While this question may be seem to have one simple, negative answer, you would be wise not to dismiss it flippantly.  First of all, you have to appreciate the opportunities available in any market with volatility, be it stocks, commodities, or real estate.  The volatility is what creates the opportunity for you, as a buyer or seller, to realize gains.  The trick is in setting a strategy that fits you and sticking to it.  Back in the IT Bubble and the rise of the NASDAQ, multi-millionaires were made based on their strategy, all while others lost fortunes.  What was the difference?  Understanding risk management and adapting your strategy to the risk.

There's nothing like a does of reality to bring everything into perspective, so here you have it:  Predicting the exact point when a market is going to spike or bottom-out is nearly impossible.  Much like a plastic shopping bag floating in the wind, there's no way of telling exactly when it will catch a gust upwards or crash into the pavement.  While this unpredictability can slow you from meeting your financial goals, I believe it is what keeps so many investors playing the game. 

One key indicator to watch is the value of the market you are venturing into, in the case of this article, the real estate market.  Specifically, you need to measure the Price per Earnings (P/E) ratio.  While this concept is commonly referred to on Wall Street, it is still possible to relate it to real estate.  By simply comparing the costs associated with your investment to the potential revenue stream from its ownership, you can make an educated determination of its value.  As you apply this thinking to your portfolio, you are now managing risk.  Your target P/E ration should be in the range of 100 to 150.  This range will provide positive returns, and can even exceed this amount.  Some areas of the country are even seeing P/Es as high as 400!

In considering your strategy and determining value, you have to also acknowledge that lucrative markets can adjust themselves - up or down - for a variety of reasons.  Sudden drops in average value in the area, a swing in rental property prices, or the compounded effects of both accruing simultaneously.  Also, while we used the technique of P/E ratio analysis used on Wall Street, we cannot rely on the fluctuations of the stock market to be a model for the real estate market.  Given this knowledge, the choice now becomes to be active or refrain from risk.  Again, you have to consider your personal financial goals and ability to manage risk. 

 If you were made privy to an investment that required only $5000 investment, and the potential windfall was $60,000, is that a risk worth taking?  Well, if you don't have the five-grand to bone up, then answer is easy.  Assuming you were able to gather that amount, then the potential gains far outweigh the risk.  It comes down to being informed about your ability to absorb that risk, and the chances of actually seeing the reward. 

These simple risk management techniques can no only bring you success in real estate, but also carry through to other capital markets.  Venture forth!