with about this situation (both professionals as well as friends) all chalked it off as a “once in a life time” bad experience. The overwhelming response from most was, “See, he probably did you a favor so you now can just wait till spring to sell your house instead of the winter and get more money for it. That will cure all your headaches.” As so everyone (and I mean everyone) thought.

Undeterred I decided to list my house right there in the dead of winter. It was near February and Feb. in NH is not cold, “It’s “freakin’ cold.” However my rationale was this: Anyone looking for a house in this weather or time of year is serious. Not just some tire kickers. And I owned my house where I could negotiate if a reasonable legitimate offer came. So I listed with another realtor I grilled and felt comfortable listing with and put it on the market. (I had to remove my front door assembly and smash the former realtors lock box with a sledgehammer to get my keys back. I still have never heard from him again.)

Everyone said I was crazy, everyone told me I was leaving money on the table and that I would be sorry. Everyone pointed to the past and rising percentage increase per year of homes as a way of showing me in dollars and cents just how much I was throwing away not waiting  “just a few more months” and list in the spring. However, as I said earlier, “I was undeterred.”

I adjusted my asking price and we put it on the market. (Again, this is February in NE) In 3 days we had appointments for 3 showings that weekend. The first appointment saw the house, offered us full price, no haggling, if we could be closed and out by the end of the following month. My answer? “SOLD!”

As I have said over, and over, again throughout this article. Everyone said I was crazy. I just didn’t understand the Real Estate market. Its seasons, its rhythm, its pricing, blah, blah, blah. Here’s what I knew: I was sold and moving on to where I wanted to go next. Who cares about all the “coulda, woulda, shoulda, everyone was telling me about.

I knew my plans, expectations, needs, and so forth and, all my instincts were telling me. “Now is the time.” Good or bad, I could live with the results. If I was wrong or anything else I would never know till after I went forth. That is when you look back and see if you were thinking correctly then adjust. But, you have to make those decisions first. then once you decide: Move!

Needless to say had we waited those “few months more” to claim all that money we were leaving on the table as everyone within my ear shot loved to harp at me. Not only would we not have claimed that booty – we would probably still be in that house, unsold, and very unhappy. Why? The greatest housing collapse of a magnitude never before seen in the United States housing market began that very spring, with the first major story of a prominent Sub-Prime housing lenders failure then bankruptcy that started the whole housing markets collapse.

There are properties in my former town that are still on the market years later since I’ve left at less than half of what they were when they were “selling like hot cakes” when I first purchased mine. Nobody I have ever talked to since has ever told me “that was good thinking on your part to get out then” no, nobody says a word. It’s like I never had a house there. (Silence is better than accolades more times than not in my book)

As I started out, there was “no bell rung” to signal the great Real Estate boon was over. I’m not saying I was some great Nostradamus with predictive powers. No, what I am saying is there were clues but – nobody wanted to see them. The most outright billboard-esque signal I couldn’t shake was the mere fact that people who had no business, being in business (I mean any form of acumen or business sense nothing more) were raking in gobs of money, and then spending that money like there was no tomorrow.

This sent warning signs I felt and believed I couldn’t nor shouldn’t avert my eyes from. People were throwing around dialogue and conversations where spending a million or, half a million dollars on some property was just nickles and dimes in their now “big picture” view.

There’s nothing wrong with that per se but, something should throw up red flags when you know they’ve never handled more than nickle and dimes just months prior. People think only large amounts ( i.e., tens or hundreds of thousands) are serious money. I’m here to tell you in business: All money is serious.

Act as if there is some duality in just how serious, and money will show you just how serious you should have been, right when you thought you were so smart, as too not think so seriously about her.

When you don’t basically have to know anything about business except to get a few hundred dollars together, take a course, apply for a license, then reap a financial lifestyle worth 6 figures and more. Something is wrong and we’ve seen just how wrong it can end when not only nobody will say so. They’ll tell you you’re wrong for questioning it.

Just like then I see the financial markets poised for the same styled events. What’s more troubling is the history to show just how wrong it can go is only a few years past. Yet, if you did nothing but bought the financial markets via some index funds or ETF’s. You have been rewarded regardless of anything out of economical, financial, or business acumen. And not just rewarded, you are now pushing levels never before seen in the history of the markets. So I guess the only question to be asked is…

Is your now found financial prowess so attuned that you will act like some Pavlov’s dog and rake in on command all those returns you’ve so carefully amassed. Or, will you act as – until there is a bell, there is no reason for alarm?

My ears have been ringing for quite some time is all I can say. Whether right or wrong from here no longer concerns me. I know what and why I am doing what I am doing. And in the end – to each – that is all that should truly matter in the end. That and the ability – to ring your own bell.

© 2013 Mark St.Cyr