Actually, in trading I see it as the opposite than that shown in the graph. Larger reward is smaller risk but less probability. Greater probability usually implies greater risk and less reward.
Within a class of investment like equity, yes, totally agree. However, seems like housing is in a different class?
Could be. They say location..location..location in real estate. I was referring strictly to trading. Not even referring to gambling in Vegas as I am not a gambler although some would declare me to be because of the practice I have of adding to losing positions in certain market contexts. LOL
Seeing as biggerpockets of all places (for folks who aren't aware, it's basically a website for rent seeking [literally]) is the one playing this thing up I'd say the top is being laid for the RE markets as we speak. So many assumptive jumps in that article. "If you invest well, rental income will start performing for you immediately. Equities will take longer; the stocks you buy today won’t produce significant income for you until 10, 20, 30 years from now. But they’ll grow in value for you at prodigious rates. Build a portfolio of passive income from rentals and dividends, and when your peers are still working in a decade or two, their incomes tied to GDP growth, you can offer sympathetic words. And then you can go back to playing golf and relaxing with your children, having reached financial independence." Ring that bell.
well known saying: "winning isn't everything. winning is the only thing." vince lombardi-football coach of Green Bay Packers
That means the market is neither efficient nor random and there is hope for us traders to find within equity classes something that can beat the market? Regards,
Of course. For instance, rental housing..real estate..can beat the wall street senario if one has the skills to make good judgements on properties and wants to deal with the maintenance issues and rental people problems. I have friends that have gone that route and they do quite well. It isn’t my cup of tea. I don’t want the hassles that come with that sort of business. I had rather sit at my computer and trade and know by end of day if I made or lost money. No energies spent going to check a property out ...fixing a plumbing problem...finding a sheetrock man...dealing with contractors..etc..the whole nine yards. At my age I don’t want all that. In addition, some people can never learn to trade and if they are going to do well in terms of making money...well it is going to have be in some other field. Everyone has to find what suits them.
I skimmed the article. As it mentioned, in addition, you got the high barriers to entry in the real estate market. It is illiquid. No diversification as with equities. However, there are benefits as the article states. I just don’t want the hassles. I have 2 friends both in their 70’s that have done this. One tried mutual funds first I think. His rental housing has done him better than any investing in mutual funds ever did for him. The other friend has a barbecue business i would dare say he has made millions off of it. He also buys houses..refurbishes them..and rents them. As far as I know he does quite well in that arena too. Neither one of them have the skills nor personality for trading. They could do some longterm investing in equities but not trading like intraday trading and at their age they simply are not going to do it nor would I encourage them to.