I wanted to talk a little bit about gold. I live in New York, I work in and around Wall Street, and generally I don't think I interact with dolts on a regular basis (with some blatant exceptions). It is within that context that I typically encounter a general disdain for the yellow metal. When it was going up into the end of year, there was skepticism - as it has been correcting over the past little while, the reaction seems to be that the secular run is over. I mention this non-scientific survey only as a suggestion that the notion of gold in a bubble is absurd. To paraphrase David Rosenberg, the positive momentum in the economy is all premised on government medicine. And the folks at the Fed know it. The idea that their intervention will end anytime soon is simply naive. Money printing and stimulus will stay the theme of the day. The trend, for gold bulls, remains your friend - even if people like Paul Krugman consider "gold buggism" an unsophisticated response to what's going on. I'll take gold to his keynesianism any day of the week.
As for commercial real estate, I am incredibly surprised by how many owner/operators I encounter or hear about who seem unprepared for the trend of rising interest rates. On multiple occasions, deals have fallen through because of financing issues with the 10-year rising over 100 bps (and given some absurd pricing, probably to the great fortune of those buyers). Most, I guess, think cap rates are going lower. Most, I think, don't understand the dynamics of money printing and its implications for a sub-6 or sub-5 cap rate on pricing.
They say the art of economics has a blind spot for inflation. It would appear that is true across all industries.
