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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: John Vosilla who wrote (23402)2/11/2005 6:56:29 PM
From: Elroy Jetson  Read Replies (4) of 116555
 
Yeah, it's funny. A lot of these builders are the same builders that went under during the early 1990s. There's a lot of new ones too but I don't work so much with them. A lot of them describe the development business as a disease like gambling - you know how the story ends but you find yourself doing it again anyway because it's interesting, you don't really know anything else, and besides for now its working.

Of course the ones that really got burned actually found something new to do. One developer I worked with lost his $150 million net worth, lost his wife, and became a Hebrew professor at a Jewish college in West LA. Drives a vintage Volkswagen beetle and lives in a one bedroom apartment in Bentwood.

But on the other hand Bill Lyon went from being the wealthiest man in California to owning only his home and a one used car and now is the CEO of Presley Development, which changed it's name to William Lyon Development when he was given the job. He's in the process of driving his new employer off the cliff. Mark my words, WLS:NYSE will be bankrupt in the not too distant future. But that's just a case of OPM. (other people's money)

In the large builders, the senior and middle management know the chop is coming just like it did in 1990. In 1990 they moved in to firms in Colorado and Washington where the bust had already come and gone, and by 1996 they were getting offers back in California. The jobs pay fairly well while the sun is shining, but during the down-turns you have to move, accept less, have savings to live on.

One mortgage broker I know makes what he can during the up cycle, then closes his office and lays off the staff. He has a small bungalow in Tahiti he lives in until the next upturn.

It's a strange business.
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