We had poor timing buying our Old Greenwich house in 2007.
Housing was really depressed given the Great Financial Crisis.
In 2010 things were still pretty bad.
People were still bailing out of their vacation homes with short sales.
Then my dad wanted me to buy a ski condo with him.
The condo was $800,000 in Jackson Hole, WY
It was a lot of money.
I didn’t feel confident about the investment.
Housing was still weak, vacation houses were even weaker.
Now 2010s is known for being a decade of historically low housing starts.
Now we have the Fed tightening financial conditions to fight inflation.
There is a big fight going on in the stock market between recession vs inflation.
According to Bloomberg, consumers are as miserable today as we were in 2010.
The stock market is cheaper,
Yet folks won’t buy,
Companies won’t want to invest.
What gave us confidence in purchasing the condo was the free cash flow yield.
Rent less management fees meant the condo paid a nice 4% cash flow yield.
But it took a year or 2 before I felt like we made a good investment.
Now our condo is worth ~ $2,500,000 12 years later but the stock market did much better.
Our best vacations and investing opportunities are when everyone else is scared.
Some companies have nice free cash flow yields.
Killing inflation today will mean commodity producers won’t want to invest.
They will want to hoard cash too.
So would you rather invest in the stock market here or buy our expensive Jackson Hole Condo?
Tip of the week.
Investing can be scary but sometimes that’s the best time to buy as long as you have a view and a strong balance sheet. Our view of Jackson Hole was it was becoming an increasingly popular ski vacation destination because it wasn’t crowded. Sometimes the least crowded investments are the best ones. We sometimes need help from a guide so we don’t make bad emotionally based decisions. Thank you Dad for making me buy the ski condo with you back in 2010!
Your Friendly Wealth Engagement Guide, Tiffany Kent
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