It was a long time ago that actions of investors surprised me anymore and the recent mistakes in property will probably repeat themselves time and time again in many forms. And that’s fine.
The basics of ‘buy when a market is under pressure’ and ‘sell when everything around you says that you should buy more’ have never been more true.
Every paper and news bulletin I read eight months ago said we would avoid recession and that property was holding up. That’s noise and is unhelpful. We told you different.
Not one of those bulletins is now forecasting anything other than doom, and it’s inevitable it will have its price as everyone tightens their belts in anticipation.
It is when all around you are losing their heads that great decisions can be made. Anyone can smile in the sunshine.
Just like we told everyone in this article to cool it two years ago, there will be a time to heat it up again. I am comfortable that markets are manipulated by the very wealthy, that’s how the great world game works. The key is in understanding it and to do that you must think like a very wealthy person who knows no boundaries.
Buying a television in December and trying to sell it back to the shops in February is not good business. Similarly buying any investment is all about buying at the right time, and to do that, you need to be able to understand what is happening around you.
A good read is ‘extraordinary popular delusions and the madness of crowds’. Why do people believe so collectively for absolutely no reason? It is in understanding this that you can easily see why a collective of 1+1 is often much less than two and in effect can easily become zero.
Why in 1624 did everyone suffer from Tulip mania? If you can’t remember, ask your older brother. Tulips traded for more than gold. Now they don’t!
Not one person I know has fundamentally challenged the whole green story yet you are condemned for talking about it in anyway negative. A delusion is a hallucination or misunderstanding, and they are often there because we want them there – a fantasy.
Making good investment decisions is all about retaining your emotional intelligence like my Air South West pilot after we were whacked by lightning (not funny in the middle of a black storm cloud when you are being turfed around like a paper bag). He calmly advised ‘sorry about that ladies and gentlemen we appear to have been hit by lightning’. ‘Oh is that what it was?’ I said to myself, ‘I thought someone had sneezed’.
We have a choice to see panic, anxiety, and all the stuff that makes your stomach churn. Your brain can go backwards and concern itself with the past and decisions you can’t change or you can look at what you can do with the future. Which is the better thought?
To the educated on any subject it’s all information, just information. Anything more than that is unhelpful.
My pilot knows the leading edge of his wing is slightly higher than the trailing edge, which causes the plane to force air downwards. He also knows his mate Isaac Newton says of motion, that every action causes an equal and opposite reaction i.e. whilst the plane is pushing air downwards, air is also sucking the plane up. What a doddle when you are in a storm!
If you learn one thing, is that for you to gain in any investment, there has to be an equal and opposite loss somewhere else. If you sell a car for £100 more than its worth, someone lost £100.
The investment world works just like that, and to win you need to make more right decisions than wrong. On that note I’ll reiterate my most common statement: there is no such thing as good or bad, it’s just your thinking that does that.
If you would like to ask Peter about your investment portfolio call Peter on 0800 0112825, e-mail info@wwfp.net
The value of shares and investments can go down as well as up
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