This is the right time to remember the roller coaster of investor emotions

Emotions are running high at the moment aren’t they?

Anxiety, fear, panic, desperation.

It’s hard not to get caught up in the emotional turmoil considering we are continuously bombarded by the media with bad news.news bad economy

Messages like job losses, businesses closing down, shattered share prices and flattened superannuation funds make us scared and wonder whether things will ever recover.

As I’ve written before, this too shall pass.

In the meantime while emotion has its place in everyday life it should not have a place when it comes to investing.

You’ll find various examples of the following chart all over the Internet showing the rollercoasters of investor emotion over an investment cycle.

 

Cycle Of Market Emotions Graphic New

 

It is well known that markets overreact in both directions – both up and down – significantly more than is justified by fundamentals alone.

The sharemarket is particularly volatile and currently its significant drop is not really a sign of the true value of the underlying companies.

It’s not a reflection of profits, dividends and interest rates. This is because investor emotion plays a huge part.

What about real estate?

A property markets are not as emotional as the stock market, because they are underpinned by the fact that 70% of properties are owned by homeowners – owner occupiers – who are not likely to sell.

buying investment property australia

One of the major lessons I have learned from previous downturns is the importance of taking a long-term perspective which always outsmarts short-term reactive thinking.

You see… it’s always property fundamentals that really matter and drive our markets in the long term.

Things like demographics, supply and demand, affordability, availability finance, and local economic trends.

Of course, we all know the old saying, be fearful when others are greedy and be greedy when others are fearful….

But it’s normal human nature to find it difficult to buy your new home or invest when everyone else is running around thinking the world is coming to an end.

However, now that I have invested through 8 property cycles, I have found that it is exactly these conditions the present the best opportunity.

That means now is the time to get prepared to take advantage of the opportunities that the market will offer.

After each global disruption, there has been an increase in property prices, and there is no reason to suggest this will be any different as the fundamentals are still strong; 40b0788a A77d 4a0c 977f 6f4c94b13bd0

  • Record low-interest rates
  • Record First Home Buyer numbers
  • High immigration (high demand)
  • Slowdown in construction (low supply)

Remember don’t make long-term decisions like buying a home or an investment property based on the last 30 minutes of news.

There is no doubt there will be opportunities in the market for those who are willing to go against the crowd and when they look back in a year’s time and definitely in 5 or 10 years’ time, they will remember the unprecedented events of 2020 as a great buying opportunity for property.

Just as happened in all the other crises you’ll see in the chart below.

40 Year House Price Growth

Timing is hard

The temptation to time markets is immense.

But look how well that worked for people who tried to pick the bottom of the property market in 2019 just last year – they all got it wrong didn’t they. property time market clock house cycle investment timing watch growth

And at the same happened every other time at the markets had a downturn – whether short or long lasting.

Of course the signs are easy to see in hindsight, it just doesn’t work that way in real time does it?

And the main reason is those basic human emotions of fear and greed. Just look back at the first graphic in this blog.

So rather than trying to time the market, if you have a secure job and the long-term outlook…

Now is the time to take action and set yourself for the opportunities that will present themselves

If you’re wondering what will happen to property in 2020–2021 you are not alone.

You can trust the team at Metropole to provide you with direction, guidance and results.

In challenging times like we are currently experiencing you need an advisor who takes a holisitc approach to your wealth creation and that’s what you exactly what you get from the multi award winning team at Metropole.

If you’re looking at buying your next home or investment property here’s 4 ways we can help you:

We help our clients grow, protect and pass on their wealth through a range of services including:

  1. Strategic property advice. – Allow us to build a Strategic Property Plan for you and your family.  Planning is bringing the future into the present so you can do something about it now!  This will give you direction, results and more certainty. Click here to learn more chess-game-leader-investment-strategy-win-success-negotiate
  2. Buyer’s agency – As Australia’s most trusted buyers’ agents we’ve been involved in over $3Billion worth of transactions creating wealth for our clients and we can do the same for you. Our on the ground teams in Melbourne, Sydney and Brisbane bring you years of experience and perspective – that’s something money just can’t buy. We’ll help you find your next home or an investment grade property.  Click here to learn how we can help you.
  3. Wealth Advisory – We can provide you with strategic tailored financial planning and wealth advice. Click here to learn more about we can help you.
  4. Property Management – Our stress free property management services help you maximise your property returns. Click here to find out why our clients enjoy a vacancy rate considerably below the market average, our tenants stay an average of 3 years and our properties lease 10 days faster than the market average.
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About

Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


'This is the right time to remember the roller coaster of investor emotions' have 2 comments

    Avatar

    March 23, 2020 Rashmi Thakrar

    I do not think investors are depressed or frightened.
    The issue is affordability is at stake here, people over committed and reliance on two income and job security.
    Those who rely on rental income?
    The issue is short term in one loss and how short term is the question, that is worrying investors not the property price.
    The government using investors as supporting tenants us also a worry.

    Reply


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