<p class="yellowboxheadline"><font size="2">The REAL State of Real Estate</font>


<h2 class="body">The April 10 issue of <span style="FONT-STYLE: normal">Money</span>
magazine says,"Want to beat the stock market cold? Buy a house."
What's this about?</h2>
<p class="body"><span style="FONT-FAMILY: Arial">Most stock market indexes
peaked two years ago. It's taken awhile, but some investors are finally waking
up to the possibility of a longer-term top. They are looking for alternate
investments, such as real estate.</span>


<h2 class="body">But since the stock market's so shaky, doesn't the stability
of real estate make sense?</h2>
<p class="body"><span style="FONT-FAMILY: Arial">What you see from the media is
an ignorance of history, which ensures that history itself gets repeated:
Virtually every major decline in stocks has been followed by a washout in
real estate.</span>


<p class="body"><span style="FONT-FAMILY: Arial">A rule of thumb in sentiment
indicators: Just when everyone gets turned on to a hot"investment,"
the trend reversal is getting near.</span>


<h2 class="body">So despite its considerable strength, you're expecting a
decline in the current real estate market?</h2>
<p class="body"><span style="FONT-FAMILY: Arial">The contemporary real estate
scene has similarities to the real estate peaks that went with the downturns of
the stock market in both 1836 and 1929.</span>


<p class="body"><span style="FONT-FAMILY: Arial">Both peaks led to the most
devastating real estate depressions in U.S. history.</span>


<p class="body"><span style="FONT-FAMILY: Arial">Just to give you an idea -
say you bought some land in Chicago in 1836. You would've paid $11,000 an acre;
but four years later, each acre could be had for less than $100!</span>


<p class="body"><span style="FONT-FAMILY: Arial">The peak in stocks that came
just before this reflected a euphoria very similar to the one that drove the
late 1990s. The"anxiety to grow rich" has outlived the bullish stock
market and made its way to real estate.</span>


<p class="body"><span style="FONT-FAMILY: Arial">And much like the 1920's, the
current real estate peak has been spread across five years. REITs peaked in
1997, but home prices have continued to go up.</span>


<h2 class="body">What kind of time frame are we dealing with? Which side of
the real estate peak are we on?</h2>
<p class="body"><span style="FONT-FAMILY: Arial">We can't go into much detail
here without revealing what our subscribers pay for. But I will note that in May
1835 stocks peaked; the real estate depression began 24 months later.</span>


<p class="body"><span style="FONT-FAMILY: Arial"> We are now 25 months
from the long-term peak of most major stock indexes. </span>




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