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How to Profit from the Coming Real Estate Bust: Money-Making Strategies for the End of the Housing Bubble
How to Profit from the Coming Real Estate Bust: Money-Making Strategies for the End of the Housing Bubble
by John A. Rubino
Edition: Hardcover
85 used & new from $0.01

45 of 45 people found the following review helpful
5.0 out of 5 stars Right Again, December 23, 2003
Back in 1999, when investment bankers were ordering $400 bottles of wine at lunch and Dow 36,000 was a credible forecast, not a joke, John Rubino was offering bear market strategies to readers of his column in TheStreet.com. Here's what he wrote on Oct. 21 of that year:
"Put simply, stocks are as expensive as they've ever been and the economy is running out of slack. Labor is so tight that companies are having to pay up to keep good people. Health care and energy costs are rising again, and interest rates are up across the yield curve. The inevitable result: higher costs of borrowing and doing business, lower corporate profits and sinking stock prices."
Rubino was clear-headed enough at the height of the stock market bubble to see the tunnel at the end of the light. Now he is sounding the alarm about the housing bubble. It's well worth listening to.
You don't need to be an economist or a financial expert to grasp the warning signals he points to: credit policies that have become shockingly easy, to the point where a down payment on a home has become optional; high levels of consumer debt, and soaring home prices. Meanwhile, job creation and income growth are stuck in neutral and profligate government spending has undermined the value of the dollar and left the U.S. up to its neck in debt to the rest of the world. Rock-bottom interest rates have been pumping air into the bubble, of course, but so has the relatively new process of securitization, a feat of financial engineering that allows government-sponsored agencies like Fannie Mae and Freddie Mac to create a virtual bottomless pit of new credit that is beyond the reach of anyone to regulate. Rubino does an admirable job of walking the reader, step by step, through this financial maze, explaining how it has held together so far, and how it could fall apart. He posits a number of scenarios for how things could play out, from the merely worrisome to the terrifying.
There are so many moving parts to the global financial engine, it's best not to get too hung up on exactly how or when the bubble will pop. Inevitably it will, and you'll understand why after you've finished the first half of the book. The second half of the book is your roadmap. It outlines a variety of strategies for sheltering your investment portfolio as well as your real estate assets from the post-bubble fallout. These include investing in commodities, particularly gold; selling stocks short, buying stocks in recession-resistant sectors, and buying bear-market mutual funds. Even if you don't think there is a housing bubble, the second half of the book offers a good investing overview that will serve you well no matter where you think we are in the business cycle. Rubino also offers a variety of defensive moves for home owners ranging from the drastic - selling, trading down to a smaller house, or moving to a less-overpriced housing market - to the less drastic but more complicated strategy of shorting housing stocks to hedge the value of your home.
Full disclosure: I used to edit Rubino's columns for TheStreet.com. So I have long known what new readers will soon discover: He's a talented financial writer with a deep understanding of the markets and a knack for explaining complex things in a simple and lively way. His advice was worth listening to in '99 and it is even more so today.


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