It sounds trite, but buy low still works. A good friend of mine and Mike's, who runs a large real estate opportunity fund, years ago made an observation which I still remember. He said they analyzed every deal in every cycle and concluded that everything bought in the first half of a business cycle was profitable to super-profitable, while everything bought in the second half was a struggle or worse. Well, the buying half of the cycle is now on the horizon. But first, we must batten down the hatches and make sure our house is in order and is strong – we've already done that. Then, we must determine when systemic risk has passed – not quite yet.

The Great Recession has momentum and has taken an enormous financial toll on our economy and all of us. An enormous adjustment of values has already occurred. The price of everything has been rolled back ten years and price does matter – a lot. I recently was quoted for a remark that I made at an industry conference... "a bottom will not be made until asset values are stupid, stupid cheap." This is a necessary, but not a sufficient condition, and I think we are now on the third and last stupid. For example, building around the country can now deliver for, say, $200,000 a home that would have cost double two years ago, and with a 4.9% Fannie Mae conforming mortgage, new home construction around America will shortly begin again(7). It sounds like a stretch, but even General Motors when reorganized, will be able to offer lower-cost automobiles, and they will sell. And, for another example, (and pardon the self-serving nature of this comment) blue chip REIT stocks are now on sale.

(7) The Affordability Index is at a record.