When the Bubble Bursts

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Hilliard MacBeth. When the Bubble Bursts

Cover

Dedication

Table of Contents

Acknowledgements

Introduction

Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

Chapter 6

Chapter 7

Chapter 8

Chapter 9

Chapter 10

Chapter 11

Chapter 12

Chapter 13

Chapter 14

Notes

Copyright

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To my clients, who taught me most of what I know

I would like to express my deepest gratitude to the all of those who helped with this project:

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Apparently what had happened, which is clear in hindsight, is that people had become frightened by the demonstrated volatility of the stock market and a perception of elevated risk, and became more comfortable with the “stability” of the real estate market. A steady growth rate of a few percent per year attracted them when compared to the 50 percent or greater drop in the stock market. After all, if a stock like Nortel can collapse, the stock market must be a very risky place. So people opted for the tangible investment, the house and the condo and the rental property. Even though my clients hadn’t experienced anything like a 50 percent drop in market values in their personal portfolios, the news media reported the stock market disasters and the general feeling of unease had seeped into their consciousness at a deep level and made a lasting impact.

I had, with skill and some luck, managed to steer my clients through the dot-com bubble in stocks. Retirement plans were intact and investment values had grown. But what if all that work were reversed in a real estate crash? I worried about what would happen to my clients in the event that real estate prices stopped going up or started to slide. The benefits of having a balanced portfolio of investments providing the ultimate in safety and return was in jeopardy because of a gross misallocation of savings into one asset class: real estate.

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