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Don't confuse brains and a bull market ...

Discussion in 'Investor Psychology' started by See Change, 14th Jul, 2015.

  1. See Change

    See Change Timing Lord Premium Member

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    One important factor in share investing is what they call survivor bias.

    Basically , if enough to people start trading with say 10 k , some one eventually is going to end up making a mil . That person can then go off and write their best seller , "'10 k to 1 mill. In one year " . While they maybe able to document the logic of all their trades , the reality is the biggest factor in their success was LUCK and if most tried to replicate their results , they wouldn't be able to do it.

    I can look back on what we've down in the last 15 years and can see that luck had a very large part in what we've achieved. In our situation that luck came down to timing . Having a 40th and realising I needed to change what we were doing , turning on the radio three days later and hearing Robert Kiyosaki out here promoting rich dad poor dad . Working out in Mt Druitt at a time the property market was booming , seeing properties that had been worth 60-70 selling for over 200k and the owners buying placed for 60-70 k in Brisbane . This also occurred at a time that somersoft had just started so there was easy access to information .

    What didn't come down to luck was recognising what was happening and taking action .

    But if I hadn't been lucky enough to be working in Mt Druitt () I wonder what would have happened . Would I have bought property in Sydney at a time when it was reaching its peak ? If somersoft hadn't been around , would we have bought those overpriced units from that marketer who came round to our place trying to get us to invest in who knows where . Luckily " the wife " warned us about them ....

    Similar things are happening at the moment . Numerous forumites have made or are making sums of money in a couple of years that they could never save in a life time . While many have thought out what they are doing carefully , they are lucky in the sense that they reached a time in their life where they where looking to invest in property at a time when it paid off to invest in property . Suddenly you become an expert . Some recognise the element of luck , but many don't .

    Cliff
     
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  2. Bayview

    Bayview Well-Known Member

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    I'm a strong advocate of "you make your own luck" - this applies to folks who do well out of property investing particularly;

    You here folks say about others; "They are so lucky to have XYZ" but the folks in question took action.

    But also do agree that sometimes luck (good and bad) just happens.
     
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  3. Eric Wu

    Eric Wu Mortgage Broker Business Member

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    agree
     
  4. Chilliblue

    Chilliblue Well-Known Member

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    Luck only comes to those seeking it. You can never win on the horses if you do not bet on them.
     
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  5. Tonibell

    Tonibell Well-Known Member

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    Totally agree.

    We had a "sliding door" moment in 2012 - we had 2 IPs in Sydney for 7 & 5 years without really being "property investors" and both were heavily negative geared. There had been a little CG but it was really only break even over those years when CF was taken into account.

    Those two properties could easily have been sold except for an API article on granny flats.

    In the course of researching that we came across SS and it was absolute gold then and has been ever since. Being a natural sceptic I am selective about what to listen to (and missed the USA, for example, as a result) but it has given us enough confidence to push forward.

    We feel very lucky not to have bailed in 2012 - but equally now consider ourselves knowledgeable and experienced property investors (maybe that is even more dangerous).
     
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  6. Biz

    Biz Well-Known Member

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    There is an element of luck in it for sure, i mean if we knew what Sydney was going to do we would have bought a lot more if we could have, BUT we also hung in there in the lean times for many years, during that time we got married, had a business almost fail and started another, bought our first PPOR and had a child, went down to one income. It was hard for a while but we stuck with it. A lot of people would have been tempted to sell up in that time and make life easier, we didn't choose the soft option and here we are.

    BOOM.
     
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  7. fols

    fols Well-Known Member

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    The harder I work the luckier I get
     
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  8. Chilliblue

    Chilliblue Well-Known Member

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    And that is the case for the majority
     
  9. Natedog

    Natedog Well-Known Member

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    Totally agree, "smarts" are secondary to actually giving it a red hot go in my opinion. You don't get lucky without taking some sort of action.
     
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  10. Bayview

    Bayview Well-Known Member

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    I am here to tell you that these two things are not necessarily linked.
     
  11. willair

    willair Well-Known Member Premium Member

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    A self made property developer from the gutter said this to me a long time ago,there are only 3 types of people in property investment ,those that watch it happen,those that talk about it while it happening,then the ones that make it "Happen" with no luck inbetween..well done ..
     
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  12. Arashi87

    Arashi87 Well-Known Member

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    can we increase our luck?
     
  13. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    Most alert, active, experienced, entrepreneurial type people would probably think so.
    I think this simply comes down to more action in the right areas after experienced gained, creating more positive results, which the uninformed and inexperienced would interpret as luck.
    But no, you can't increase your luck on random events, although you can often manipulate the results in your favour by reactive actions.
    No successful person relies on luck.
     
  14. Pistonbroke

    Pistonbroke Well-Known Member

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    but plenty have relied on charm and good looks (& something else with the same last 3 letters ;) )
     
  15. keithj

    keithj Moderator Staff Member

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    Absolutely - simply by participating in things where the odds favour us, and withdrawing when they turn against us. . There are no guarantees in life - everyone MUST rely on luck to some extent. However, evaluating odds & timing entry & exit are 2 actions that require knowledge & experience, along with the discipline to act or not.

    Most of the successful get good at timing and evaluating odds.
    The really successful ones also manipulate the odds in their favour.
    There is always an element of luck in any venture, although knowledge & experience will significantly reduce the amount required.

    Unfortunately, a small portion of successful outcomes are from dumb luck alone - they are often too dumb to realise it & become experts.
     
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  16. Chilliblue

    Chilliblue Well-Known Member

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    Sounds like your talking from experience:D
     
  17. sumterrence

    sumterrence Well-Known Member

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    I'm defiantly a property investment amateur, but what I see myself doing differently to my other peers that consider themselves as experts investors, is that I do so much more outside of box thinking and questioning, and a lot more macro research then just simply listen to friend A and B and admire them, in fact, I always ask these "successful investors" what has been the biggest lost they have ever made? have they break even from their lost?

    I am a sole believer that I create my own "Luck/Opportunities", as I remember there is a say forgotten who said it: "Opportunities are only for those that are well prepared"
     
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  18. sanj

    sanj Well-Known Member

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    this has long been my secret weapon, people find my gold shirt and stylish mo hard to say no to.
     
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  19. wombat777

    wombat777 Well-Known Member Premium Member

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    Luck and timing have played a big part for me.

    Buying my PPOR - lived in the area since 2003, GFC subduing the market until I was ready to buy land in 2012. Rail-line getting planning approval. This indicated to me I had to make my step into the market. Market picks up as I was building and I now have a healthy level of equity.

    Buying my first IP - new draft planning scheme gets delayed just as I am buying. Gives me time to buy. Settle on an IP and 10 days later zoning for the area my house is in changes from residential to high-density in the draft scheme. Prior to buying I did notice the unit developments and shopping centre upgrades happening where I was buying and my logic said that zoning would change soon. Fortunately it did. This was also driven by the location being near the waterfront and the new train line nearby.
     
  20. radson

    radson Well-Known Member

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    Survivor bias literally occurs in the world of climbing, where many a bold climber has come to grief while others seem to lead magical lives above the fray of rock and avalanches and wild weather.

    Anyways, I find behavioural psych and perception biases a fascinating subject. Like 'See Change' I believe its very easy to be successful in a bull market. Insert Warren Buffet quote repeated and nauseum here. We all like to attribute success to skill and hard work rather than random life events.

    Still I have always liked Woody Allens quote: " 90% of success is showing up"

    An interesting article exploring the interplay of success and luck further

    http://www.forbes.com/sites/ericjac...ccess-factors-you-think-matter-actually-dont/
     
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