Real estate prices cannot grow faster than the national economy forever. Otherwise their percentage of total net worth would become 100 percent. The non-lizard brain says the market could plateau or decline.

Where the lizard brain steers us wrong is that it tells us to overextrapolate from the past, but people are unlikely to pay attention because they have been rewarded for buying property decade after decade. I say, do all the models of risk allocation, calculate what you think is the right amount of real estate to own, then cut it by a factor of four, or maybe 10.

Those who do not study the past are doomed to repeat it.

When it comes to assessing market performance, a rational look backward is really depressing. If we had been considering risk probabilities in 1950 or 1960, we would have had to factor in the chance of nuclear war with the Soviet Union. Now we know that up to this very moment the risk was zero, so when we look at the pattern of financial markets over the past 55 years we do not factor in the huge risk of a nuclear war. In assuming future performance will look like the past, we are drawing the wrong conclusions.
We are built to believe that we have more control over our actions than we do. I’m sure every CEO thinks he or she is more in charge than reality dictates.