Before they go over the cliff to their destruction these little furry ones get together for a party and celebration. Each tells the other how smart he has been with his investments and buying and selling of stocks and real estate.

Wait a minute. Did I say lemmings? I think I meant investors. It seems they had that same party in January 2000 and it was a doozy that lasted for several months. A great time was had by all. They did not have one in 2001 as membership dropped off. Nor again in 2002 and by 2003 there wasnt anyone around at all.

The lemmings (oops, investors) had gone over the cliff. And they were such nice little guys too. The few at their party who tried to preach caution were drowned out with loud squeals that the market was going to 40,000 or maybe higher.

This new crowd said it will never happen to them as they are not going to put their money in that risky stock market. Oh no, there is a really safe investment that always goes up real estate. There is only so much land and no more is being created. The population is expanding so the demand will continue and prices can only increase.

Even for the novice speculators there is a place to make big bucks. They are joining real estate clubs just like the old stock market investment clubs to which they have previously been members. Put in a few thousand and watch it grow as the real estate market keeps going up and up. These investors know they are on the verge of great expectation that will mean wealth. Wealth without work or effort. Maybe they forgot how much they lost from the expert advice in that previous investment club, but everyone knows real estate is a sure thing.

A stock investment is just a piece of paper, but real estate you can feel the dirt, walk through the building and slam the doors. Thats solid. You cant miss. With each deal they recognize how they are getting smarter and smarter. Hurrying, doing nothing constructive to make their fortune. Just like in 2000.

For more than a year the professional traders, insiders and large institutions have been quietly selling their stocks and I am now beginning to hear of sales of major properties. Just because someone has a lot of money doesnt mean he is smart. These groups can be as wrong as the little investor.

Real estate may continue to be an excellent investment, but speculation in real estate can be hazardous. If, or maybe I should say when, this market stops going up or even starts down it is very hard to sell a property. Payments must be made and upkeep maintained. It is possible to rent out some houses or offices, but the income ratio today does not allow a breakeven to costs.

These real estate lemmings dont seem to care. They are gathering in larger groups and are working under the greater fool theory.

This is a time for caution as it was in 2000 for stocks. You dont want to go over the cliff again.

Copyright 2005

Al Thomas

Albert W. Thomas has spent most of his life in the field of finance. In 1965 he founded an insurance holding company, Security Dynamics Investment Corporation, after having been an agent and General Agent for several life insurance companies. In 1970 he became cofounder and president of Real Life Estate, Inc., that marketed a unique real estate and life insurance package.

After he became interested in commodities he bought a seat for his personal trading on the Chicago Open Board of Trade, which is now known as the MidAmerica Commodity Exchange. Later he became a full time trader and also acted as a commodity broker for a few select clients. By fellow floor traders Al is considered to be an excellent technical analyst much of which is outlined in his book IF IT DOESN'T GO UP, DON'T BUY IT! It became a best seller on Amazon.

In 1981 he sold his membership on the Exchange and with his wife, Carolyn, lived full time aboard their 41' ketch, the Aumakua (which means guardian angel in Hawaiian). They sailed in Florida and the Bahamas for two years.

He founded World Trading Group in 1984 that grew to the seventh largest introducing commodity brokerage firm in the U.S. with 35 offices from coast to coast, Alaska and Canada. It was sold in 1992.

Al is a graduate of Northwestern University with a B.S. degree in Commerce and is a member of MENSA. He is now president of Williamsburg Investment Company that syndicates his weekly financial column since 1999 to more than 300 newspapers and writes a financial market letter called Over My Shoulder that is quoted in Barron?s and many other publications. A 3-month trial subscription is available on his web site. He is a regular guest on several financial radio talk shows.

His favorite pastime is fishing.

Mr. Thomas is available for speaking engagements. Please call 321-453-5300 for more information.