Do the math. When you take away the cost of exercising his options in the first place, Mezger walked away with a profit of $23.8 million. If he had waited until today to sell his shares, he would have collected just $7.2 million. As for Karatz, he pocketed $63.6 million. Had he waited until now to sell the shares, the figure would just be $17.6 million.

Wow.

Nice savings.

In the spring and early summer of 2005, the standard line out of the real estate industry and out of Wall Street was that the boom would continue. Demand will continue to surge, went the argument, thanks to low interest rates and a strong economy.

Guess what? Long-term interest rates have stayed pretty low. The economy has remained strong. Employment is up. And, last I checked, people still like to live in good homes.

Yet the market has crashed anyway.

The reason isn't hard to find. House prices were just way too high -- especially when measured against long-term metrics like average household earnings.

Price matters.
In keeping with TSC's editorial policy, Brett Arends doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships.

Arends takes a critical look inside mutual funds and the personal finance industry in a twice-weekly column that ranges from investment advice for the general reader to the industry's latest scoop. Prior to joining TheStreet.com in 2006, he worked for more than two years at the Boston Herald, where he revived the paper's well-known 'On State Street' finance column and was part of a team that won two SABEW awards in 2005. He had previously written for the Daily Telegraph and Daily Mail newspapers in London, the magazine Private Eye, and for Global Agenda, the official magazine of the World Economic Summit in Davos, Switzerland. Arends has also written a book on sports 'futures' betting.

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