Imagine backing out of your driveway each morning. As you back up, you look above your garage door. Above that door, fastened to the wall, is an electronic message board. That message board runs a continuous re-pricing of the value of your home (if you sold it in this moment, hypothetically). It fluctuates faster than you can keep track:
$200,038….”oh, good”
$198,655….”no, I’m losing money”
$194,142….”honey, we’re losing money, maybe we should move”
$204,895….”we’re in the money, I just knew real estate was a good investment”
And, on and on it would go.
If there were a daily pricing mechanism, such as this, would you follow it? Would you look at it each day? Each moment?
What if all of us had one on each of our homes? Would we, as a society, talk about it each day at the office? Would it make us believe we were smart about real estate investing? Would those who didn’t follow it say, “If I only had time to follow it, then I’d figure this thing out?”
Why is it easy to see how ridiculous this line of thinking is? But, many of us do this. We just call it the S&P500 or the DOW.
