Would you rather be aggressively conservative or conservatively aggressive? Many investors who are still in the game through the mortgage meltdown and the Great Recession are facing this question – whether they realize it or not.
In a recent show (Old School Real Estate – Debt Free Investing) we talk about the pros and cons of the old school approach of investing for cash. However, the discussion raised another consideration that we didn’t talk about: how has the Great Recession affected your inner investor? Whether you’re aware of it or not, you’re probably forming new paradigms as you observe and experience the current real estate market. We suggest that you form your new paradigms thoughtfully and purposefully, rather than simply absorbing the attitudes of whatever group of people you happen to associate with today.
So again: would you rather be aggressively conservative or conservatively aggressive?
Some people will respond to the pain of unforeseen setbacks by elevating risk avoidance above profit generation. If you’re old enough to remember the Tom Cruise film Top Gun, Cruise’s character, Pete “Maverick” Mitchell was a reckless, but very talented fighter pilot. After Maverick’s beloved flying mate “Goose” (played by Anthony Edwards) was killed during a practice session that Maverick piloted, Maverick became hyper-conservative. He lost all of the swag that contributed to making him a great fighter pilot. Though he remained talented and capable, he became ineffective when it mattered most.
Later in the movie, the now timid Maverick is pressed into live combat, but actually endangers his team because he is too conservative to engage the enemy. The safety of his own plane had become his paramount priority. He was more interested in risk avoidance than winning the battle. His paradigm shift had changed his priorities.
Thankfully, in the middle of the battle, he snaps out of it and re-engages. The irony is that the formerly reckless, undisciplined Maverick doggedly follows procedure, placing his own plane in jeopardy by refusing to “leave his wingman”. But all the skills and instincts that made him great when he was reckless still remained, and he was able to outflank and outsmart the enemy. He saves the day with his now conservative aggression.
So Maverick started out highly skilled, but arrogant and reckless. Then he experienced a tremendous setback and withdrew into an aggressive conservativeness which neutralized his amazing skill. When he applied the lesson of his setback to his aggression rather than to his fear of failure, he became conservatively aggressive and highly effective – perhaps even more so than before his failure. In other words, his failure actually made him stronger when he got the right lesson from it.
If you’re just starting out, try to look at the pain some of the old timers are facing (we know it’s hard) and ask yourself what lessons you should apply to your ambition.
If you’re among the walking wounded, look at your attitude towards investing today. Are you looking for reasons to engage – or for reasons to disengage? Have you become aggressively conservative? If so, did you do it purposefully – or have you simply absorbed negativity from the naysayers in your life?
The great news is that you don’t have to have lightening fast reflexes, eagle sharp vision or marathon runner stamina to be successful as real estate investor. But like Maverick, you have to manage your inner fighter pilot and make sure you can effectively engage when the battles of investing call you into action. You may be safe sitting in the hangar watching, but you won’t win any medals. This economy needs heroes right now.
But not everyone has what it takes to be an investor in the real world. It’s hard work, it can be scary at times; and if you engage early and often, there is a high probability you will get shot at – and perhaps even shot down. But if you keep your wits about you, pack your chute, and follow procedures developed through the trials and errors of those who have come before you, you have a legitimate chance to win.
Is it worth the risk? That’s up to you. But financial freedom, like any other kind of freedom, isn’t free. It comes at a price. If you do nothing, then not winning is a certainty. You may be safe, but you won’t be victorious. You have to decide if you want to soar like Maverick in an iron eagle or be safe like a church mouse hiding in a hole in the wall hoping to live your life unnoticed.
You know where we’ll be: right here on the radio and our website bringing you news, views, information, inspiration and resources to help the fighters succeed. When one of our listeners succeeds, they become another contributor to a successful society. That’s good for them, it’s good for us – and it’s good for the church mice, too.