The Difference between Real Estate People and Financial People right now

They're the Same, but Different...

This month's Conde Nast Portfolio magazine features Bob Toll (CEO of Toll Brothers, also famous for their spread of "McMansions" offered since about the 1980s) on its cover with a wry smile. He is accompanied by a pull-quote from his feature interview, and the quote reads:

"(What cracked the market) was not just our greed, but the greed of our buyers."

Bob Toll admits that the business model that has successfully and profitably served Toll Brothers (the 13th largest residential builder in America) is now suffering a bit due to swiftly changing economic conditions. Their stock price has dropped about 2/3rds since 2005, and they're stuck with about 60,000 lots across the US with nothin' goin' on.

Here's the difference...
First, that Bob Toll is on the cover of a magazine spouting his own company's excesses is very interesting when all I've seen in the Financial Sector lately are hoardes of CEOs being replaced, stepping quitely (or loudly) from the limelight, and figuring out how to get taxpayers to hold the metaphorical banking-bag of which the bottom has dropped out.

Someone this candid with information is a good go-to source when it comes to understanding market conditions for us real estate investors...What's more, Bob Toll, unlike 99% of other financial business people, is extremely outspoken (the article actually uses the adjective "cantankerous"). He angered financial markets earlier this year by 'predicting' that the housing market was in the throes of a "depression", he lobbied Congress for a $15k taxbreak for homeowners (which did not pass), and is an avid supporter of Barak Obama in the upcoming election.

What's the Same about them? Their Money Rules Aren't Ours!
What's interesting is that for all the positive PR Bob can garner by being outspoken, supporting presidential candidates, there is one aspect that kind of gets me: the similarity of the fact that that this big builder, much like the financial higher-ups, clearly do not emply the "money rules" that they expect their clients/investors.buyers to use. And here's what I mean:

Hedage Fund managers most certainly did not pout their money where they put their investors' money. Nor would they, knowing the inherent risk or bad design on the financial products and SIVs that were offererd across the past few years.

Similarly, this article suggests, nay, bluntly points out that: "Bob Toll's personal beliefs have always been somewhat at odds with his brand identity. His primary residence is a 19th century farmhouse...He's owned the sam apartment...in Manhattan...for 20 years...To many people 'me first' might be perfectly symbolized by an enorous, gas-guzzling McMansion set far from a city. Toll recognizes the irony but doesn't let it bother him." (Excerpted from Conde Nasts' Portfolio, October 2008 p.135)

Do as I Say! Not as I Do!
Thus it stands that we, as real estate investors, as ANY kind of investors should know better as far as following the leader. People like Bob Toll and people in the financial Sector do not expect that we will be using the same money rules as them. And why not? Let's look to the "leaders" in a new light, and that is not to just listen to what they say, but to look more closely at what what they are actually doing.