Hotel Ritz Paris

In 1979 Mohammed Al Fayed purchased Hotel Ritz in Paris for $30 million.

In 2016 a major renovation of the Hotel was completed. 159 rooms.

Average price of the room per night: $950
Nights in a year: 365
Occupancy rate: 85%
Total revenue: $47 million
Total costs: 40% ($19 million)
Net profit before tax: $28 million
Hotel valuation at the yield of 3%: $940 million

Let's say if somebody would offer Mr. Al Fayed $1 billion he would sell the hotel. But let's go back to 1979, if Mr. Al Fayed decided to invest those $30 million into S&P 500 fund, how much he would have today?

S&P 500 fund: $2.4 billion
Coca-Cola: $1.6 billion + dividends ($2.6 billion)
Berkshire Hathaway: $26.6 billion (as the stock price went up 88,670% since 1979)

Obviously recognising the genius of Warren Buffett in 1979 from London/Paris was not an easy task, but recognise the power of American economy in 1979 was easy, no matter where you were located. So again, every major real estate investment that is shown to us a great investment is actually a bad investment. Harrods is a bad investment. Ritz Hotel, bad investment. Every single real estate investment where you were told is great, is actually a bad investment when comparing to S&P 500 over the same period of time.