Follow the leaders
Today's Financial News - Posted November 18, 2008
The real estate industry is hitting all-time lows. Many investors are running in fear. But some are leaping into the market. Follow them to profits.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): I spent last night at an entrepreneurialism seminar. I figured what better way to learn what the little guys of the business world are up to than visit them firsthand.
The keynote speaker for the event was Cordia Harrington, the founder and president of the Tennessee Bun Company. In an economy filled with reports of doom and gloom, the bakery owner was downright upbeat by her business environment.
At first I thought her demeanor was artificially inflated to instill a spirit of endeavor on a hall full of entrepreneurs. But as I reviewed the highlights of her presentation on my way into the office this morning, I realized she was on to something.
The bread will rise
One subject that Harrington drilled on was the notion of patience.
Her company produces over 4,000 hamburger buns in a minute. The more bread Harrington can produce, the more money she can make. But the bread industry has some unique operational hurdles.
Chiefly, bread has to rise.
“If you want good bread,” Harrington says. “You have to give it time.”
At the Tennessee Bun Company, the rising process takes about four hours. In a production line that is moving faster than the human eye can process, waiting four hours for bread to rise can feel like an eternity.
But as Harrington exemplifies, if you want good bread, you have to wait.
Today’s real estate investors could learn a lesson from the baking industry. Patience is not a trait we have found much of on in the investing world lately. We want the economy fixed, and we want it fixed today.
To prematurely force the economy back on its feet, we are attempting some extreme measures. We forced hundreds of billions of dollars into the markets. We created ways for the government to take over free enterprise. And we created regulations that greatly limit the powers of free markets.
We greatly skewed the nation’s economic model in an effort to instantly put profits back in our portfolios.
As investors we should not be in a hurry to get out of this mess. Harrington was upbeat by the prospects her company faces and so should you. The real estate industry is a perfect example of one of the greatest opportunities you will come across in a lifetime.
Have some patience
Earlier today, the National Association of Homebuilders announced its housing market index hit an all-time low reading of just 14. Anything below 50 is considered negative sentiment.
For many folks, the reading is a sign of economic calamity. For the Harrington’s of this world, the decline is a signal to get to work. When all others are too fearful to enter the market, that is when she makes her move.
When Harrington started her real estate business when mortgage rates were 17%, they called her crazy. When she bought her first McDonald’s restaurant, a dilapidated low-volume franchise, they called her crazy. When she sold those businesses to build a state-of-the-art bakery from the ground up, they called her crazy.
But Harrington took advantage of fear in the markets to create a small fortune. Now she sees the current financial calamity as another fantastic growth opportunity. And she is urging entrepreneurs to follow in her footsteps.
With the real estate industry in the worst shape we have witnessed in decades, this is an opportunity to make investments that have the potential to pay of for years to come. Just as Harrington’s bread takes time to rise, so will the real estate market.
With the right ingredients, this market has the potential to rise into a fantastic wealth-generating opportunity.
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