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SPECIAL INVESTOR LETTER FROM GEORGE Do you remember how traumatized our parents and our grandparents were by the Great Depression? The economic survivors eschewed debt for thirty years. They became hoarders and fanatical savers. I remember my mother would save packaged food for years after its expiration date. Stocks were reviled, and it took the Dow almost 25 years to break through its 1929 top. There can be no doubt that economic terror takes decades to be forgotten. A great many Americans were indeed terrorized by the Great Recession. Almost 2 million households lost their homes during the Great Recession. In 2013, CBS estimated that Americans had lost 55% of their wealth since the start of the slump. A report came out this week that consumer debt grew last month at the smallest rate in years, as consumers continued to resist piling on more debt. “Never again,” they seemed to be saying. If you own a business, however, I actually believe this is the absolute best time to invest, borrow, and expand your business. If you are on the fence right now about whether or not to buy that new machine to increase your production, I say, “Do it.” The U.S. economy is in a powerful recovery. Unemployment is falling. The deficit is falling, as tax receipts soar. Our oil imports are falling. We used to call my area of the country, “The Rust Belt.” Now its “The Rockin’ Sockin’ Belt”, as U.S. manufacturing once again becomes the envy of the world. My best friend, Ron, was my roommate at Culver Military Academy almost 45 years ago. He made a fortune during the Great Recession buying used manufacturing equipment at auctions for pennies on the dollar and putting it back to work in his recycling plant. This month he drove all of the way to Florida to bid on some equipment he needed to expand his plant, only to come home empty-handed. The demand for used manufacturing equipment is so ravenous right now that he was outbid on everything he tried to buy. Folks, I continue to maintain that the current economy is the best economy that any of us will ever enjoy in our lifetimes. Don’t be afraid to invest in your own business, even if it involves taking on some debt.
Commercial loan demand is seasonal. Our busiest time of the year is between September 15th and the middle of November. Late February and March is our second busiest period, as borrowers raise money to pay their taxes. Not surprisingly, you have therefore seen a nice string of first mortgage investment offerings from us recently. Unfortunately March is also typically our slowest money-raising period, as our wealthy investors keep their powder dry until they know how much they owe in taxes. After April 15th, investor money comes pouring back into the company, and… loan demand falls completely off a shelf. Why? I dunno; but after 35 years in this business, this is as predictable as El Nino. Therefore, if you have money to invest in first mortgages, you may want to look at our current offerings. Unless this April is different from prior years, you may be in the mood to invest next month, only to find that there are very few deals available. Those of you who are the fathers of teenage daughters may enjoy the following. My own daughter, Jordan, is now 16-years-old, trim, and shapely.
Warm Regards, George Blackburne III |
4811 Chippendale Drive, Suite 101, Sacramento, CA 95841 | telephone: (916) 338-3232 | fax: (916) 338-2328
Real Estate Broker - California Bureau of Real Estate | License Number 829677
NMLS #103430
