To amplify arebelspy's wise comment, investment genius David Swensen observes in his book "Pioneering Portfolio Management" that in the alternative asset classes (like real estate, private equity, etc), the people who do well do really well... that maybe suggests you really only get rewarded for knowing what you're doing?
That totally makes sense and jives with what I've seen.
Swensen, BTW, shares that the top quartile real estate investor earns like 17% annually while the median investor earns 12% and the bottom quartile earns 8%. That bottom quartile investor probably would do better in stocks.
Does he go into how that's calculated (i.e. what that return does or does not consist of, such as appreciation, tax benefits, etc. and over what time frame) and/or what data sources are used, either in the text itself or in an appendix or footnote/endnote?
What percent of the book would you say is about real estate? Worth reading? :)
Very little of the book is about real estate per se... but it is definitely worth reading if you're serious about being a good investor.
A caution: It's sort of a weird read because it's really written by a guy running a $20B endowment fund (Yale's) who is writing to other endowment fund managers running "small" $500M endowment funds, etc.
I found a ton of useful, applicable information for individual investors... Especially for people who want have a chunk of their portfolio outside of the "traditional asset" classes that are stocks and bonds.
The other thing is, you're getting inside the head of a guy who's earned like nearly a 25% annual return for nearly three decades...
P.S. If you click my sig link to my blog, this week's post (actually next week's too) shares ideas from Swensen's book.
