I agree with you overall, but perhaps the housing market would be a better example than the car market, especially in the current Silicon Valley market. When the job market heated up in the valley, housing prices became somewhat obscene. The hype started, and people would bid the prices up even further (sometimes 50% higher than the original asking price), afraid of missing out on the appreciation potential. Of course, the upward spiral was so rapid that most people did miss, and the prices soon became unreachable for most people. The prices have since flattened out, and will most likely go through a rapid drop if/when the business cycle here in the valley hits a low point. Do people consider housing to be speculative? Most likely not, although there is some of that present. Will most housing appreciate over time? Yes, if you buy value to start with - get a good property in a good location with good property management. Of course, if you paid a ridiculous price to start with, you might never recoup your investment.
The moral is...always buy good properties at a good price, whether they are stocks, businesses, or houses. |
