Posted: 12/20/2008 7:18:22 AM EDT
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Can somone explain how this would work given the economic conditions of today?
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I am sure others can provide a better explanation. But my take:
As the economy unwinds and jobs are lost/cut back, wages fall and prices & property values fall. Then, after bottoming out, pent up demand starts to spur economic activity. However, since the fed has printed so much new money in the interim, prices escalate beyond old levels due to more money chasing the same (or less) goods. You don't want to be highly leveraged (think bad mortgage terms on overvalued home) during the down cycle, but on the up cycle, a lot of opportunity exists. |