Thursday, February 3, 2011

Today's fortune: February 3, 2011

Today's fortune: You will do better in real estate than in stocks.

I have a tough act to follow today. The new column "In Bed with David Crowe" is hilarious, and I look forward to bringing it to you around the beginning of every month.

Let's turn to today's fortune, which is decidedly less funny. But I think it's interesting, and I've been churning it around in my head all day.

The fortune is very specific: "You will do better in real estate than in stocks."

I've dabbled in both. On the real estate front, my wife and I purchased our house in January 2008. I don't have a single regret about the decision. This is our first home, and it will always hold a warm place in our hearts, no matter where we live. Jamie and I have built some special memories here, and I've yet to destroy the place with my lame attempts at home improvement.

Financially, though, the venture has been a fiasco. We bought the house right before the bottom fell out of the real estate market. If we had have been able to wait six months, we probably could have had the house at 80 percent (or less) of the purchase price.

So let's look at my stock market track record.

About 10 years ago, my brother, my father and I each decided to invest an equal and modest sum into the stock market. We turned it into a competition of sorts. My dad and brother invested much of their stash in Cisco, a very good company with little debt, and they bought in when the price was about sixty bucks per share. I sat back and watched as the stock torpedoed to the low teens. That's when I bought in, and I rode the stock back up into the twenties. I also diversified and bought shares in other sectors, and before long my portfolio had grown by nearly 75 percent.

But apathy and a bad economy pushed my portfolio down into the toilet. After I got married I lost interest in the game. Before, I would check my portfolio every several hours. After, I only checked up on things every few months. Last year, when Jamie and I decided to cash in the stocks, they were worth about 90 percent of the original investment.

We made the decision to cash in the portfolio because we had our sights set on an different kind of investment. We bought an original work of art.

I don't want to say too much about it, and I don't want to say how much we paid. But let's leave it at this: besides our house and our cars, the work of art is the single most expensive thing we own.

Now, the traditional definition of "real estate" usually means a house, a building or a piece of land. But defines "real estate" as "property, esp. in land."

It's that "esp." in the middle that I'm interested in. Property, especially in land. That means we're not only talking about land. It's a bit of a stretch, but I think our sketch fits in with that definition.

I'm very proud of this investment. It's not only something that will go up in value, but it's something pretty we can hang on our wall. You can't say that about a stock certificate. And immediately after we purchased it, an art appraiser told us it was worth much more than we paid.

Once Jamie and I have built up a certain amount of disposable income, I wouldn't mind following this fortune's advice. Jamie has always wanted to own rental property. She could be the landlord, and I could be the handyman.

Okay, maybe we could hire a handyman.