I am constantly analyzing how my endeavors are affected by supply and demand.
Let’s look at a few specific examples.
Choosing Your Career
Decide on a career that has something that the other professions do not. Or more importantly will prepare you to do a very wide variety of things in the future.
So let’s look at a few. Let’s consider Doctors, Dentists, Lawyers and Accountants. All are extremely great educations to get and all of them will allow you to provide a very nice living for yourself. I would argue that the Accounting role is the best here because it gives you the best education to tackle a very wide range of endeavors. You will be able to take that education and experience at a CPA firm and apply it to your investments and running any business you choose. In this case the Supply of directions you can go is virtually unlimited. I would recommend Accounting to anyone who is interested in business but doesn’t really know what they want to do yet.
Look for a home that is special in some way compared to all the other homes in your price range. Real estate people are often heard saying “location, location, location” What they are really saying is, buy in an area that has a real advantage. So how can we apply this to our house hunting trip? Only buy in the really popular area or corridor. Never buy a home in the middle of a street. Go for the corner or the culti-sac. There needs to be something very special about your purchase. This will assure you get the most money for your home at re-sale.
Buying a Vacation home
Use the Supply and Demand concept here to smooth out the bumps when the economy lulls and prices go down. Condos and homes hit all-time highs in 2007 and 2008. Some of these properties got killed when things cooled off. The ones that were on the right side of the supply and demand concept did very well. A good example of this happened in Miami, Florida. Condos downtown were hit very hard. Why is that? Virtually every tower downtown was similar to the next one. Why do I care if I am in one or the other? Many of them were in walking distance to the places people wanted to go so the supply was huge. On the other hand the buildings that were on the beach in the hot part of South Beach saw only a 10-15% decrease at the time and are currently again at all time highs! The Whole World looks at condos in the hot part of South Beach creating a very low supply and high demand. They are not looking at downtown Miami. This is also true for Vail, Colorado, Parts of New York City and Aspen, Colorado to name a few. I am not saying that you need to invest in one of these locations; I feel you need to be aware of the principle when making your choices. Always purchase the property that has some edge or niche like view, layout, location etc.
This is an area you need to look at the supply and demand concept regularly. Putting your investment dollars to work is definitely a key in achieving your financial goals. Make sure you have big time demand working in your favor. Several years ago I invested with some friends in a Luxury Suite at the new TD Ameritrade Ball Park in Omaha. This was not designed to be a big money maker but we wanted to earn back some of the expense of owning it by leasing it out during the College World Series. We knew that the demand of fans both Corporate and individual would be high and the supply of luxury suites would be very low. This has worked out great for us. Many people saw the initial investment in the suite as extremely risky. The supply and demand concept worked beautifully. Keep this concept in mind every time you invest!
Picking a location for a Family Trip
Here’s one that is a little more light hearted and doesn’t come with a lot of consequences. As we all get older and more successful we will want to take some great vacations with family and friends. By simply doing your homework you can find incredible resorts and destinations that are not quite yet to Peak Season or have just ended their Peak season. Pursue these to make your vacation dollars go much further. You will be amazed at the beautiful places you can stay at greatly reduced prices.
Action Steps for using Supply and Demand to Profit:
1. Unless you are set on a certain career path, get an education that allows you to do many different things. Most likely you will enjoy a wide variety of money making endeavors over the course of your life
2. When buying property, make sure your property is set apart from the others. Don’t be afraid to pay a little more for the great location, View etc. When it comes time to sell you will enjoy the same advantage.
3. When investing analyze how supply and demand will affect your deal.
4. Look when others are not for deals and discounts like booking a vacation, buying a new car or purchasing a summer lake home.