Ingredients for Smart Investing, or Lessons From the Food Channel

by Susan L. Stupin, Managing Director, The Prescott Group, LLC.

September 15, 2011 - The question for all alternative investors, including those in real estate, is "why invest now" versus waiting for strategies to become patently obvious and attract a crowd. No one wants to be "chopped." But there is still the tension between coming up with the creative dish versus the "meat and potatoes." Needless to say, the darkest times, in retrospect, can afford amazing profit potential for those with the courage to be contrarians and the manager/chefs who can execute. But, savvy investors wisely see a "no growth" world and are waiting for a glimmer of growth to surface to validate investment strategies.

So what to do and how to reconcile this dichotomy? Try not to be swayed by the “gloomsters” in the hedge fund world who are likely promoting their own short positions. The world is not coming to an end; the U.S. has more strength than it is given credit for; more credit than it is given credit for; and interest rates are at an all time low which affords both de-levering opportunities and an operating cushion. Use common sense to see value and consider some “non standard” variations on traditional strategies. Corporate real estate, downtown areas, hotels, niche retail, multi-family assets in non-core markets, and many other strategies can all offer intriguing investment propositions. And these investments can be further hedged with conservative capital structures. These bad times are limiting the competition, which is a silver lining.