My theory is that everybody had their money tied up in stocks. Everybody I knew was trading stocks on the internet. People that didn't know a thing about the stock market had brokerage accounts, margin accounts, mutual funds and you name it. And - the funny thing was that everybody I knew was making money. I was making money. With hardly any exceptions, I at least doubled my money on just about every stock I traded. But then - all good things must come to an end. People got greedy. Traders got greedy. Risk tolerance got all out of whack. Then people and traders got both greedy and arrogant, as if the boom times would never end. Guess what! They ended. The dot.com boom turned into the dot.com bust. A lot of folks lost all the money they made and more. Brokerage houses went under or were gobbled up by other more prudent companies. All of a sudden everybody was getting out of the stock market. Prices dropped like a stone. The Dow Jones average took a dive. Retirement funds and 401k's went way south. Corporations started reneging on retirement plans and health insurance benefits for retired workers. Some people went to jail. Does any of this sound similar to the CNN reports on today's housing market?

Well, where did all of that money that was taken out of the market go? Not gold, not platinum, not fine art or wine. It went back into real estate from whence it had come and kicked off one of the most astounding real estate booms in modern history. Prices of houses in the Upper Valley were appreciating at 20%-30% per year for some of those years. Developers couldn't develop new properties fast enough. Farmers sold their herds and their farms and retired. People were flipping houses in thirty days and making killer profits. TV shows were created, books were written, and fortunes were made telling ordinary folks how to get rich in real estate. Banks were making loans to anybody who filled out an application and some didn't even have to apply. A familiar scenario, just a different venue.

Now - the real estate boom has become the real estate bust and guess what - the stock market is booming again. Interest rate cuts are the order of the day to protect housing, but it's the stock market that's reaping the benefit, because the money, both real and imaginary, that was holding up the real estate boom is now back in the stock market from whence it came. 

What does it mean? It means that people are human; they're greedy and want to make an easy buck. There's nothing wrong with that for as long as it lasts, but look out stock traders. Real estate will come back and when the tide turns back, it'll be time to sell, sell sell your stocks and buy back into real estate.