Just the other day, over sips of Orahovica, I chatted with a long time friend about the state of the media.
(Aside: Orahovica is a walnut based brandy that is popular along the Adriatic Coast and it's amazing. Not too bitter, not too sweet ... 100% awesome.)
There was a day, not long ago, where investigative journalism offered a "third view" into current events.
You know ...
You used to have governments telling you how the economy was going via 100 pages reports.
Then you'd have big corporations tell you how things were going via their earnings forecasts.
And then you'd have investigative journalism tear into both governments and corporations and report a "third opinion" that was based on some deep research and fact-checking.
Not so today.
It seems to us, as outsiders, that today's media just repeats what government's say. And they repeat what big corporations forecast ... as fact.
There's no investigation any longer.
We've lost that critical alternative third view into matters.
It's not the fault of the journalists.
The model has changed.
Much more of the heavy lifting in the media seems to be done by freelancers instead of highly paid full-time investigative journalists.
Some still exist but it definitely feels like there's a lot fewer of them.
Why should this matter to you as a real estate investor?
Well, it's made it much harder to get an accurate view of what's going on in the overall economy and in local communities.
You've always had to do your own due diligence before buying property and now it's even more important.
Here's a funny example of what we mean...
The Chairman of the U.S. Federal Reserve is often considered the master conductor of the global economy.
So naturally people hang on every word he says and it's often repeated in media articles with little critical analysis.
Here are some of his quotes over the past few years:
2005: “House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals.”
2005: “We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.”
2006: “Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise.”
Now, we obviously don't have to tell you how this story ends.
But when this sort of information is reported in the financial news ... if you don't check it against your own base of facts it could really mess you up.
During the years that these sort of comments were being made, we're sure historical data was available to the Fed, to the media and to you and I.
But it would be ultimately left up to you and me to analyze it and make our own conclusions from it.
No one else would do it for us.
Looking back, it seems that housing prices were well out of historical norms while the Fed was making comments that would suggest the contrary.
Now, it's easy to look back ... hindsight is always easy.
That's not our point.
Our point is that you need to depend on yourself to make solid investing decisions.
You can assemble the best power team in the world. Lawyers, brokers and accountants.
But ultimately you'll need to do your own research to gain 100% confidence in your decision making.
It's a good idea to start building up your own resource of tools, reports and data to digest and reflect on.
And our point in sharing this is not to slam the media ... it's to impress upon you the importance of learning to depend on yourself.
Investing for yourself, for your own reasons.
Remember, our accountant told me not to quit my six-figure salary. It was too risky, most small businesses don't work out ... not to do it.
I did it anyway.
Our own lawyers have told us not to invest in certain cities, in certain properties with certain methods.
We did it anyway.
We take what they say seriously but always make our own decisions.
Self-reliance will serve you well.
It's more important now than ever.
Only you can create the lifestyle you want for yourself.
You can do it and you will!
Until next time ... Your Life. Your Terms.
p.s. If you're beginning to build your own pile of data to make investment decisions off of, make sure you review some of CMHC Housing Reports ... they're not everything you'll need but they're a great start.
