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Notes From Michael - Sept 8th

Posted by MIchael Campbell

on Friday, 08 September 2017 14:04

Posted Friday, 08th Sept 2017 

When you see around the globe the maldistribution of wealth, the desperate plight of millions of people in underdeveloped countries, when you see so few haves and so many have-nots, when you see the greed, and the concentration of power, have you ever had a moment of doubt about capitalism? Whether greed is a good idea to run on? (Mark Donahue, Talk Show Host 1979)

World respected economist Milton Friedman: Well first of all tell me is there some society you know that doesn't run on greed? You think Russia doesn't run on greed, you think China doesn't run on greed? What is greed. Of course none of us are greedy it's only the other fellow who is.

The world runs on individuals pursuing their self-interest. The great achievements of civilization have not come from government bureaus. Einstein didn't construct his theory under order from a from a bureaucrat. Henry Ford didn't revolutionize the automobile industry that way. In the only cases in which the masses have escaped from the kind of grinding poverty you’re talking about, the only cases in recorded history are where they have had capitalism and largely free trade. If you want to know where the masses are worst off, it's exactly from the kinds of societies that depart from that.
 
So that the record of history is absolutely crystal clear that there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by capitalism.
                                                                                                        

Featured guest:

Purchasing real estate via the stock market alllows Featured Guest Jeff Olin of Vision Capital to buy undervalued real estate and sell short overvalued real estate. They look for a disconnect between what the underlying value of the real estate is vs the stock price. So if all of the real estate value is $10. and the stock price is $8 they buy. If all of the real estate value is $8. and the stock price is $10 they sell short. The ability to sell short allows Vision to make profits in down markets as they did 2 years ago in the Calgary Commercial real estate market.
 
Jeff notes that in their collective experience real estate values are determined by supply and demand rather than interest rates.
 
Vision is negative retail real estate, bullish industrial real estate and bullish rental apartments both sides of the border and bullish seniors housing and cautious on office space in Canada.
 
One exception in the retail area because it has been driven far below its real value is symbol GGP $21.28. GGP is an S&P 500 retail real estate company focused exclusively on best-in-class retail properties. Jeff thinks their real estate value is $30. from its currrent $21.28, it has a 4% yield and an additional catalyst is that it is currently being looked at for takeover by Brookfield Asset Management, already a 1/3 shareholder. 
 
In Canada Jeff likes Pure Multi-Family Reit. TSX-V: RUF.U trading at $6.40Canadian based, publically traded vehicle which offers investors exclusive exposure to luxury resort-style apartment communities in key sunbelt locations.
 
Jeff also likes InterRent Real Estate Investment Trust  IIP/UN.TO. $7.97 which is focused on medium-sized, multi-family residential properties in Ontario's mid-sized population markets, targeting working and middle class, long term renters. Stock is trading at $7.97 and Jeff thinks it is worth $9.
 

Michael's Real Estate Warning

Michael shares a costly real estate mistake he himself just made and gets some great advice from Ozzie on how everyone can avoid stumbling into the same costly scenario.


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