“One of the Rothschilds is said to have observed that if he could be sure of transmitting [or passing on to the next generation] a quarter of his capital, he would settle for that,” John Train writes in Dance of the Money Bees. “Alas, he probably didn’t make it.”
The Rothschild in question well knew how hard it is to preserve wealth. History is full of tales of fortunes lost. And if you needed reminders, there are memorials to lost fortunes everywhere. “There are so many great families whose former grandeur survives only as an echo, in the names of museums, converted mansions, streets and towns,” Train continues. “Their descendents don’t have it anymore. Taxes, inflation, expropriation and rising costs have pulled them down.”
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Buy a House!
A little more than a year ago, a very successful professional investor declared, “If you don’t own a home, buy one. If you own one home, buy another one, and if you own two homes, buy a third and lend your relatives the money to buy a home.”
Since that declaration, house prices have continued drifting lower in most parts of the country. The Case-Shiller index of national home prices is down about 4% year over year. Even so, we’re betting this professional investor was merely early…not wrong. US housing isn’t just cheap; it is the cheapest it has been in more than 40 years. And when one considers the possibility that inflation may rear its head soon, housing looks even cheaper still.
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