The stock market may be reaching new highs, but I would not suggest you take that as a proxy for your own investing in real estate. It took real effort, but Obama and Hillary managed to craft a foreign policy over the past four years which has accomplished the seemingly impossible, and it bodes very badly for where the world is headed and what could happen. That lack of leadership and the misaligned policy has managed to enrage our key allies in the Mideast –Egypt, Israel and Saudi Arabia. It is unheard of for the Saudis to so publicly insult and turn on the US. They really need us for defense. But they have now concluded Obama is an unreliable and weak person and not a leader. The same for Egypt and Israel. They simply think Obama is unreliable, and is being mislead by Iran. Meantime an independent research group announced yesterday that Iran could produce a bomb in 30 days. Israel is screaming from the rooftops that the time has come. The Saudi actions at the UN and otherwise are screaming the same thing. Leaders in Congress are saying the same thing and demanding more sanctions. But Obama is not listening. He is going the other way on Iran. The Egyptians have told us to go away. Israel is saying it is ready to act alone. Iraq is back to massive sectarian civil war like before the surge because the US went away for political reasons. Afghanistan is already deteriorating as US troops leave prematurely. Libya is a terror haven. Tunisia is collapsing again. This is going in a very dangerous way and the complete lack of US leadership is taking the world into an extremely high risk situation which could turn massively bad very fast. If that happens there is no way to predict where the capital markets go. Likely everyone buys treasuries and crawls in a hole.

Then we have bad employment numbers, not even keeping pace with population growth. Another round of debt ceiling negotiations which are unlikely to go well, and the disaster of Obamacare roll out. Add on the absurd effort by Obama and Holder to score political points by trying to crush Jamie with insane fines and you have nothing that bodes well for the next few years. As the administration continues to attack the big banks, it only harms lending, the economy and job creation. JP Morgan is already revising 2014 budgets, reducing staffing plans, cutting salary increases and bonuses and harming the staff, shareholders and borrowers. But Obama looks good to the populists who think the bankers are all crooks.

So where does that leave real estate investors and lenders. Hard to know. There may be a continuation of a huge influx of Chinese and other foreign investment in US real estate as a safe haven. US Treasuries will likely see a lot more investors if the world continues to go badly. Solid cash flowing US real estate may be the place to be for several years. Just don't assume that to be the case. If Obamacare does blow up as it seems to be doing, and if the debt talks in Washington go as badly as most people think they will, then employment will stay very weak, the recovery will stall further, and rents may not rise. Maybe we don't go back into recession, but upside in rents and values my be a lot further off that you expect or project. If you do invest in an asset, do it in a way that you can put on reasonable leverage that is sustainable if things do go bad again, and don't chase price. Get a good solid 12%-15% leveraged cash on cash return and be happy. If you can hold long enough you may get a nice cap gain but don't assume that when doing your analysis. There is so much uncertainty you can't know what is coming, only what is the cash return today. Times are as uncertain as they have been since 2008, and you need to be very careful in your analysis and conservative.