When it’s hard to find great deals, it’s easy to find money.
When it’s hard to find money, it’s easy to find great deals.
This tweet by Sean Sweeney is, of course, 100% true. It is also true of markets and investing in general. When everyone feels confident, money becomes available, and then returns fall. There's too much competition. But when everyone is scared and liquidity dries up, bargains emerge. Now there's very little competition.
Warren Buffett has made an entire career out of playing this paradox. It's his well-known "be greedy when others are fearful" mantra. But in order to do this, you need to be patient, you need to have the resources, and you need to have the right emotional temperament when things are in meltdown.
I am seeing this first-hand in Toronto real estate. To give just one example, development land is right now worth, oh I don't know, roughly half of what it was before (a broad generalization).
There are very good reasons for this. The value of land depends on what you can do with it, and if you can't do anything with it, then it's not worth very much. But as soon as you can once again do something with it, and clarity returns to the market, the bargains disappear.
So to find the "great deals" you have to be willing to wade into areas where most of the market is unwilling to go in the current moment. Put differently, there's money to be made when you're right about something that most people think is wrong, or when you're able to do something that most people can't do for whatever reason.
All of this is easier said than done, but I think about Sean's tweet a lot these days. It's easy to find reasons to say no right now. But here's the approach I'm trying my best to take: it's a great time to be in real estate. In fact, it's a generational opportunity. And so it's my job to find the great deals.
Cover photo by Sean Pollock on Unsplash
I just joined Warpcast. You can find my profile, here.
At first glance, Warpcast is going to look a lot like X. But instead of tweets, you cast. There are also various topic channels, similar to how Reddit works. But the most important difference is that Warpcast is a client for the Farcaster protocol, which is a social network built on Ethereum. This means that it is a decentralized social network.
You won't see of any this if you decide to sign up. All of the esoteric crypto things are hidden in the background. But it's there. And it ultimately means that, as a user, you get to own your online identity and whatever content and following you create. Meaning, you can take it with you if you decide you no longer want to use Warpcast and instead want to access the network through another client.
It also means that software developers now have a real incentive to build things on top of the protocol, because unlike with a centralized service like X, they can be confident that they won't get the rug pulled out from underneath them. And herein lies the feature that will ultimately lead to an enormous amount of new ideas and innovation.
In real estate terms, you can think of developing on top of a centralized service like building within a theme park owned by a single company. The theme park might want you to build on their land, right now, but if at some point it no longer suits their business needs, they can always change the game on you.
On the other hand, building in a city on land you own outright is a lot like developing on top of a decentralized service. Sure, you need roads and municipal infrastructure to service your land (think of these like the above protocol), but you generally don't need to worry that the city might wake up one day and remove all of this important infrastructure. It's a given. And that's a fundamental difference, even if the buildings might look the same in the end.
Venture capitalist Fred Wilson once explained it in this way, “don’t be a Google bitch, don’t be a Facebook bitch, and don’t be a Twitter bitch. Be your own bitch.” What he meant by this is that if you build on someone else's land, then you're opening yourself up to being their bitch. What you want to be is your own bitch. And similar to how our cities work, this is the potential of decentralized services.
As I write this post, I currently have 6 followers on Warpcast. If you'd like to be number 7, you can follow me here.
This morning, I came across an FT article talking about how mainland Chinese people are right now flocking to Macau to receive western mRNA vaccines. Apparently the Special Administrative Region has a single hospital offering the western varietals to "tourists", and lots of people now want them and presumably think they are more efficacious than the Chinese alternatives. This is not surprising.
So what actually stood out to me was the photo that FT chose for the article. It's of the half-scale Eiffel Tower replica that was built as part of a $2.5 billion casino resort in Macau known as The Parisian Macao (pictured above). There's even a faux Louvre-like building behind it and a "Jardin" in front of it so you can get that axial view of the tower. Welcome to Paris!
Of course, this is not the sort of thing that excites me in the least. I understand why it is done and that there is clearly a market for it, but I don't get it. It feels totally empty. Have we really run out of new ideas? So I decided to tweet something out to this effect and, in it, I included the fun fact that Macau is a former Portuguese colony and currently a Special Administrative Region of China, just like Hong Kong.
But it turns out that you can't say this on Twitter. I don't know why, but my tweet was immediately filtered out of my feed -- twice. Instead what you can say is "Macau is a SAR of a country that starts with C and ends with A." Apparently, this is acceptable Twitter language. Hmm. This has never happened to me before.
Thankfully, I have my own domain (which you are now reading from) where things are much freer. And collectively, we have things like the Ethereum Name Service, which is trying to create an even more censorship-resistant version of the internet. So today I decided that it was time to cancel my Twitter Blue account and put some more money into ENS tokens. This feels more like the future.