The Demographic Cliff

Hence, you need to buy real estate only if you need it long-term, or to buy foreclosures in this global real estate bust with the intention of renting them out for positive cash flow.

end. If central banks can’t keep pushing longer-term rates lower, then mortgages will become more expensive again, corporate buybacks of stocks will slow or stop, and stock valuations will be hurt by rising long-term rates.

The old-fashioned way of making money on real estate (i.e., the Monopoly game) is back. You don’t buy it for appreciation—you buy it for the rents.

we tell real estate investors to avoid property as a long-term, appreciating investment. That strategy is now dead. Instead, the best strategy for years to come is to buy real estate cheaply in foreclosure and then rent it out for positive

If you want to see the future, watch demographic trends, as they are the ultimate leading indicators. Even better: most economists, investors, and businesspeople don’t understand this, so it creates a unique advantage for you as an investor or business.

out. My

This messing with Adam Smith’s “invisible hand” means you need to prepare for the worst downturn and crash of your lifetime, which I predict will arrive by late 2015.

The Best Leading Indicator The best indicator? People do predictable things as they age. That’s it in a nutshell. So, let’s look at how demographics drive economic trends, from the macro to the micro, in modern middle-class economies.

we do see will be most visible in low-end starter homes and the rental apartment markets.

We need to go back to the lessons of Monopoly, where you buy real estate for the rents, not the appreciation.