ONE DAY! Near the end of the day were a ton of buying opportunities and the sophisticated investors were in there, making tons of money today. However, that’s not how most people see a day like this — most people see this as a sign to get out of the market place, because it’s going down. If you’re licking your wounds because you got pounded today in the stock market, you need to really take a serious look at the two fundamental rules I insist that any investor have in place before they invest – KNOWLEDGE and CONTROL. In the U.S. real estate market, a similar story is occurring. The capitulation is happening, and people are finally realizing that they will have to take ANY offer they get rather than waiting for a better one. In the meantime, there are lots of sophisticated real estate investors that are going to make a KILLING, because they have the understanding and courage to be buying when most other people are selling. Whether it’s the stock market, or the real estate market, you have to understand when is the time to buy. And it makes a lot more sense to buy when everyone’s running for the exits, and there’s no demand in the market. Today was a great example of that. It’s true that the rich get richer and the middle class get less. I can guarantee you, a small group of investors made a lot of money today, while the masses got absolutely slaughtered. The only difference between them is understanding how to invest and make money in any market, rather than being the kind of investor that only knows how to make money when prices are on the way up. Whether it’s buying speculative pre-construction condos in Miami in 2004, or any commodity stock that showed signs of life in late 2006, if you don’t UNDERSTAND what you’re doing, and have CONTROL over your decisions, you’ll get killed. It’s just a matter of time. That’s why I preach that any good investor MUST have a good understanding of what they’re investing in, and control over the investment. Most investors violate at least one, if not both, of these rules. So it’s not a surprise that days like this are remembered by most people as a horrible day, as opposed to a glorious day where they made a killing. For me, since I have very little exposure in the stock market, I don’t care. For the last couple of years, until today, I owned one individual stock, and it actually was one of the top performers today because it’s a VALUE stock, and people buy it when there’s volatility (thank you Warren!) I bought into one other stock today I believe that is solid, but got way oversold in the panic today (and thus, was underpriced). From the price I paid this morning, it’s already up over 15%, yet still near its 52 week lows. I think it will continue to go up and I’ll be back to owning one stock once I believe it’s within the range of the true underlying value. My exposure to the stock market is less than 2% of my net worth, because I recognize I do NOT entirely understand the stock market. I know real estate and that’s how I act, and ensuring I have knowledge and control is what led me to being immune to crashes like today. The current messes are far from over. I believe this is the first signs of a major bear market coming to a stock market near you. So brace yourself if you’re into stocks and don’t really UNDERSTAND what you’re doing, or have CONTROL over what you’re doing. It’s about to get ugly in a big way. Remember, this is AUGUST when there is very little market activity! Wait until the fall, and into September and October (which historically is the month in which losses are most significant of any other). Of course, all the money running away from the stock market will push into real estate, which will have a positive impact on real estate investors. When you put yourself in a position where it’s hard to lose . . . man, it’s hard to lose!]]>