Last year I had a great year as a property investor.
Not because the real estate markets went gangbusters – although they did where I was investing – but because about a year ago I made it a personal goal to pay attention to fewer things.
Fewer forecasts, fewer predictions, fewer breaking news headlines.
It’s been wonderful and it made a world of difference to me as an investor.
I want to share with you how I did it.
First, a story about why I did this.
You see…about a year ago I sat down with a group of my high net worth clients (some of them very, very successful investors) to talk about the year ahead in the property market.
And virtually every one of them was nervous.
Back then the media was full of negative messages – the property markets had topped (or so they said), interest rates were going to rise, the economy was slowing down and house prices were already unaffordable.
Then there was talk of China’s meltdown threatening to throw our economy into recession, the European economy being a basket case, overseas markets were in turmoil as America had a new President (Trump), etc., etc.
Yet, despite all these concerns, Australia’s property markets enjoyed a positive 2017 buoyed by strong population growth, historically low interest rates, a voracious appetite for capital growth by investors and the desire by overseas investors to place their money in Australia’s large capital cities.
And while many were worrying, Melbourne property values increased by around 10% and well located properties in Sydney, Brisbane, Canberra and Hobart grew significantly in value also.
Just in case you hadn’t worked it out yet…
There is very little correlation between all the commentator’s forecasts and what the market actually does.
It’s what we call “noise”.
As we head forward into another year, you are about to be flooded with predictions about what to expect in 2018.
I urge you to take them with a grain of salt.
Be very careful who you listen to, because this year is likely to be a very, very different year in property.
Here are three specific things you should consider:
1. Avoid broad claims. Realise that everyone’s goals are different
I’m planning to continue to be an investor for the next three decades, at least.
You might be older or younger and have a different time horizon.
Most of those commentating on what to do in property have a completely different time horizon than either of us.
Saying “You should buy in this booming location” might be rational for one person, and totally bonkers for another.
We all have different goals, risk tolerances, and time horizons.
The best reason you should stop paying attention to media predictions and guidance is because the guy writing on line has no idea who you are, how old you are, how much you make, or what your bills might be.
Once you come to terms with this, you realise that the majority of predictions made by the media are probably not relevant to you.
2. Avoid explanations of random events. Pay more attention to historical context
People can’t stand the idea that markets are random and unexplainable in the short run, so they try to attach meaning to every event.
Instead of reading explanations of what the property market is doing, I pay attention to what the market is doing in a historical context.
I’ve invested for well over 40 years now and I’ve paid the market a hefty learning fee.
As I said, this year the market will be very different.
How do I know?
Because I’ve lived and invested through more than 6 property cycles and while the cycles seem to be getting shorter the lessons are the same.
However today we get reports on daily house price index movements, weekly auction clearance rates, monthly changes in property values.
Trying to explain these short-term market moves gives us the impression that we can predict the future, which we can’t.
Looking at market moves in historical context reminds us to keep things in perspective and ignore the noise, which we can.
3. Avoid strong opinions. Pay more attention to people who talk about their mistakes
Psychologist Philip Tetlock studies the science of forecasts.
One of his best findings is that analysts who are the most confident about their predictions have some of the worst track records, while those with the best are always questioning their beliefs.
The media love confidence and hate timidity, so the guy who yells the loudest gets the most attention.
Which explains another of Tetlock’s findings:
Analysts with the highest media profiles have some of the worst track records.
I don’t know if you’ve noticed – it’s much the same here in Australia.
Look at what happened to all the predictions of those hot spots of last year and the year before and the year before that.
The landscape is littered with real estate casualties – where the value of some properties hardly rose in the last 5 years and others fell significantly.
Instead of paying attention to strong, loud opinions, I suggest you give more weight to those who talk about why they could be wrong, what they’ve learned from past mistakes, and those who think in probabilities rather than certainties.
They are less entertaining, but more likely to offer good advice.
Want to know some more lessons that I learned?
I’m going to share the lesson I learned, the mistakes I made and the successes I’ve had in my 40 years of property investment at my only round of national property seminars in 4 capital cities in March and April this year.
And I have organised a panel of experts including Dr. Andrew Wilson, Australia’s leading Property Economist, and Ken Raiss, director of Metropole Wealth Advisory to give you their unfiltered and unedited analysis of where we are heading as a country and how that will affect you, your family, your business and your real estate investments.
Click here now and get all the details and reserve your place.
If you had attended my seminars last year or the year before – and more importantly if you would have taken the correct action – you would now be sitting feeling pretty smug.
By the way…since I have no properties for sale, it’s always been easy to give independent unbiased facts about what’s going on.
Please remember, the future is coming and it looks nothing like the past few years.
We can’t wilfully ignore the changes, but for those at this event, we will sure discover how to prosper in the next few years.
See you there – just click here now get all the details and reserve your spot and a FREE spot for a friend.
SUBSCRIBE & DON'T MISS A SINGLE EPISODE OF MICHAEL YARDNEY'S PODCAST
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
PREFER TO SUBSCRIBE VIA EMAIL?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.