The Best of Times, The Worst of Times
My friends, we live in interesting times…
As the broad economy emerges from what has turned out to be the most significant global financial challenge in a generation, opportunities emerge even while significant difficulties remain.
Government statistics show that the US economy continued to grow in the fourth quarter, although the growth rate was not strong enough to have a significant effect on employment statistics.
At the same time, inflation concerns are heating up both domestically and abroad. Food prices have been soaring due to emerging market demand coupled with supply issues linked to floods in some parts of the world and droughts in other parts. Political issues in Egypt are now raising fears of increasing energy prices – which means inflation is beginning to impact a broader portion of all of our lives.
Meanwhile, the US Federal Reserve, along with their counterparts in Europe and Asia, are working hard to keep currency values low – with the hopes of keeping goods and services cheap and boosting demand from overseas. The currency issue is especially dangerous because as governments compete to devalue their currency, it has a direct effect on the purchasing power of our individual savings and investment capital.
One other interesting issue to note is that banks are still sitting on large amounts of “troubled assets” – primarily loans and risky securities that have declined in value and are not likely to recover. On February 7th, the Wall Street Journal published an article titled: Toxic Assets Still Lurking at Banks. Below is a quick quote that captures the essence of the problem.
…banks still hold plenty of the bad assets that once spooked investors: mortgage-backed securities, collateralized debt obligations and other risky instruments. Their potential impact concerns some accounting and banking observers…
It’s a bit disturbing to realize that these banks can continue to hold specific trouble assets on their books without writing down the value “as long as they believe the value will eventually rebound. So while most people believe that the problems in the banking system have been resolved, my inside contacts at the banks tell me that these institutions are desperate to unload these assets at almost any price.
Historic Opportunity (And it Won’t Last Forever)
For the last few quarters I have been telling you that we are at a historic crossroads when it comes to investment opportunity. The financial crisis that first hit real estate developers & builders quickly worked its way into the financial system.
This left banks with balance sheets full of foreclosed loans and repossessed development properties. Unfortunately, many of these banks are still in trouble or have already closed doors – transferring the distressed property to the FDIC.
Today as the economy begins to recover, we have the once-in-a-generation opportunity to buy residential land at crisis valuations – despite the fact that the overall economy has already begun emerging from the crisis.
As you probably know, real estate is one of the most effective investments to hedge against inflation. As the price of various assets and commodities increase, land values typically rise alongside. So when you see that higher tab for filling your car or checking out at the grocery, keep in mind that savvy investors are offsetting these costs by owning positions that trade higher with inflation.
With my expertise in the local Atlanta market, Ashford Capital investors are picking up exposure to prime property which should lead the recovery in terms of price appreciation and the speed in which we are able to turn deals around and sell them to hungry builders and developers.
If A Picture Tells a Thousand Words…
If you are looking for a quick overview on how Ashford Capital’s business model is structured, take a look at our most recent presentation. The video is only about 2 minutes, but offers a good summary of how our investments work, the rates of return investors can expect, and the opportunities we are seeing in the Atlanta area.
Once you understand the basics, the next step is for us to have a conversation and determine exactly how Ashford Capital can help you personally. Our investment programs are flexible and can even be implemented using an IRA or other tax advantageous account.
I’m looking forward to our discussion and hope you will join me in pursuing the unique opportunities we have in today’s market.
Wishing you every success,
Matt