Comment by senordevnyc
6 months ago
Agreed. I’ve always been skeptical of this argument, because it assumes the counterparty to these valuation models is consistently an idiot.
6 months ago
Agreed. I’ve always been skeptical of this argument, because it assumes the counterparty to these valuation models is consistently an idiot.
I've always assumed the counterparty is a computer. You have say 100 Billion of 401k moneys to invest. How are you going to invest it into real estate with a expense ratio of 0.05 and also check all of the properties in the portfolio?
Counter party is either stupid, careless, on it or forced. I think often there is intermediaries involved. Say real estate investment fund. For which on paper in short term numbers looking good is enough. And in past environment as long as there was enough money coming in the ponzi could continue to run.
And other parties further can be say pension funds, which on paper are forced to search for anything that make their goals look good enough. Thus not doing enough due diligence.
Everything is fine until it is not. And this has been seen time after time.