Monday, 20 August 2012

What exactly is the Stock Market? It's the organized method where by everyone and all people could sometimes invest in or even market their particular futures or perhaps shares


...stock market... by losy


On the morning of 8/9/11 Sonoma County real estate investor Steve asked his me, his Realtor to negotiate a longer escrow because of the large drop in the stock market the previous day. Stock market declines have a strong effect on investors like Steve who will likely still purchase the property he is pursuing, but he is literally banking on a short term market rebound so that the losses he realizes have an opportunity to be negated or at least lessened when transferring the stock assets to a real estate asset.

Drops in the stock market don't just delay real estate escrows as they will likely do in Steve's case. They have the ability to derail sales altogether. Buyers suddenly have less money at their disposal and they may need to buy a less expensive home or they may get into a position where they can't or won't want to purchase at all. They will simply wait until they have more money when the market rebounds.

Stock market gains are important to real estate because often buyers are counting on liquidating stocks in order to purchase homes. I purchased my first condo in 2000 in part by buying 100 shares of (PCL) at the IPO price of 16. After the requisite holding period of 30 days I sold in the mid $150's and that became a significant portion of my down payment. Short term trading strategies don't necessarily help the market, but back in the day when the internet economy was in its infancy and booming people like me were taking what they could get and riding an upwelling in the market.

The stock markets and the world economies need to perform. It would be great if someone like Al Gore would come along and discover an internet or something. Don't hold your breathe but our society is evolving. Technology is driving change and new opportunities. Perhaps the paradigm shift to a greener economy will not only help the planet but all of our pocketbooks and portfolios as well?

In general when the stock markets are up people have more money to invest in other things like real estate. Conversely as markets decline people not only feel less than wealthy, but they are and they can only do less. The economy as a whole suffers, which is why the stock market must and will perform. We've all got too much riding on it, even those of us who don't own stocks.


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