Joseph Saylin did not like to take chances. He didn’t trust people very much and he didn’t trust paper wealth very much. He trusted dogs and real estate…and that’s about it.
Joseph Saylin, my grandfather, was the son of Latvian immigrants. Joseph worked hard… always. And saved money… always. He was ambitious. He was a physician at the age of 21, a lieutenant in the US Army at the age of 24, a captain at 27, a major at 31, a colonel at 35. “I was always the ‘boy this’ and the ‘boy that,’” he would often boast during his twilight years. “I was the ‘boy doctor’ and the ‘boy colonel.’ A lot of guys were jealous. But they didn’t even think about how hard I worked.”
Don’t get the wrong idea; Joseph was not one of those all-work-and-no-play guys. In his 1912 high school yearbook from El Monte, California, he offered the following senior quote:
“I am very fond of the company of ladies.”
To be sure, Joseph knew how to play; but more to the point of our tale, Joseph also knew how not to play. In other words, he did not play in the highflying stock market of the 1920s. Joseph parked his savings in real estate. Between 1923 and 1973 he bought a variety of houses and office buildings in Southern California.
He once bought 4,000 acres of sand and sagebrush in Utah, just because it was so cheap. He called it “the ranch” and always tried to drag his grandkids up there for long weekends. But his youngest grandchild, your editor, always refused to take the 12-hour car ride just to look at sand and sagebrush.
Fortunately, Joseph also bought properties of greater aesthetic and/or investment value. He purchased residential and commercial properties in Venice Beach, Brentwood, Arcadia, Orange and Lake Arrowhead. He even owned a gas station in Torrance. He always bought them cheap. Unfortunately, he often sold them cheap as well.
If only he had held onto his large house on South Rockingham in Brentwood, California (yes, the same Rockingham made famous by a former professional football player with anger management issues), he would have tripled or quadrupled the ultimate size of his estate.
But no matter, Joseph was not hurting financially. Throughout two World Wars, one Great Depression, one hyperinflation and numerous lesser crises, he maintained course and speed: Buying Southern California real estate, while using little or no debt financing.
Joseph’s frugal tactics served him well. He accumulated a small fortune during his 86 years on this planet.
He might have amassed an even larger nest egg, if his wife had not devoted her golden years to traveling around the world — first-class — with her best friend. These two feisty, 70-something women would book around-the-world flights on Pan Am and disembark wherever their whim dictated. India, Egypt, Israel. In fact, my grandmother was in Israel in 1967 when the Six-Day War broke out.
Joseph’s lifelong commitment to real estate served him extremely well. Importantly, he made most of his money during the postwar years, when America was in the sweetest “sweet spot” of its entire history. As a result, American real estate was a “strong buy” from many, many decades. It may still be a “buy,” but it probably isn’t a “strong buy.”
Now that the latest US housing boom has gone bust, a few select portions of the US real estate market may have become “strong buys” once again. But the US economy is unlikely to provide a multi-decade tailwind to housing prices like it did after the Second World War.
Of course there will still be opportunities here in the United States. But some of the best real estate bets may be in the fastest growing economies of the world. Therefore, the would-be real estate tycoon may want to cast a glance overseas and consider the opportunities that beckon from foreign shores.
Obviously, buying a beach house in Ecuador is not the same thing as buying a beach house on the Jersey Shore. But maybe that’s a good thing.
Eric Fryfor The Daily Reckoning
Eric J. Fry, Agora Financial's Editorial Director, has been a specialist in international equities for nearly two decades. He was a professional portfolio manager for more than 10 years, specializing in international investment strategies and short-selling. Following his successes in professional money management, Mr. Fry joined the Wall Street-based publishing operations of James Grant, editor of the prestigious Grant's Interest Rate Observer. Working alongside Grant, Mr. Fry produced Grant's International and Apogee Research, institutional research products dedicated to international investment opportunities and short selling.
Mr. Fry subsequently joined Agora Inc., as Editorial Director. In this role, Mr. Fry supervises the editorial and research processes of numerous investment letters and services. Mr. Fry also publishes investment insights and commentary under his own byline as Editor of The Daily Reckoning. Mr. Fry authored the first comprehensive guide to investing internationally with American Depository Receipts. His views and investment insights have appeared in numerous publications including Time, Barron's, Wall Street Journal, International Herald Tribune, Business Week, USA Today, Los Angeles Times and Money.
Could this be the first hit of the new GS Siewert PR team only asking
Thanks in part to Michael Lewis's book Flash Boys, High Frequency Trading (HFT) is front and center for this round of the news cycle. Today, John Rubino continues the discussion, explaing why HFT is so dangerous, and how public awareness of it is affecting something called the "trust horizon." Read on...
As the saying goes, there are two things you never want to see being made: laws and sausages. But to hear David Stockman tell it, there could be a third thing added to that list: how crony capitalists make money. Today, Mr. Stockman gives a complete rundown of how this corrupt system really functions, and why it makes him ill. Read on...
It's earnings season, and that means the "expectations game" is in full swing. Of course, with so much speculation involved, this often ends up being a "contradiction game" between various media outlets. Today, Dave Gonigam explains how to sift through the noise and play a few earnings surprises for big gains. Read on...
If you look at all the measurements, number crunching and financial instruments that are employed at the Federal Reserve, you may come to the conclusion that economics is a science. However, in his speech at the 2013 Agora Financial Investment Symposium, Bill Bonner explains why that couldn't be further from the truth...
Some of the world's most successful venture capitalists and entrepreneurs are moving their money off the stock market. Where is it going? Today, Matt Milner gives a brief explanation of this historic shift in the economy, and why it will redefine the future of nations and boost individual fortunes. Read on...