Every day I’m asked when is the ‘bottom’ of this market? Whether here in Colorado or elsewhere in the country, the answer is the same, I don’t know.  But some things should be apparent to anyone who is a student of the markets, any market.

Whenver the majority of people become experts on something that they rightfully have no expertise in, education about, or experience with, you can be certain that subject has recently become a very hot topic.  For example, tech stocks in 2000, the ‘top’ of the housing market in 2005, the tulip bulb craze in Holland in the late 1700’s….or the housing market now.  In each on the previous situations, the majority of people ‘knew’ what was going to happen.  They were certain of it.  Many have since changed their version of what they knew.  Everyone ‘knew’ in 2000 that tech stocks were the way to get rich quick, just buy any tech stock and you were set.  Just like everyone ‘knew’ that buying spec homes in FL, CA, NV, and AZ was the fastest way to great wealth and 20-30% returns or better in 2005.  Just like everyone ‘knew’ that tulip bulbs were the only real currency in Holland in the 1700’s and that owning tulip bulbs was the way to financial security.  Ok, this last one may not be a familiar example to the non financial types out there, but my point is the same.

Currently, everyone ‘knows’ that the real estate market is going to go down some more, its on the nightly news, in the papers, Time magazine cover, etc.  But let’s look at a couple contra-indicators;  1.  Everyone is an expert with the same opinion; and 2.  The Fed just cut rates.

Generally speaking, you don’t want to fight the fed in either the stock or real estate markets, additionally Bush and congress have made it clear that fixing the sub-prime mess that many homeowners have become entangled in is a big issue.  So a question?  Can congress and Bush throw enough money at this problem to ‘fix’ it?  Yes, I think they could.  Will or should they is an entirely different subject.

Back to the original question, is this the bottom of the market?  Again, I don’t know, but from expereince and history, when everyone ’knows’ what is going to happen, and the Fed is cutting rates, and Congress and Bush have shown a willingness to throw money at a problem, I wouldn’t wait on the sidelines not making a decision because I ‘know’ what everyone else does.