Chapter 4 "Grave Dancer" - Sam Zell

Just finished chapter 4 of Am I Being Too Subtle?, which is set in the early-'70s crash — overbuilding, a REIT blowup, rates spiking, and lenders sitting on properties they didn't want and couldn't run. Everyone else was frozen. Zell looked at it differently: the supply/demand math had already corrected, nobody was building anything new, so anything he bought below replacement cost was going to look cheap on the other side. Between 1974 and 1977 he assembled roughly $4 billion in assets, mostly on personal guarantees with very little cash down. Sellers were so desperate to get out from under the debt service that the equity was almost free.

Real estate moves in cycles. 2008. Arguably 2020. Roughly every decade, though never on the dot. Which raises the question: where are we right now? My read is we're on the tail end of a bull run. Whether that means a real correction shows up in 12 months or 24 and which asset class it hits harder, I have no idea. Just something to think about!

But the reason it matters is this: the money gets made when everyone is running away from an asset class. Real estate, small businesses, stocks — doesn't matter. That's when sellers are motivated and competition disappears. Buying when everyone is running in is just how you overpay with extra steps. Zell wasn't a genius in 1974, he was awake while everyone else was paralyzed.

Where do you think we are in the cycle, and what are you doing about it right now — buying, holding cash, or building your list for when it turns?

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Chapter 4 "Grave Dancer" - Sam Zell

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