The Math Doesn’t Lie

Predicting Elections and Choosing Winning Investments

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I love to read data-driven news analysis from sources like Nate Silver’s FiveThirtyEight because they use the realities of hard data — not emotion or speculation — to inform whatever it is that they are reporting on. In the 2012 United States presidential election between Barack Obama and Mitt Romney, Silver correctly predicted the winner of all 50 states and the District of Columbia. Prior to the election he repeatedly declared that if you put everything aside and simply looked at the math there was no way Romney could win. Silver was right of course. Obama ended up winning the Electoral vote decidedly 332 to 206. The math doesn’t lie.

Earlier this week, my partners at OpenPath Investments hosted a teleconference highlighting the opportunities in multi-family housing investing. Here’s a few top line data points shared on the call that frame the macro market:

1. Over the last 10 years, U.S. Home ownership declined from 69% to 63% and is projected to continue declining for next 15 years+

2. This means 110 million Americans live in rental properties

3. Why? The older generation is downsizing and for younger buyers mortgages are harder to obtain plus stagnant wages and student loans leave nothing for down payments

4. For every 1 new homeowner in 2010–2030, there will be 5 new renters

5. 80% on new construction financing is focused on housing for the top 20% of income earners.

In short, the math confirms that there is a major shortage of workforce housing which will continue to be true for at least the next two decades. These facts are the basis for an investment opportunity in housing. Of course, alone they do not insure success. Your ability to profit from these conditions will hinge on partnering with a firm that has the right business model that can take advantage of this opportunity and deliver strong returns. Your partner should have a track record to prove it.

The conference call went on to discuss how OpenPath’s unique model translates the above realities into excellent returns for investors (15%+ IRR) while at the same time delivering positive outcomes for working-class families and the environment.

If you are interested in hearing more about real estate investing and/or social impact investing, you’ll appreciate listening to the audio recording of the full call. For a shorter overview this brief video is excellent.

Let me know if you have any questions or would like discuss any of this further. Feel free to email me directly to arrange a time.

A couple other posts that I think you will like:

My Next Google: A perspective from employee 75

A Quick Way to Check if Your Investments are Optimized for 2016

Five Resolutions for 2016 (the last one involves you)

Note: OpenPath investment opportunities are for accredited investors.

Investor, Partner, Advisor. First Google Advertising Exec (2000–07), ex-Chicagoan. Now at OpenPath Investments & FullCycle Climate Partners

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