David D. Kirkpatrick and Jamie Heller
Is Real Estate Cooling Off?
By Jamie Heller
Posted Tuesday, May 23, 2000, at 10:43 AM ETDavid,
Another bleak day in the market today, though it's more slow creep than yesterday's vicious spiral. We are now approaching midpoint in the year with every index harbored safely in the red. Given our antsy Fed, there's no sign of imminent relief.
One question your average bear has to be thinking about is--is this now affecting the real-estate market, and if not yet, when? The media, whose sources are mostly the sellers' brokers, seem confident that the real-estate market is still red hot. But some macro data indicates that things might be shifting. (Check out Bloomberg columnist Caroline Baum's piece from last week titled "Is the Economy Slowing? Data Tell Two Tales.")
You've covered real estate in your day, David. What's the relationship between the two markets? When does one start bleeding into the next?
Jamie
Is Real Estate Cooling Off?
By Jamie Heller
Posted Tuesday, May 23, 2000, at 10:43 AM ETDavid D. Kirkpatrick is a contributing editor at New York magazine who writes frequently about business and finance. Jamie Heller is editor for strategic ventures at TheStreet.com, where she's worked since its 1996 founding. Reader Response from The Fray--to be read after the most recent entry:
I still don't understand how the stock market can be efficient in the long term and not the short run. And I'm not relying merely on Keynes' famous sentiments about the long run; my point is even simpler: when is the long run? Was Microsoft's long run value from 1990 to early 2000 or to today? Short run volatility must have consequences for people who claim long run efficiency. To my mind, and for many other reasons, believing in efficient markets is like believing in Santa Claus--there are correlations between expected results and reality, but people really ought to grow up and accept that no-one on Wall Street knows anything.
--Jeff
(To reply, click
here.)
(5/22)
To Jeff: Various natural processes are long-term efficient without being short-term efficient, for example the downhill flow of water or the process of natural selection (aka evolution). Complex human processes seem to have similar behavior. Perhaps efficient is being confused with "optimal". The problem with most strategies that attempt to be optimal is that they often have truly horrendous failure cases, which wipe out all their interim or theoretical gains. Democracy has been called "the worst form of government, except for all the rest." It is hardly optimal, and in many cases very inefficient. A dictator could get the graffiti cleaned up and the trains running on time; democracy seems to have a hard time doing such things. But what about the failure case of a less-than-benign dictator or a dictator whose benign intentions diverge from many or most of the desires of the population? An example of short-term efficiency vs. long-term, in terms of human happiness.
That's not to say short-term efficiency is bad, or that we can't improve on raw systems. But it is possible for a strategy to be the best long-term one without exhibiting short-term efficiency.
--Paul Canniff
(To reply, click here.)
(5/23)
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Reader Response from The Fray--to be read after the most recent entry:
I still don't understand how the stock market can be efficient in the long term and not the short run. And I'm not relying merely on Keynes' famous sentiments about the long run; my point is even simpler: when is the long run? Was Microsoft's long run value from 1990 to early 2000 or to today? Short run volatility must have consequences for people who claim long run efficiency. To my mind, and for many other reasons, believing in efficient markets is like believing in Santa Claus--there are correlations between expected results and reality, but people really ought to grow up and accept that no-one on Wall Street knows anything.
--Jeff
(To reply, click here.)
(5/22)
To Jeff: Various natural processes are long-term efficient without being short-term efficient, for example the downhill flow of water or the process of natural selection (aka evolution). Complex human processes seem to have similar behavior. Perhaps efficient is being confused with "optimal". The problem with most strategies that attempt to be optimal is that they often have truly horrendous failure cases, which wipe out all their interim or theoretical gains. Democracy has been called "the worst form of government, except for all the rest." It is hardly optimal, and in many cases very inefficient. A dictator could get the graffiti cleaned up and the trains running on time; democracy seems to have a hard time doing such things. But what about the failure case of a less-than-benign dictator or a dictator whose benign intentions diverge from many or most of the desires of the population? An example of short-term efficiency vs. long-term, in terms of human happiness.
That's not to say short-term efficiency is bad, or that we can't improve on raw systems. But it is possible for a strategy to be the best long-term one without exhibiting short-term efficiency.
--Paul Canniff
(To reply, click here.)
(5/23)