One of the most interesting asset classes where we see the very pronounced influence of behavioral biases is in real estate. Why is real estate such a ripe area for behavioral biases? Real estate is a highly emotive asset in most cultures. This can help explain phases of ‘irrational exuberance’ in property markets where prices move away from fundamentals.
“When you invest internationally, currency is the name of the game, all other factors become secondary. You think you’re buying real estate, stocks or businesses? Think again. Foreign Exchange fluctuations have become the number one cause of gains and losses. They have impacted every sector in every nation”. ~ Bryant Palma*, in a presentation April 17, 2018 made this statement to his audience.