Second order thinking is essential if you want to be a superior investor. 

               Most real estate investors, however, only consider the first order effects of economic events – such as a downturn in housing prices. 

               Conversely not spending time to consider the second order effects of market events can result in you missing out on alternative opportunities that may be attractive. 

                                                              Capital Flows

               Every major market event sets in motion capital flows that leave one asset class – and go into another.

               When capital is flowing out of real estate – and prices are falling – you want to be in an investment where capital is flowing in – and out-performs the rate of inflation.

               Buying low and selling high is the golden rule of investing.  So when housing prices are falling, I recommend  real estate investors seek out alternative opportunities that are likely to rise in price. 

              Then after the downturn in housing prices is over, you shift your money back into real estate.  

                                                    Darwinism at Its Finest

               “Adjusting to change” is not only how you survive in life – it’s also how you get ahead.