Here's what I've got for you this week.
- Why this time is different.
Still pulling punches but getting closer to revealing my true sense of what is going on in the market (it's not easy to do). Let me know your thoughts about the commentary below.
- Podcast Episode 704: A Day in the Life of a Capital Allocator
This week you'll meet Nick Stromwall a capital allocator who candidly addresses common myths about the industry.
- LinkedIn Mastermind
My LinkedIn lead-gen is getting so intense it's becoming difficult to keep up with. Join me in the next Mastermind as I show you how to create a list of prospects so vast it'll completely fill your pipeline.
For more information and to enroll here.
Use coupon code FEB14 - before Feb 14th - for $200 off enrollment.
Plus, a reminder of the other two main initiatives this year:
- Investors:
I am getting increasingly active in finding personal real estate investment opportunities.
Follow my journey here.
- Sponsors and Capital Allocators:
Join the waitlist to get the exact system our clients have used to raise nearly $1bn in equity capital.
Join the waitlist here.
As always, please do not hesitate to email me directly if you have any questions.
Best,
Adam
***
A new era for real estate and why this time is different
People always say we should learn from history, yet they only seem to say it in hindsight, after the cycle has already turned, when the damage is done. In commercial real estate, we look back at every peak and crash and tell ourselves, We could/should/would have seen it coming but, all too often, we don’t see it coming and fall victim to the cycle.
This time is different.
This time we can see it coming.
The signs are clear, the conditions unmistakable.
We are entering a new era for the familiar economic cycle, one that has repeated throughout history. A period of rapid, seemingly unstoppable growth fueled by deregulation, loose capital, and speculative fervor, followed by an inevitable collapse that will serve as the pretext for a consolidation of power and a new era of control.
The dissolution of the Consumer Financial Protection Bureau (CFPB) and the quiet weakening of the Securities and Exchange Commission (SEC) are not isolated events; they are signals that we are now in a controlled, expansionary phase of the cycle.
Capital will flood into markets.
Asset prices will soar.
Regulations will ease.
And the risks will be hidden by distractions and hype.
Beneath the exuberance, the scaffolding of this boom is knowingly being built on unstable ground, ensuring that when the inevitable collapse is triggered, only those who saw the design for what it was - and act on that beforehand - will be positioned to turn the fallout into opportunity.
Salami-slice Deregulation
The shuttering of the Consumer Financial Protection Bureau (CFPB) marks a significant shift in the regulatory landscape of American finance. Established in the wake of the 2008 financial crisis, the CFPB was designed to police predatory lending, enforce transparency in financial markets, and provide consumer safeguards.
With its neutralization, the immediate impact is clear: regulatory constraints on credit markets have loosened, potentially ushering in a period of rapid economic expansion, particularly in real estate, unchecked by the hard-learned lessons that led to the CFPB’s creation in the aftermath of the financial crisis.
However, whether this newfound exuberance represents a sustainable growth cycle or the precursor to a managed systemic correction remains to be seen.
A Regulatory Vacuum in Capital Markets
The absence of the CFPB is not the only shift shaping the current environment. The Securities and Exchange Commission (SEC), which oversees capital raising and financial market integrity, is also undergoing substantial change in its enforcement approach.
Under the current administration, the SEC has adopted a more business-friendly stance, with significant procedural hurdles placed on new investigations. SEC attorneys must now obtain approval from politically appointed leadership before launching formal probes, a shift that has slowed enforcement actions and reduced the likelihood of timely interventions.
As a result, oversight of financial products, including securitized real estate investments and syndicated capital raising, has become less immediate and more reactive, allowing risk to begin accumulating largely unchecked.
This deregulatory momentum suggests that capital will flow more freely into real estate investments, with syndicators and sponsors finding it easier to structure complex financial vehicles with fewer disclosure obligations. Investors, meanwhile, may be drawn to the prospect of outsized returns in an era of lighter-touch regulation.
Short-Term Exuberance, Long-Term Uncertainty
The near-term effects of this shift are predictable. With fewer constraints on lending, fewer regulatory hurdles to financial structuring, and a more permissive SEC environment, the real estate sector is poised to experience:
- A surge in capital deployment, as investors move quickly to take advantage of an environment where risk-adjusted returns appear disproportionately favorable.
- Asset price inflation, as reduced oversight allows for more aggressive underwriting and leverage.
- Increased financial engineering, as syndicators find it easier to introduce alternative investment structures that might have previously faced regulatory scrutiny.
However, the longevity of such conditions is questionable.
Economic booms fueled by regulatory loosening rather than organic fundamentals tend to be self-limiting, with risk accumulating beneath the surface before a correction occurs.
Strategic Positioning in a Shifting Market
For those operating within this environment, strategy will be key. While the immediate climate encourages risk-taking, debt expansion, and rapid capital deployment, history suggests that those who remain disciplined in their investment approach will emerge in a stronger position when conditions inevitably shift.
Key considerations for market participants include:
- Liquidity concerns:
Many financial products will offer "enhanced liquidity features", though history shows that in times of stress, such mechanisms tend to be suspended or significantly constrained. Investors should carefully assess exit strategies.
- Leverage dynamics:
While aggressive debt structuring may be rewarded in the near term, market reversals tend to punish over-leveraged positions disproportionately – unless we spiral into a hyperinflationary environment. Understanding how to manage debt effectively will be critical.
- Regulatory risk re-emergence:
While enforcement agencies may be less active now, regulatory bodies have a long history of returning with force following periods of excess – next time with retribution in mind. Compliance should remain a focus for those seeking to build enduring investment platforms.
The Inevitable Endgame
The question is not whether this expansion will end, but rather how and when the next phase will unfold. History suggests that booms fueled by regulatory abdication and unchecked financial speculation do not end in gentle corrections, they end in sharp contractions, liquidity crises, and the sudden realization that risk was vastly underestimated.
But this time, it isn’t just the natural cycle of markets at work. This is something more deliberate. It is a system being allowed to overheat, setting the stage for an eventual reset that only a select few will be prepared for.
The immediate winners will be those who embrace the excesses of this moment, leveraging the unprecedented capital inflows and regulatory leniency while remaining acutely aware that this runway has a hard stop. The ones who thrive in the long term will be those who know when to step off the ride before it derails.
So as the cycle accelerates, the playbook is clear: move fast, extract value, and position for the inevitable reversal. Because when the dust settles, and policymakers pivot from fueling the expansion to controlling the collapse, the real wealth transfers will begin.
The question is, will you be positioned to capitalize on it?
***
My Approach
One, I am going to be making some investments this year to capitalize on the current, what will be, short-term boom while keeping hyper focused on the inevitability of a significant reversal.
Maybe I'm wrong (it has been known). But what's the downside of being prepared for a downside?
Two, I want to connect with like minded people and so ask a couple things of you, if I may.
- Please share this newsletter with anyone you think might be sympathetic to the investment thesis I am gradually unravelling here and encourage them to subscribe.
- Join me in the next LinkedIn Mastermind - starts Feb 25. I’ll show you how to connect with like-minded professionals and position yourself so they’re predisposed to working with you.
For more information and to enroll here.
Use coupon code FEB14 - before Feb 14th - for $200 off enrollment.
And three, if you, like me, are focused on how to navigate the radical changes this country is undergoing, join me here as I make my own investments this year, focusing on capital protection, income streams, and long term wealth generation - in that order.
Thanks,
Adam