Stocks vs. Real Estate: "YAWN" - Follow-Up

AS A REFRESHER: Stocks vs. Real Estate: "YAWN"

Some additional thoughts:

The S&P 500 index is something that no one buys and keeps. Two of the best known stock investors in the country are William O'Neil and Warren Buffett. They would never buy any index. O'Neil buys 4-5 stocks and Buffett around 20.

The stock market(s) are national or international markets. Not so with real estate (housing). They are local markets only. So, it's like asking, "is it faster to N.Y. or by bus?"

So, on that basis, does a commercial RE investor in L.A. care what the Denver condo market is doing? No. But, a stock investor must always worry about the right time and/or right sector of the market to be in.

READ: Get A Grip - On a Real Market not a Trading Environment

In 2005, the Phoenix housing market returned a stunning average appreciation of 46%.
Point. Set. Match.

The SPX is at 1480.93. I can buy it today, with cash, hold it and get religious: start praying. I get no discount.

There is no reason why I can't buy real estate at huge discounts from the outset, take the property to a higher use and beat my market's averages routinely....and I do. Can't be done with public equities. After you buy, the price will move up or down despite your prayers.

The public trusts property because of it steady record since 1930 and low volatility. Not true with stocks.

With stocks, strict sell disciplines must be in place. With real estate you need strict buy disciplines.

Please keep another point in mind when analyzing stock returns over time: According to the Frank Russell and Co, the “manager of managers”, the S&P 500 (10.2%) and the average fund manager (12.2%) has outperformed the average investor (2.7%) over the past 30 years. Why? Because, individuals who handle their own accounts tend to make too many moves and at the wrong time greatly retarding long-term performance. The point being that unless you own managed funds or index funds, you will not achieve any where close to the returns used in research reports comparing stock market returns to other asset class returns over a long period of time.