What Should The Pyschology & The Mindset of an Investor Be like?

Great article on just how important mindset really plays. Enjoy. I particularly like the quote below and believe it's especially pertinent to current times .

“The Financial Markets will remain the same yesterday, today, and tomorrow simply because of the four basic human characteristics of fear, greed, hope, and ignorance”.


Until you can manage your mind, do not expect to manage money.—Warren Buffet. Getting into the field of property investment, your mindset plays a very important role. You need to think like a successful person in order to gain success.Psychology tells us that the way we think, feel, and act is as unique to each human being as their fingerprint. No two people are the same. How else would it be possible that in the same room one person feels comfortable, the other one is cold and for a third person it appears to be hot? Or that one likes the food and the next one finds it awful?

People are largely driven by their sub-conscious and are typically not consciously aware of why they think the way they think or feel the way they feel, such as being angry or be happy. This is influenced by many factors such as our environment and surroundings, past events, education, our memories, values, attitudes, past decisions and beliefs. Everything we take in every second of our lives gets sub-consciously evaluated against them.


Everybody is unique and what you think is right, because it is right for you according to your sub-conscious mind – but it might not be right for somebody else. It was just your own personal evaluation and projection – it’s all just in your (own) mind. But the good news is: Your sub-conscious mind is just an order taker; it just does what you tell it to do. So it is literally easy to change your mind.


Link to full article for those interested.
What Should The Pyschology & The Mindset of an Investor Be like?

 

So do I but, in my experience, a lot of people only have three of those basic human characteristics, namely Fear, Ignorance and Greed (abbreviated to FIG) . Probably related to FIGJAM.

I live in hope that one day they will find the fourth ...

 

The 'Hope' people, led by Mr Dent et al, are still waiting for their 60% Nationwide crash.

They've been hoping since I started investing 18 years ago and decades before that I suspect.

 

Quote..

Your sub-conscious mind is just an order taker; it just does what you tell it to do. So it is literally easy to change your mind.


There is a legal term out there called ''invitation to treat '' in simple terms it means ''a willingness to negotiate'' and that is sometimes the problem as some try and fit into what others think and not what they think,just the same as when one walks into any fast--food outlet and looks up at the menu..

I read somewhere many years ago about a 1980's junk bond wizard who revolutionised the way all companies not only in the USA but across the entire globe were financed and the secrets to borrowing money in the bonds markets to drive up growth and as some have described him as one of the very few human beings who can see into the future and beyond..
That may be it ,we are not born equal as some think --some can think faster walk faster some walk slower and think slow ,some are born with intellectually gifts that were never given to most people on this planet ,and maybe Trump will pardon him..imho..

Michael Milken..
Home | Milken Institute

 

Most of those hoping for a crash are not investors, they just want to a buy a home at a price inline with historical norms. So you would expect them to have a different mindset to investors.

Probably a large % of 'the hope people' would not be in a position to buy if the big crash did come (don't have a substantial deposit or maybe the first to lose their jobs in the recession that results).

Those hoping for Sydney or Melbourne to return to historical norms should probably look elsewhere around Australia for more reasonable prices or focus more energy on changing policy which is driving the ridiculous prices in those cities:

 

OR change their expectations and make some sacrifices. Rarely does anyone get their dream home first purchase.

 

It's not (always) about expectations of a dream home. A basic house in the outer suburbs of Sydney is far more expensive relative to income and rents than it was for previous generations.

Many are already making sacrifices (more so than previous generations: How life has changed for people your age).

 

Doesn't have to be a house. Many other kinds of dwellings.

 

Agree, all part of the herd/fitting in mentality. If you think about it...how often does following the herd in life ever lead to anything worthwhile. Very seldom.

 

Sure, it could be a cardboard box, caravan or apartment in a complex that is falling apart, what's your point?

Home buyers are looking for quality of life and are rightfully concerned that it's degrading (compared with previous generations).

 

@Sackie, my apologies for de-railing your thread .

You started it talking about mindset. My post derailed it. It was written with a dose of humour .

I hope it gets back on track soon.

 

Ok no point debating it. Those who wish to keep banging their heads against the wall may do so.

Que sera sera.

 

Should put in your signature ' Official PC derailer'

Nah all good. Just an interesting article. Most generally don't comment much in the mindset category. Just mostly thought to share the article.

 

I also really loved this comment:

"If 1% of the people own maybe 40-50% of the wealth, should we say that this is ‘unfair’, envy them, or even try to take it away from them? Or rather, should we learn from them, understand how they think and act differently, and just model what they do for our own benefit?"​

What do Government do?

Don't get me started!!!!

 

Your spot on. All comes down to this.

 

Psychology and mindset. Get those two right and the world is yours.

When the cave men first came across fire and put it to use.....cooked food, warmth, something to light smokes.

And when that cave man saw that lion with his paw on a round rock. Who would have thought that neanderthal envisioned the badge of the Holden motor vehicle.

The mindset would have been intense......"Hey Gronk, you paleolithic pea brain, stop dragging ya mrs by the hair and have a look at that lion rolling a rock with its paw. Get some paint bro, and we'll paint that image in a cave. One day it'll be a badge on a car, driven by someone not much smarter than us. I'll explain later"

 

Great question! I've got a couple of points but not sure if I'm able to tie them together in some grand theory so I'll just list them out instead.

1. I think you have to be somewhat optimistic otherwise why bother? If you sit on the sidelines because you think a fantastic opportunity is just around the corner(people predicting market crashes) then you're probably going to wait far too long & miss out on some wonderful opportunities because there's always some drama around the corner.

2. Not paying enough attention to what matters: your situation & what can be done to improve it. Way too much time & attention is spent pouring over Trump's latest tweets instead of what could be done today to make tomorrow better.

3. Looking at the world with the view that not everything is zero sum, especially at an individual level. Just because boomers got their place for $X doesn't mean millennials are forever doomed.

4. Have a plan for where you want to go in life otherwise any road will do and you might not like the journey or the destination when you finally arrive.

 

That's all I understood from your post @datto

 

F+++ing well said mate.

 

@cberg86 I'm a strong believer in you'll attract what you focus on. I know many ppl who started with not much but had the right philosophical framework and built a resilient mindset and they achieved some remarkable results.