If you’ve ever been in a crowd when something surprising happened … or even in a game of musical chairs, you know …
… people respond VERY differently when stressed.
Some think, decide and act very quickly. Experience, confidence, coaching, and maturity are all factors.
Then there are those who act quickly … without thinking. It doesn’t always end badly, but it often does.
With the shoot-first-ask-questions-later group, it’s usually immaturity, inexperience, lack of training, arrogance … even desperation … that gets them in trouble.
Others take way too much time to think … and then act too slowly. They often miss the best opportunities or fail to avoid rapidly approaching danger.
This quintessential “paralysis of analysis” is usually rooted in inexperience and lack of training. But pride and extreme fear of failure is often the biggie.
And of course, they’re the folks who completely freeze under pressure.
They can neither think nor act … they’re the proverbial deer in the headlights … suffering emotional and intellectual overload.
These folks are often in denial … using avoidance and reliance purely on hope as their primary strategy … and abdicating personal responsibility for their results.
Which are YOU?
It’s a hard question. We all want to be Joe Cool … calm, confident, collected, decisive … taking effective action under pressure.
Yet we all have our limits. And sadly, we don’t often discover them or work at expanding them until we fail under fire. Not good.
This is a VERY timely topic because in case you hadn’t heard … the world’s economy and financial system is under EXTREME stress right now.
Some of it is likely to roll downhill onto Main Street real estate investors. So if you’re not stressed yet … get ready.
NOW is a really good time to look honestly at your own investing and emotional IQ …
… not based on your goals, aspirations, ideals, or vision … but rather on your actual history of performance under pressure.
If you’re younger, you may not yet have a resume of stressful investing or business experiences to reflect on.
So use what you have … experience in school, sports, games, and even relationships (they’re stressful!) … to find clues into your psychology.
It can be humbling. But it’s an important exercise.
It’s well known by those who study the emotional side of investing … the art of managing fear, greed, procrastination, and arrogance …
… successful investors are able to act decisively and diligently in times of extreme stress.
That’s because they’ve learned to stay level-headed, think clearly, rely on data and expert advice.
Those who FAIL to keep their cool under pressure usually only win small (if at all) … often lose (often big) …
… and sometimes aren’t even in the game at all … missing opportunities like a little-leaguer swinging against a big league pitcher.
There’s a lot of shift happening right now.
And with a polarized election season now added to the mix, it’s about to get a whole lot shiftier … and emotional.
Our friend Blair Singer says …
“When emotions run high, intelligence runs low.”
Your mission is to remain aware, prepared and rational … so when threats and opportunities pop up, you’re able to act wisely and decisively.
Easy to say. Sometimes hard to do. Yet VERY important to work at nonetheless.
In tumultuous circumstances, it’s natural to want to stop, sit down, or cling to anything or anyone familiar in search of stability.
Sometimes that’s smart. After all, there’s a reason money is moving into real assets like metals and real estate.
But it’s not smart to cling on to obsolete strategies, paradigms, or methods. As things change, you might need to change also.
How do you know what to think and do?
One of our strategies is to watch experienced investors … especially those with access to great advisors and quality research.
That’s why we noted billionaire Sam Zell’s and Warren Buffett’s moves into gold.
You may or may not be interested in gold … but the overt and implied reasons behind big money moves contain clues …
… about the economy, financial system, currency, and interest rates.
All investors, real estate and otherwise, are wise to pay attention to those things.
But while gold and real estate are both considered “real assets” … they are also very different.
Real estate is the opposite of a commodity or an asset class. It’s not uniform in all places. Every property is unique right down to the address.
Yet even seasoned real estate investors tend to think about real estate only in the context of their niche and markets.
If you’re into apartments, that’s what real estate is to you.
Or if you’re into office buildings … or retail … or farmland … or single-family residences … that’s what real estate is to you.
Of course, real estate is also more than a niche …
If you’re into residential real estate in New York, you’re having a certain kind of experience right now.
But if you’re investing in residential real estate in Jacksonville, Central Florida or Phoenix, you’re having a VERY different experience than those in New York.
Overall, residential real estate … especially housing … is red hot. Housing starts are up. Homeownership in the US soars to its highest level since 2008.
But that doesn’t mean every house in every market is on fire. Some are. Some aren’t. Some for good reason. Others … not so much.
It’s the ambiguity of real estate which creates the opportunity. And when shift happens, pockets of opportunity and disaster open up.
The important point here is real estate is NOT an asset class … and as things shift, there will be winners and losers.
So back to billionaire watching …
Reuters reports … sovereign wealth funds are re-thinking once-reliable real estate.
“The COVID-19 pandemic has forced sovereign wealth funds to think the previously unthinkable.”
Perhaps the same thing that happened to Warren Buffett and his position on gold.
“ … the funds are retreating from many of the real estate investments that have long been a mainstay of their strategies.”
“… shifting … funds increasingly investing in logistics space, such as warehousing, amid a boom in online commerce during the pandemic, while cutting back on deals for offices and retail buildings.”
“Such shifts in behavior can have seismic effects on the global real estate market …”
Of course, if you’re investing in Main Street self-storage centers or mobile-home parks … you’re likely well-insulated from the “seismic effects” created by the equity repositioning of these behemoths.
But while their moves might not affect you … and you may not emulate WHAT they do … you can still learn from WHY they’re doing it.
They’re responding to the STRESS of COVID-19.
Do you think these behemoths think COVID-19 and its ramifications will pass quickly and the world will soon be back to business as usual? Or not?
After all, Buffett backtracked on one of his most outspoken positions and pulled a page out of Peter Schiff’s playbook … dumping dollars and buying gold.
Similarly, these sovereign funds are shifting HUGE long-term holdings from certain real estate niches (the projected “losers”) into others (the projected “winners”).
As shift happens bigger and faster, winning will require more intelligence and greater emotional control.
If you’re not already diligently developing those things … it’s probably a REALLY good idea to get started soon.
Notice that the big boys aren’t taking a Wait and See approach, but rather they Think and Do. That’s a clue.
Meanwhile … what’s clear is the world is changing quickly … the big boys are making their moves … and old paradigms are being re-evaluated.
Our experience, both good and bad, tells us the informed, level-headed, rational, decisive investors will most likely be the biggest winners.
Think and Do is better than Wait and See.