Let me say this as plainly as I can . . . when you purchase stocks, you are purchasing paper. You own nothing tangible. Stocks may provide a dividend -- or they may not. You gamble that they will go up in value.
When you acquire investment real estate, you have relatively steady income, you have incredible tax writeoffs, and you can defer any capital gains by trading your property for other investment real estate. See below. How a company like this didn't see it coming, I still don't understand.
From Bloomberg News Service -- Oct. 24, 2007 -- Merrill Lynch & Co. reported the biggest quarterly loss in its 93-year history after $8.4 billion of writedowns, the most by any securities firm. The third-quarter loss of $2.24 billion, or $2.82 a share, was about six times higher than the New York-based firm estimated on Oct. 5. Merrill wrote down the value of subprime mortgages, asset-backed bonds and loans to finance leveraged buyouts, and Chief Executive Officer Stanley O'Neal said in a statement today that he is "working to resolve the remaining impact from our positions.''
"Merrill fell as much as 3.1 percent in New York trading and is now performing worse than any of its four largest rivals, after O'Neal misjudged the severity of the decline in the credit markets since July. Investors who lauded the 56-year-old CEO for chasing higher returns now question whether he policed the risks as he pushed the firm to become the biggest underwriter of debt securities backed by subprime loans.
"We're very disappointed,'' said Rose Grant, who helps manage about $2 billion at Eastern Investment Advisors in Boston, including Merrill shares. "I don't think Stan O'Neal will step down, but you do have to look at top management and wonder why they didn't know the extent of this loss.'' Click here for the full text of this story from Bloomberg News Service.