BOOK EXCERPT FROM THE BOOM AFTER THE BUBBLE: ANDREW CORDLE
What
would
happen
if
you
handled
your
It would be the same with your personal investing.
investments in this manner? You may not have the
Whether you knew what you were doing or not, you
five hundred billion dollars that the hedge fund has
could make it a lot longer on fifty billion dollars, just
to invest. But maybe you have $500,000 to invest.
because you have that cushion of money in the
What would happen to your money if you went out
bank. When you’re investing, you can appear
and bought five houses with that $500,000? And
successful for longer because the money lasts
then, you only rented out one of them, while the
longer than if you only had $500,000 to invest.
other four sat vacant? Eventually, you would run
That’s what is happening right now.
out of money and would be unable to produce.
Just recently, within the last thirty to ninety days (as
What we are starting to see, here in 2013, is just
of the writing of this book), one of the bigger hedge
the tip of the iceberg. But it’s starting to crack just a
funds has bought out one of the smaller hedge
little bit, with the smaller hedge funds. Not all of
funds, because the smaller hedge fund was starting
them have five hundred million to three hundred
to run out of money. This is similar to what
billion dollars to spend. So take a look at the guy
happened when the bubble started and the real
who only has thirty million dollars. He is out there
estate market began its decline in 2007. The bigger
with the competition, but he has a smaller amount
banks started buying up smaller banks. And then
of money to compete with. He is buying an
this new regime continued, with big banks
inventory that he cannot get managed, overseen,
constantly buying up smaller banks. Today we’re
or rented out, and because of that his reserve has
seeing that same process in the market with the
run out faster then the guys why have five hundred
hedge funds. The really large hedge fund needs
million dollars.
more inventory, has a lot of money to invest, and
can go buy a small hedge fund that’s struggling to
bring in revenue. In fact, as the small hedge fund
begins to run out of capital, it will go to the big
hedge fund and try to sell out.
This is just now starting to happen. So, this is a
heads up to all individual investors. I’ll tell you what
our company is doing. We’re watching the hedge
fund market. In my opinion, the hedge fund market
will not make it for very long. It may be somewhat
successful for a time, but eventually the money will
start to run out and they will realize that managing
50,000- 70,000 houses nationwide is very difficult.
This is already beginning to be a problem. It is
necessary for the large hedge funds to have