Money – Money – Money
Cape Cod Real Estate vs. the DOW and GOLD
This video report is about MONEY! It looks at long-term investment options that include: two Cape Cod property types, the Dow Jones Index, and gold.
It reports on a Gallup poll where Americans name their favorite investments. It reviews 4 investment choices from 1999 through 2014 and it ranks them based on their gain/loss over this period.
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Text for this report:
This report is about MONEY. Specifically about: What is the Best Long-Term Investment?
In 2014 the Gallup Poll company conducted a nation-wide survey where they asked people that exact question. Gallup’s on-line report sorts the respondents in several ways, including by Age Group and Income Level.
In this report I present my animated version of an Infographic – created by Keeping Current Matters – that shows responses to this Gallup question. It breaks down the respondents into 4 adult Age Groups: 18 to 29 – 30 to 49 – 50 to 64 – and 65 and above. For each age group it shows their top two responses. These responses were either: Real Estate – Stocks and Mutual Funds – or Gold.
The #1 answer from all four age groups was: Real Estate. The # 2 answer from three of the four age groups was: Stocks and Mutual Funds. While the 50 to 64 age group preferred Gold.
I also created another animated Infographic. This one also uses data from the online Gallup Report. It breaks down the respondents into 3 Groups based on Yearly Income: 75K Plus – 30 to 75K – and less than 30K. This time we see the top THREE responses for each income Group.
For the highest income group – the #1 answer was Real Estate. Followed by – Stocks and Mutual Funds – and then Gold. For the middle income group – the #1 answer was Real Estate – and – Gold. Stocks and Mutual Funds were third. And, for the lowest income group – the #1 answer was surprise – Gold. Followed by – Real Estate – and then Stocks and Mutual Funds. I think for this income group their issue with real estate is the high cost of entry. You don’t need a lot of money to buy some gold – or to invest in stocks.
This report is actually a totally new replacement for my previous reports called: Cape Cod vs. the DOW. It’s also a follow up to my recent update of the: Water – Water – Water report – which broke down the Cape Cod real estate market into 7 Property Types based on proximity to and location of WATER. If you haven’t watched Water – Water – Water you don’t have to stop now and go watch it – but you’d better off if you did.
The goal of this report is still the same as my old DOW report: namely, to compare investments in Cape Cod real estate with other long-term investments. To do this I will show you the 16 history of 4 investment choices. Two are Cape Cod property types: Water View Ocean and WaterLess. The other two are: the Dow Jones index and Gold.
The first of our investment choices is the Cape Cod real estate property type: Water View Ocean. We’ll look at the change in median sold price during three specific time frames. These are defined in detail in my Water – Water – Water report.
Starting in 1999 Water View Ocean prices went UP for 10 straight years – peaking in 2008 – long after the bubble burst for all other property types. The result was an increase of 136%. Water View Ocean prices did Fall in 2009 –but only for 1 year – a price decline of 15%. And these prices immediately started to Rebound in 2010 – with prices trending UP during the last 5 years – including price increases each of the last 3 years. As a result, prices were UP 17% from its low of 2009 – and are now within 2% of its high in 2008.
Our second Cape Cod real estate property type: WaterLess. This property type is not split between Ocean and Inland. Starting in 1999 WaterLess prices bubbled UP for 7 straight years – peaking in 2005 – and increased by 136%. This Fall also started in 2006 and prices went down for 4 years in a row – losing 24%. Prices Rebounded in 2010 – and were UP in 4 of the next 5 years – gaining back 12%.
Next we’ll see a similar history for the Dow Jones Index. The DOW values shown are the median weekly closing prices for each year. This corresponds to the real estate prices which are also the yearly median sold prices. Starting in 1999 the Dow Jones Index went down for 4 straight years – a price decline of 15%. Then in 2004 the Dow Index started to rebound and went UP for 4 years in a row – gaining 45%. Then came the stock market crash of 2008 – and the DOW fell for the next 2 years – losing 32%. But, since then the Dow Jones Index has gone up in each of the last 5 years – gaining 89%.
Lastly, we’ll look at the price history of Gold. Starting at the end of 1999 the price of Gold went down for 2 years – but only lost 4%. In 2002 the price of Gold started a prolonged Upward streak that lasted for 11 years – resulting in an amazing price gain of 513%. The Gold Bubble burst in 2013 with prices falling each of the last two year – and an overall decline of 23%.
Like investments in any market, these four investments have had Ups and Downs during this 16 year period. So far, all Cape Cod property types have had the same overall Up and Down pattern. Water View Ocean and WaterLess properties each had a Bubble Up time – followed by a Fall Down time – and then followed by a Rebound Up time. The Dow Jones Index had a different pattern: Down – then UP – then Down – then UP. Gold had its own pattern: Down – then UP and Up – and Down the last 2 years.
Now we will look at a really big spreadsheet. But, it has only two numbers that are really important. The first is 136. The previous slide showed that each of our four investment choices had 3 or 4 major time frames. But, really, you could have bought any of these investments in any of the 16 years – and sold it in any year. This chart shows the gain or loss for all 136 possible year-to-year time frames. The second important number is – 18.4%. It’s the average price increase for Water View Ocean properties for all 136 time frames. This spreadsheet is for Water View Ocean properties. There is also one like this for WaterLess properties – the DOW – and Gold. For more info on these Gain/Loss spreadsheets see the Water – Water – Water report.
Before we look at these average yearly gains – a special note. There were multiple time frames where each of these four investment choices had the best result – and some where they had the worst result. For examples of the best result:
- Water View Ocean Properties: bought in 1999 – sold in 2006
- WaterLess Properties: bought in 2000 – sold in 2004
- The DOW: bought in 2009 – sold in 2014
- GOLD: bought in 2005 – sold in 2011
Now we will look at the Average Gain % for these investments during this 16-year period. First we’ll look at all 7 of the Cape Cod Property Types – sorted by highest average %. Now I can reveal that the two property types that I decided to focus on in this report – Water View Ocean and WaterLess – are the ones with the Highest and Lowest average gain.
We can now look at our 4 investment choices – also sorted by highest average %. Obviously GOLD is the big winner – actually was the big winner. Remember from the charts that GOLD is the only one of these four investments to go DOWN in each of the last two years. Still, Why oh Why didn’t I buy gold in 01 and sell it in 2012 – and quintuple my money. I hope some of you did.
Like all investments — there are times when they go UP – and times when they go DOWN. And then – there are all the things you can do with them while you own them. Let’s look at a few examples.
- With Cape Cod property – or a Dow Certificate – or Gold: you can grow your equity.
- With Cape Cod property – but Not a Dow Certificate – and Not Gold: you can have a party on your deck.
- With Cape Cod property – but Not a Dow Certificate – and Not Gold: you can earn some rental income.
- With Cape Cod property – but Not a Dow Certificate – and Not Gold: you can live in your investment.
- With a DOW Certificate – but Not a Cape Cod property – and Not Gold: you can make a paper airplane.
- With Gold – but Not a Cape Cod property – and Not a DOW Certificate: you can you can use your investment as a paper weight.
In summary, most people buy Cape Cod real estate to enjoy the natural beauty of Cape Cod – and our destination life style. Also, I strongly believe – if you have a long term view – Cape Cod real estate is a very smart investment.
Thanks for reading this report.