THE WEEK IN REVIEW

Welcome to my weekly newsletter featuring a personal note on the ever-evolving world of real estate along with a few news-worthy updates. Enjoy!

MOOD SWINGS

I credit much of this week's story to our super smart Compass "Evangelist in Chief" Leonard Steinberg.

The past week has seen a massive erosion of wealth - over $6 trillion. While this may not impact the lives of the wealthiest amongst us, it does impact the MOOD of anyone and everyone invested in the markets. That's 162 million American adults, or about 62%.

It is ironic that this massive market plunge happened during Financial Literacy Month.....but may be a good time to brush up on some aspects of market plunges.

1. I have yet to meet anyone who loves losing money. Some handle it better than others, but no one likes to see their wealth eroded.

2. Most big market corrections are inevitable given the cyclical nature of the economy. Some bet for this to happen and can reap huge gains. Often corrections and crashes happen because of shocks and/or surprises to the system - 9/11, COVID, or the Russia-Ukraine war. More often than not, market corrections are a result of the actions of individuals, politicians, or countries. Since 1900 there have been around 34 significant global market corrections. 

3. Most sophisticated investors expect market corrections, plan for them, and minimize their impact as best they can. Many wealthy people LOVE corrections as they see them as buying opportunities. Some even love deep recessions in the hopes of buying up bargains.

4. Who are the uber wealthy that might see the opportunity? Well, Warren Buffet's Berkshire Hathaway is currently sitting on $334 billion.... Often big fortunes are created or expanded at moments like this. 

5. It is those NOT invested in markets that stand to suffer the most if a market correction/crash triggers job losses or fuels inflation.

What might LIFT the mood of markets?

1. Are we entering an era of STAGFLATION with slow growth and higher inflation? If so, real estate may be a wise place to park money.

2. Interest rates could come down and some believe what is happening is designed to force this to happen. This could lessen the load of debt for many, and lower mortgage interest rates to fuel home buying.

3. After a deep plunge, sometimes the recovery/upside fuels the next narrative....one of wealth GAINS. Then moods swing in the other direction.

4. If the tariffs that have caused this plunge are lifted or reduced in areas, or produce their desired result - more manufacturing in the US - this too could lift markets and fuel employment....and lift the mood.

5. The word 'tariff' is another word for 'TAXES'. But that's far less impactful on the mood of markets than the word "Trade WAR".... 

   
   

   Yes, moods impact markets. Moods also shift and change.

real estate & the news

• Bill Ackman, CEO of Pershing Square Capital Management who called for a 90-day pause in the tariffs to negotiate with other countries, warning that the alternative was “a self-induced, economic nuclear winter.” (WSJ)

• What are the hottest private clubs in the world? No, not Soho House or and of the other traditional clubs: Forget social clubs and extravagant dinners. The health-conscious elite are flocking to high-end clinics in the hopes of getting ahead of the aging process. And membership can cost up to $250,000! (PS: Time is the last luxury....can you buy it?) (WSJ)

• The world is fast approaching temperature levels where insurers will no longer be able to offer cover for many climate risks, according to Günther Thallinger, on the board of Allianz SE, one of the world’s biggest insurance companies. Without insurance, which is already being pulled in some places, many other financial services become unviable, from mortgages to investments.... Heat and water destroy capital. Flooded homes lose value. Overheated cities become uninhabitable. Entire asset classes are degrading in real time. Australia’s disaster recovery spending has already increased sevenfold between 2017 and 2023.  (LINKEDIN)

around dc

The Moonwalkers:

A Journey with Tom Hanks

AT THE KENNEDY CENTER

Through voiceover, Tom Hanks narrates an epic experience that offers a unique new perspective on humankind’s past and future voyages to the moon.

Telling the stories of the Apollo missions in intimate detail, The Moonwalkers, co-written by Tom Hanks and Christopher Riley, also provides an insight into the impending return of crewed surface missions by going behind-the-scenes of the Artemis program, including interviews between Hanks and Artemis astronauts. Details and tickets available here.

Lee Arrowood

Principal, Arrowood Advisory at Compass

M: 202.251.3175

O: 202.448.9002

lee.arrowood@compass.com

+$173M Sold In 2023

#3 Team Lead 2022