“I recently spoke to a guy who was thinking to get into the housing market (new high paying job, fresh out of MBA school, wife and new kid) and he had said I was the first one to voice any concerns [about the RE market] to him. He was of the opinion that real estate only goes up, that far flung areas will soon be centralized with the endless expansion of burbs, that it is a great time to buy with low rates and that the high prices were secondary. Upon further discussion he acknowledged that debt levels were high for too many, that a rise in rates will lower affordability and could very well eat away his equity, and that if the likelihood of prices rising over the next 5 years is low then it may be best to wait, plus it was cheaper to rent than own.”
- Rob at VREAA 2 Feb 2012 8:33am
Gee, a guy who has an MBA and doesn’t read the newspapers, or the web, or Maclean’s, or The Economist.
Are there still market participants out there who haven’t heard anything about the possibility of Vancouver RE being severely overvalued?
RE Bubble Cone of Silence?
- vreaa
I teach MBA’s and when I hear stuff like this, all I can do is either refuse to believe it or point out this ‘guy’ wasted his money on a crappy MBA, where someone probably learned and taught him the formulas that worked 10 years ago, but not how to adapt to the future. Pardon my interruption, I am ashamed for my profession.
Must be the Sauder School of Business in Vancouver aka BPOE.
Global ranking 82 in the FT ranking 2012! No wonder!!
Tsur Somerville must be proud.
People still do MBA’s? LOL!
Seriously, if you aren’t going to Harvard or Yale and you aren’t looking to work on Wall Street an MBA is a total waste of time.
MBA’s aren’t the key to high paying jobs that they used to be. An MBA used to get you the job but now an MBA is a requirement just to get the interview. I personally do not promote any employee to upper management unless they have some form of business degree, graduate or undergrad. To get into middle management (or any role involved in the budget and planning process), they must at least do a diploma or distance learning program. I’ll support them financially for the education but if they’re not willing to invest the time in learning the tools they’re not going to use them.
I love hearing elitist BS masquerading as prudent decisions.
Kinda funny to listen to a person say to a 45 year old that “your 20 years of experience, personal talents, and contacts are inconsequential. You didn’t take a certain course when you were 18 so I’m not willing to consider you.”
Jimmy Pattison only has honorary degree’s and would wipe the floor with you or ANY “institutionally trained” exec.
I was at a house warming party recently, obviously RE came up. Not one mention of a slowdown much less a bubble.
My coworker has finally decided to sell after we talked about RE bubble for 2 years, I told him to do it sooner than later because of the rise in listings. He got in touch with his realtor and he told him it was a hot market. The guy does have tons of listings on his site so I guess for him it could be hot, if he sells any of them.
Still alot of cool-aid going around.
MBA always studied someone else’s failure not themselves…… ……. …….. sooner or later they are going to be someone else’s case study —-
Isn’t that how the human animal learns, from mistakes?
Unfortunately most MBA’s are indoctrinated with Portfolio Theory as popularized by Robert Merton and Myron Scholes. Portfolio Theory is bogus and a feeble attempt to predict market risk using statistical methods. After Scholes and Merton ran their Long Term Capital Managment Fund into the ground in 1998 you’d figure their philosophies would not be in favour. But they are still taught at the MBA level. No wonder the MBA grad in question believes real estate can only go up.
think you mean Markowitz wrt portfolio theory. It’s a valid concept but an MBA program would likely only provide an introduction without the complexity required to employ in current risk management practice. This stuff is now the domain of the very mathematically inclined.
Merton and Scholes were most famous for putting Portfolio Theory into practice with Long Term Capital Management, and subsequently running it into the ground based on bad bets due to events that their bad statistics deemed were highly improbable. Portfolio Theory was completely discredited by Nassim Taleb. The mathematically inclined deal in equations that are perfect in form and conclusion, very much unlike the real world of unpredictable randomness.
LTCM didn’t fail because of a failure in portfolio theory. The failed because their hedge correlation changed while employing massive leverage. You have to take Taleb’s “fooled by randomness” rants with a grain of salt. He’s the same guy who wrote “Dynamic Hedging” based on his dissertation so he’s well aware of the requirements beyond delta hedging such as gamma and correlation hedging. Taleb has more of a beef against the failings of standard vanilla value-at-risk methodologies just as all practitioners recognize. The point is that good risk managment is done by people with equations not by equations with people.
Randy, education doesn’t get you the job, experience is key but seriously Jimmy Pattison is a one in a million and not the norm. I just feel that 9 out of 10 times experience alone will only get you so far and I like to see that experience augmented with training. Would you drive over a bridge with your family designed by a self taught engineer or allow a self taught surgeon to do your bypass? In this day and age the workplace is so competitive that it’s is very rare for Jim P types to evolve. As for that 45 year old, I’m going to ask them why they never thought to take a 1 week course on finance and have them explain to me why their experience is more valuable; if they present a good case then perhaps however I will look at the other 45 year old with similar experience and a degree first.
When there is a shortage of talent, such as in AB today, you can’t be as picky, or as you put it, elitist.
Famous, Rich, and Successful People Who Were High School or College Dropouts:
http://collegedropoutshalloffame.com/
The site collegegraduatehalloffame.com would probably take up the entire internet…
yltn has it right. While there are certainly examples of people with little or no formal education doing well, the list of people with formal education doing well in the job they were trained for is much larger.