Be it high-technology, commodities, equities or real estate, speculation, coupled with abundant capital availability and a clouded understanding of intrinsic value inevitably create a bubble that is often recognized only in hindsight when it bursts.
I have for years been teaching that "spec" is a four letter word. Is there anything more speculative than a new golf course? Accordingly, while the number of rounds played in this country have stabilized and perhaps slightly declined, I would argue that the issue is supply, not demand. What's we're seeing is a bursting of the golf course bubble, pure and simple.
Thoughts?
Mike
Doublebogeyed this one, I think. Demand as measured by # of rounds played is generally down for several years. I haven't seen a mix analysis, but I suspect that higer priced courses have been hurt the most, so the more relevant measure of demand, revenues, is probably even worse.
As a result of an oversupply, one could see lower revenues due to discounting, but the number of rounds should be up, holding everything else equal. The condition of the economy, competitive alternatives for our time, changing preferences and priorities primarily affect demand.
Next time you see Art, you might make your argument. I would be most interested in his response.
BTW, would you care to define "intrinsic value"? I may argue that it is mostly without meaning.
BTW2, there is a city official in Michigan who has a solution to an ""oversupply", mass bulldozing of neighborhoods. I don't know what compensation they're offering to owners, but I could see a salaried banker or a regulator with no skin in the game lining up to cure his ORE portfolio. Of course, I don't mean you.