Stocks vs. Real Estate

Both real estate and stocks have had their day, but the question you need answered is this: Which contender is the superior long-term bet today?

Volatility
Round 7
Volatility
One visitor to CNNMoney.com wrote: "I once lost 20% in one week holding Hewlett-Packard stock. That situation will never happen to me with a smart purchase in real estate."

He's got a point. Because real estate takes so much time and effort to buy and sell, it rarely soars or plunges. The Francis-Ibbotson study, for example, found that over the 27 years surveyed, homes in their worst year returned 3.5% and commercial property lost only 5.6%.

The S&P 500's worst annual performance was a 22.1% decline. That doesn't mean you can't lose your shirt and everything else on real estate. Hartford, Houston and Los Angeles, for example, experienced 20%-plus price drops at some point since the '80s. But those declines unfolded over several years, and all three markets recovered.

On the other hand, we're still a ways from knowing whether the current slowdown in the housing market is about to end or is only getting started.

Performance Leverage Costs Taxes Transparency Effort Volatility Diversification Decision
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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.