We are all here to do what we are all here to do. So The Matrix Reloaded told us. Another way of saying that is that we are all here for the sole purpose of making decisions and then experiencing the consequences of those decisions. This relationship is so unavoidable in life that our economies harness it to create wealth for all of the participants in the economies. It can also be the source of our undoing as businesses live to find more cost efficient ways of serving a need and that leads to advances in technology. Advances in technology make existing technologies obsolete over time and that is the beating heart of market risk. You can’t eliminate it, but you can manage it and harness it to turn lemons into something more profitable. Lemonade requires information, ingredients and time.
So does everything else.
We know that most technological advances take at least two (2) years to create enough of a market disruption that existing income-producing assets start to suffer revenue and earnings losses that are significant to them and their investors. That time can be harnessed to re-position the commercial real estate property, perhaps re-develop the commercial real estate property into something else that has the potential for even greater profitability or make an orderly exit from the investment that doesn’t include the proverbial “fire sale”.
Maybe it is time we recognized we have new opportunities for making market risk something other than the big, bad bear in the woods.