So the recession is over (for economists) and everything is back to normal (for Wall Street), so it's time to look back and ask ourselves the most important question of any major event:
What Did We Learn?
Historically, as a nation, we don't learn a lot. At best, a few choice lessons are gleaned from each disaster, a few are radically exaggerated into reactionary decisions and the things that are most uncomfortable for us to face, we procrastinate solving. Pick a "Real Housewives of Beverly Hills" fight and that's about the resolution arc we generally see. (I suppose free-market economics would be Camille Grammer in this analogy)
The only lesson we should all agree on is: not to trust anyone. Businesses politely refer to this as due diligence. As an example: Brian Nordahl, SVP-Acquisitions, Archon Hospitality explained at ALIS that underwriting was the key to any distressed hotel purchase because the lenders don't run hotels [my emphasis] and may have out-of-date information/paperwork on the asset, if they have it at all. And with hotels defaulting at a ratio to transaction volume of 4:1 and REITs grabbing the choice properties, that leaves a lot of opportunity on the table. And a lot of it is going to be opaque.
In a world were Fugi Film's Underwater digital cameras are not waterproof and Amazon changes the prices of items based on the history of what you routinely buy; it pays to be at least a little suspicious and dig a little deeper on what appears to be a good deal. The new zodiac sign is a man holding a snake. It seems fortuitous and, unless you're Nancy Reagan, there are no astrologers that can help you when inflation has been flattened and rising treasuries start compressing your cap rates.
If you don't do your due diligince, you could find yourself in the position of the Wilpons, who trusted their Madoff returns and now are vying for ownership of the New York Mets with The Donald. Perhaps Major League Baseball will do its due diligence and remember how well the USFL fared with Trump.
Eh, who am I kidding? What could go wrong with a casino owner running a baseball team?
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