We hear it all the time: investment managers who describe themselves as “disciplined” or “contrarian”, even though we know that this cannot be true in the aggregate. The point of this article is to suggest some simple analysis, which I don’t believe is generally being done, to put investment managers’ discipline to the test.

Real estate is a tremendously cyclical sector. This makes investment discipline all the more important. In fact, a manager could generate very attractive returns in real estate “simply” by investing consistently throughout the cycle, avoiding only the peaks.

I am sure that most readers are thinking that there is nothing “simple” about this. Like Alan Greenspan, they are probably saying that market peaks do not come along with signboards announcing that fact, and that it is impossible to identify bubbles in advance. Like Alan Greenspan, however, they are being far too easy on themselv