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What part of a simplified example can't you accept? Just focus on the principle here and that is: Whether there are 5 or 1000 sub-markets, it's more sensible to invest in the market that is undervalued than overvalued. Sure you can make money in the undervalued sub-markets of an...

I'm sorry to disappoint you. Maybe a simplified example will clarify it for you. Assume there are 5 sub-markets. There are currently valued at say 75%, 80%, 85%, 90%, 95% of their long term values. Assume they are roughly the same size so you can take a straight average to get the market...

The extent of leverage doesn't vary by experience level, unless inexperienced investors pay significantly over market value. The extent of leverage should vary with valuations. Borrow more near the bottom of the cycle, borrow less near the top of the cycle, not the other way round.

As a new investor, you would look at the relative valuation of different asset classes and go from there. For example, the stock market is around 2/3 of its highs, while the property market is at its all time highs and high as a multiple of income. So the low risk option might be to stand aside...

Reminds me of the Mexican Fisherman http://www.inspirationpeak.com/shortstories/mexicanfisherman.html

In my experience, experienced investors invest with low or no debt, while novices tend to overextend themselves. They might have gone to a seminar and become motivated to make up for lost time. But a little knowledge is a dangerous think. Debt magnifies your returns, but because the interest...