Today’s Idea—July 21, 2008 –When the Crisis Ends the Bear Market Begins - Being a fund manager of a fund that acts as an asset based lender, primarily on commercial real estate, everyone asks when the bear market in real estate is going to end. I usually find this pretty amusing considering that I think we are still in the crisis stage in real estate, that is going to eventually lead to the bear market in real estate. In other words, in my humble opinion I believe we haven’t seen the half-way point yet. Until the United States can solve its supply in demand problem in real estate, which is dependent on too many factors to be listed on this brief posting, we will not be able to see a recovery. The main catalyst needed for a recovery is for the government and the financial sector to create a structure that can get home buyers approved for loans, and able to buy homes again. Being in the business I would have to say that this is a long way off, not to mention all of the other factors like employment and trade deficits. This type of decreased liquidity is excellent for asset based lenders and their investors that are making good returns off of the short supply of money. The phrase is old but true. Cash is king.

Copyright: Dominic Mazzone, Regent Global Funds 2008