They say that stocks are poised to crash just after everyone is unanimous about the wisdom of getting into stocks, and that they’re set to rise just after everyone is sure stocks are dead. Presumably, it works the same for real estate. I heard something recently that sounds like either a good sign for stocks or a bad sign for real estate in Canada.
I hosted a get together where a friend who is a real estate agent told us about one of his clients. This client is frustrated with years of poor results from stock mutual funds and plans to pull all his money out and try to generate better returns buying real estate and collecting rent.
This sort of thinking is great for real estate agents, but I’m doubtful it will work out very well for this investor. I know people who are well-suited to be landlords, but most of us are not. This story feels like either a great sign for stocks now that the last person is getting out, or more likely a terrible sign for real estate in Canada now that the last holdout is jumping in.
Just to be clear, I have no confidence at all in my ability to read such signs. I have no intention of changing my investing strategy to use this information in any way. But, it sure feels like a sign that stocks will outperform real estate in Canada over the medium term.