Chuck Ponzi April 5th, 2005

Many of you know that the Kennedy’s are some of the wealthiest Americans, and also that their wealth was not diminished during the great depression because of some luck or foresight by an early Kennedy. Legend has it that just before the stock market crash of 1929, Joseph P. Kennedy decided to sell his entire stock holdings. One day prior to the crash, he went to get his shoes shined. The shoeshine was talking about all of the stock trades that he would make that day, and even offered some advice. It was this moment that Joseph realized that this had become a mania. Joseph reasoned that if a shoeshine were giving out stock tips, things had gotten out of hand, and it would soon crash. Which it did.
I remember buying my little home on the edge of Los Angeles County in January 2000, with what was a considerable down payment to me. It also carried a hefty monthly payment that was greater than what I could rent for, but I was very interested in owning a home that I could call my own. Interest rates were at 8.5% at the time. In the ensuing 4 years, prices got out of hand. When my wife and I decided to sell in May 2004, the house sold for over asking price, more than double what I had paid for it. When we dediced to sell, everyone was talking real estate. I learned about flipping properties from a guy working in the call center where I was a finance manager. I realized at that moment that if someone making half what I did was so interested in this as a speculative investment, it was time to get out. It reminded me of all of the people giving stock tips right before the dot bomb bust.
So, the Kennedy’s and I have something in common. Well, besides the millions of dollars, lavish estates, celebrity status, and dying all the time. Still, I am glad that I got out when I did. Sure, my parents said I was crazy. My friends thought I was stupid. I think my wife even secretly wonders why I did it. I can only think… they will see.
BTW, some great articles to read come along. This one is about a really stupid real estate investor: What not to do.
The WSJ also had a great article on how renting is cheaper than buying. Rent now, buy a foreclosure in a few years!
Well, enjoy yet another day in SoCal… the bubblie is going to burst.

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