Investing tips from Warren Buffett

Warren Buffett isn’t really a property expert, but you’d have to agree that he’s the greatest investor of our time. In his 1986 Annual Letter to the Shareholders of Berkshire Hathaway Buffet said:

“What we do know, however, is that occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable. And the market aberrations produced by them will be equally unpredictable, both as to duration and degree. Therefore, we never try to anticipate the arrival or departure of either disease. Our goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

HERE ARE THREE LESSONS TO TAKE FROM HIS THOUGHTS:

  1. Fear and greed (amongst many other factors) drive our markets and cause them to cycles – all too often too far in both directions – on the upside (when people are greedy) as well as on the downside (when people are fearful.)
  2. Trying to predict these market cycles is a fool’s game. The evidence is overwhelming that we know much less than we think we do, even when we’re armed with all the data and reports.
  3. As an investor, you simply need to know that these cycles keep recurring and be prepared not to surprise and not to overreact because when emotions affect our investment decisions this clouds our judgement and even the most rational investor reacts irrationally.

BUT HERE’S THE PROBLEM:

Your psychology and instincts will try their best to persuade you not to act counter-intuitively. For example, many investors find it hard to feel greedy at present with all the negative headlines in the media. We’ve experienced a number of consecutive years of booming property markets, especially in Sydney and Melbourne and now the cycle has moved on to the next phase.

THE MARKET IS BEHAVING NORMALLY.

It’s catching its breath in some locations, falling in value a little in certain areas and holding firm in others. If you’re a home owner or investor with a long-term perspective (as you should be), if you’re not planning to buy or sell in the near future – these markets ups and downs shouldn’t worry you. On the other hand, if you’re planning to buy – don’t try and predict the bottom. The best time to buy a property was 10 years ago, and the second best is today.

MORE INSPIRING QUOTES FROM WARREN BUFFETT

*source PropertyUpdate

 

Posted in Buy, Latest news, News, Sell on 4th February, 2020