I just shake my head...

Every day before the kids wake up, I read the Wall Street Journal and have to shake my head. Story after story of novice 'real estate investors' attempting to speculate on condo flipping, income-producing properties, and other mortgage-papered transactions. I truly hope these folks wake up and remember the fundamentals of investing before they get too far into the quagmire of real estate investing...

Warren Buffett, the guru of all investment gurus, reportedly keeps just five reference books on his office desk in Omaha, Nebraska. Which means a book has gotta be pretty darned good to make his favorites list.

One of these chosen five,The Intelligent Investor, was penned by Benjamin Graham. There, Graham discusses the extraordinary changes that had taken place in the investment environment over the past 50 years, and yet he takes comfort in the fact that "through all its vicissitudes and casualties, as earthshaking as they were unforeseen, it remained true that sound investment principles produced generally sound results. We must act on the assumption that they will continue to do so."

My reason for sharing this diatribe with you today? Because recently, more and more Clients are engaging my brokerage company to locate investment properties for them and I'm finding myself in an awkward role of advising them not to buy. At least right now. The Indianapolis area real estate market is currently churning and my judgement is, in most cases, that Sellers are asking too high a premium for my Clients to achieve their individual capitalization rates. It will settle down soon and that's when to put the chips on the table.

Much like Warren and Ben believe, it's important to stay true to your sound investment principles right now.

Oh, by the way...The year Benjamin Graham published his book so beloved by Buffett was in 1949. And his theories still hold relevance today.

Cheers!