Greed vs Aggressive Action

I was thinking about the thread on poor Kate and Matt Moloney where YIP selected them as the winners for investors of the year in 2012 for building a quick portfolio by heavily leveraging into mining towns.
Unfortunately, we all know this did not end well in a relatively short term by property investment standards.

At the time, Kate & Matt could have only had visions for high growth rates and fantastic opportunity, but also too heavily committed to one area.
Were they driven to achieving high goals via aggressive action, or, did greed play a part in the downfall.
Not wanting to judge anybody as this can happen to anybody and greed is difficult to resist at times when it seems you can simply reach out and grab it if you choose to.

Many things come in to play here, such as your risk tolerance, but also having a 2nd and 3rd safety net in case things turn ugly, if you choose to play aggressively.

We've had a short period of aggressive accumulation a few years ago and thankfully came out well, although we also had a very strong business income to support this too.
After settling a bit, admittedly still greedy, but very patiently greedy now rather than aggressively.

The lesson from this may be that if you think you're going too fast, best to just stop for a minute and reassess before you get out of control and lose sight of what's really happening.

 

Personally, I think it all comes back to property investment education. I know i sound like a broken record - but I believe the truth cant be overstated.

Personally I believe:

If you have read and studied even a little you will know that:

1. Mining towns have their own unique cycle that needs to be understood very well and constantly monitored closely.
2. Mining towns inherently have higher risk/reward ratio due to heightened supply/demand equation and volatility due to fluctuations in the underlying commodity.
3. Timing is everything, in and out. Must be bought at a certain time/price and sold at a certain time.
4. Has to fit into your overall strategy for investment and very importantly MUST suit your personal risk profile.

All this simple knowledge is easily gathered from a few books and articles.

I feel for the people who get swept up in all the hype and have bad outcomes. I don't think greed or moving too fast is the issue in my opinion. I know many people who move very fast and who you could easily be called 'greedy'. They can move really fast and do things that others might consider 'greedy' (and be successful or not) because they have the knowledge, experience and risk profile compatibility to take that path imo.

The only way forward to do better in the future is to thoroughly educate yourself from a variety of sources about property investment and wealth creation. Its really that simple imo.

 

I agree with most of what you are saying.

However, I still believe the underlying motivation behind victims of spuikers and the insufficiently educated/experienced who attempt to run before they can walk are a result of greed.
If you've got the runs on the board from extensive real life experience, study and investigation and have a genuine confidence about yourself, I wouldn't classify it as greed, but rather as being aggressive as you already have the proven tools to produce and repeat results successfully.

 

That's the point I was trying to make when I said " I know many people who move very fast and who could easily be called 'greedy'. They can move really fast and do things that others might consider 'greedy' (and be successful or not) because they have the knowledge, experience and risk profile compatibility to take that path"

 

Personally, I think it all comes back to risk mitigation.

My view is that some are too focused on excessive accumulation, rather than appropriate risk reduction.

But good luck to them - they tried & failed - that's a lot more than 95% do, And hopefully they will keep trying and do it better each time until they win
.

 

They seemed to have achieved more than most people had at that age at the time the article was written. But young investors who only have experience with rising markets are restricted in their experience.
Even with the delays with the downturn, bankruptcy etc... I'm sure they have the knowledge - and more importantly the experience - to be able to do even better in the future.

 

Agree. I'm also assessing my motives, abilities and goals.

 

Kate Moloney has set up a website now...

Wonder what the outcome would have been if they diversified!

 

I can't find the thread. I'm interested in the story

 

I am guilty of going too aggressive in the past few years. My only precaution is that I only focus in metro areas (my rule is to stay away from apartments and mining/regional towns). Wife recently had a bubs and it made me stop and reflect.

In the meantime, I'm finishing up my development and also fixing up a few of my property so I can collect a bit more rent and hopefully the higher yield can help me ride out any storms that comes.

 

YIP Investor of the Year 2012

 

I agree it has nothing to do with moving fast but more to do with what investors are buying and when (timing).

For example investors who went hard/aggressive - buying in Syd, Melb, 2012-2015, Perth 2012-2014, should be sitting on significant equity/cash. Now if they were to start buying aggressively now in these markets, it will very likely be a different.

 

There would be a lot of small investors in the mining towns in QLD that would have found out real quick the power of 5- 10 and the 80-20 rules works very well in upswing market,when profitable procedures check all the boxes,the only problem for them was when they maybe bought iron ore was three times the price,and the construction phase was in overdrive and then the price imploded ,it would have worked for them if they had an exit plan from the start
and not greed become investment fear..

 

On the face of it I think ignorance, not greed, was primarily what brought them undone.

It's right here:

They didn't know what they didn't know.

Perhaps easier said than done, but I feel the key lesson is to ensure you have enough information to make informed decisions before acting. Had these guys engaged with a diverse range of successful investors who have seen a lot, have a wider perspective and made some mistakes, they could have tapped into their experience and wisdom and had some other, critical pieces of the puzzle.

Though, after a quick google, it looks like they were in the hands of a property investment mentoring group at that stage and they may have fallen victim to instilling trust in the wrong people.

Great that Kate is sharing her story. I'm sure it will save many others from taking the same path.

I have acted quit aggressively in my investing but I have minimised risk through education prior to action.

 

Moving fast really is not the problem, if you buy at the bottom of the market before it takes off, targeting bread - butter houses with decent size of land in a mainly owner occupy area, not too far from shops and schools, like the current Brisbane market, you would be sitting pretty. Then time/patience will take care of you.

 

Who ever came up with that annoying word "retire" and linked it to property investing?

 

Re retire, people who have never been landlords and managed property. The easier way is stocks.

Ironically I want to work more as I age


No point blaming anyone for greed, our western system relies on it, what do we really need to live ? But in our societies, some people strive to do better or are not happy to just sit and pass time in a mindless way, in reality, it would be ideal to have a business and be productive or creative, but some may not have this option.

At the end of the day, we can all be wiped out, from various events, some may be in our control to avoid, many are not, what are you going to do if the $ system collapses ?.

 

@Steven Ryan
I agree,and you are in the minority of people who take the time to properly self educate. I have always said that 'action' is not the most important ingredient for massive, long term success in investing, it has to be 'informed action'. Many people are taking action all the time to buy investment property and yet the majority of them won't build massive wealth. Personally I believe one of the main factors is because their actions are largely uninformed.

 

Yep, and some good old diversification, buying in some different areas/cities.
There's an old saying about eggs and baskets...