[Kinny]

Hey guys,

I've been hearing a lot about the possibility of a Commercial Real-Estate bust in UK and US and wondering what is your take on that. How will that affect the markets and will it be safe to sell all stocks/funds and go to cash or stay put in strong foreign/emerging markets, and possibly commodities? If the commercial real-estate crash is bigger than last year's crash (as economists/analysts) have been shouting about...how are you guys planning for such thing?

Curious to hear what your opinion is and what your investment strategy is.

Thanks!

 

[Rickson9]

It has no bearing on my stock investments.

 

[HaroldCrump]

will it be safe to sell all stocks/funds and go to cash

Of course, it is always safe to sell and go to cash.
It is buying that is risky.

or stay put in strong foreign/emerging markets

What strong foreign market?
US is in the dump, Europe is in the dump, Japan has been in the dump for as long as I can remember.
What strong emerging market - there's threat of recession everywhere.

 

[dogcom]

Look for a more sure cash generation for you, like utilities, so you have a return in my opinion. Everything risky, is depending on money flowing in, without concern for fundamentals, which requires trading to make money.

 

[Smac20]

The reasoning behind the view of a commercial real estate crash is due to a number of factors:

1) NINJA mortgages - basically low interest starter with a big jump up at renewal - 50% of these are up for renewal at much higher rates in 2010
2) Retail Sales are down - drastically lowers income from Malls, etc. where percentage rents are common
3) Vacancies are up.
4) Perceived risk of owning Commercial Real Estate has caused Cap rates to Rise.

This all leads to lower Commercial Real Estate values and less cash flow to cover debt obligations...boom there goes another mortgage meltdown.

This has already begun. The amount of debt is not as large as the residential problem from last year, but it is still very large indeed.

As for those that think this will not affect other investments...who are you kidding? This will cause more bank bankruptcies and lead to another spiral down down down. If it turns into a big issue like some think of course.

Play safe and you are very likely to be rewarded this year.

 

[HaroldCrump]

Play safe

How?