November 19, 2014
Whitepapers and Publications
Should All Real Estate Investors be Value Investors? An exploration of momentum investing in real estate markets
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As commercial real estate investors, we are told time and again by investing legends that the key to long-term success is value investing — buy during times of uncertainty and pessimism, and sell during periods of “irrational exuberance.” In the words of Oaktree founder Howard Marks, “The herd applies optimism at the top and pessimism at the bottom. Thus, to benefit we must be sceptical of the optimism that thrives at the top, and sceptical of the pessimism that prevails at the bottom.” We all aspire to invest like Ronald Perelman, snapping up tens of billions of assets during the height of the Savings and Loan Crisis. Or to be Lone Star’s John Grayken, pulling the trigger on Merrill Lynch’s housing-backed CDO portfolio for $0.22 on the dollar in July 2008. In both cases the investors reaped massive payouts for their bets placed during the height of market fear.
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