A fair comment yesterday on The Motley Fool criticizing reports from the National Association of Realtors which have been hopelessly optimistic over the past many months as to the depth and duration of the ongoing housing market decline:
“It comes down to this: The NAR's prospective on housing is irrevocably skewed because its very existence depends on the fiction that housing is a good “investment.” All evidence points to the contrary. A home is a great place to live, but not when it leaves you poor.”
In the interests of honest commentary, one must also acknowledge that reports from sell side securties firms suffer from the very same skew. Securities dealers exist to sell people investments, especially equity investments where margins are highest. They must say that equity products are always a good investment, otherwise their business model predicated on perpetual growth and smooth earnings falls completely apart.
Buyer beware: no one on Wall Street or Bay Street has any earthly reason to ever suggest that the stock or bond markets may be over-valued. The truth does eventually seep out however, it just takes time and some premptive discipline on the part of investors who must always guard their kitty from the culture of buy, smile and wave.