Limiting Belief 8 - Successful Investors Have A Crystal Ball That Enables Them To Time The Market
Is It True That Successful Investors Have A Crystal Ball That Enables Them To Time The Market?
Wise investors invest with clear criteria and plan for worst case scenarios. Once they are in the game, whenever opportunities present themselves, they will act upon them and achieve high returns.
For an outsider, the image is totally different. People hold the mistaken belief that successful investors really can time the market. They do not understand that those investors were already in the market and then took advantage of opportunities.
Between 2010 and 2012, I bought 3 townhouses with the objective of renting them out for cash flow. I managed my risk and bought properties that are more than 20% less than the market price. With the right buying price, I made my profit going in. The net cash flow from renting out those three properties was positive, with ROI’s ranging between 10% to 17%. I was quite happy with such returns. When the market in Dubai started to regain its 2008 losses and even started to get irrationally high, I took advantage of this window of opportunity and sold those three properties in 2015 with a total profit of a bit over a million dollar. All those agents and bankers I was working with to acquire those properties really believed that I have a crystal ball and I can time the market. I consistently explained to them that I purchased those properties for the cash flow, but I saw enormous capital gain opportunity when the market ticked up in 2015, so I immediately sold them for a handsome profit.
The funny part of the story is that my friends and colleagues who thought I was stupid to invest in properties in 2010 all thought I was smart in 2015. The fact of the matter is that I am neither stupid nor smart. I am just an investor with clear criteria and objectives who had a stake in the market when it changed course and started to grow again at very high pace.
After a strong comeback in 2015, the market in Dubai softened a bit. I immediately bought couple of properties. The banker I always work with to get loans still calls me every couple of weeks for advice on how the market is going. Every time, I tell him that I don’t know. I don’t think he believes me since I still receive those calls. To be transparent, I am enjoying those calls more than he is because I always ask him about the number of home loans the bank is granting. In fact, I am getting data from him that will enable me to have a feeling for where the market might be going. Please note that I said “might”. I never convince myself that whatever data I read will really tell me what will definitely happen next or when.
In other instances, some of the agents I frequently work with also call me to ask about when the market will drop or improve. I tell them, too, that I don’t know. I believe they do not believe me either, given the frequency of calls I receive from the same agents in a short span of time.
Most people think timing the market is about sitting on the sidelines and actively observing until they identify the golden moment to jump in a make fortune.
They don’t understand that timing is about always being in the game, then, when opportunities show up, taking advantage of them. In other words, timing is not about being in the right place at the right time; it’s about always being in that place and then leveraging any opportunity.
Warren Buffet once said: “We have long felt that the only value of stock forecasters is to make fortune-tellers look good.” I’m amazed at how many investors take market forecasters seriously, even when they have no credible track records of success. Warren Buffet also advises against trying to predict the direction of the stock market, the economy, interest rates, or elections. I hope you agree with me that no one has a crystal ball to time the market.
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Wise investors invest with clear criteria and plan for worst case scenarios. Once they are in the game, whenever opportunities present themselves, they will act upon them and achieve high returns.
For an outsider, the image is totally different. People hold the mistaken belief that successful investors really can time the market. They do not understand that those investors were already in the market and then took advantage of opportunities.
Between 2010 and 2012, I bought 3 townhouses with the objective of renting them out for cash flow. I managed my risk and bought properties that are more than 20% less than the market price. With the right buying price, I made my profit going in. The net cash flow from renting out those three properties was positive, with ROI’s ranging between 10% to 17%. I was quite happy with such returns. When the market in Dubai started to regain its 2008 losses and even started to get irrationally high, I took advantage of this window of opportunity and sold those three properties in 2015 with a total profit of a bit over a million dollar. All those agents and bankers I was working with to acquire those properties really believed that I have a crystal ball and I can time the market. I consistently explained to them that I purchased those properties for the cash flow, but I saw enormous capital gain opportunity when the market ticked up in 2015, so I immediately sold them for a handsome profit.
The funny part of the story is that my friends and colleagues who thought I was stupid to invest in properties in 2010 all thought I was smart in 2015. The fact of the matter is that I am neither stupid nor smart. I am just an investor with clear criteria and objectives who had a stake in the market when it changed course and started to grow again at very high pace.
After a strong comeback in 2015, the market in Dubai softened a bit. I immediately bought couple of properties. The banker I always work with to get loans still calls me every couple of weeks for advice on how the market is going. Every time, I tell him that I don’t know. I don’t think he believes me since I still receive those calls. To be transparent, I am enjoying those calls more than he is because I always ask him about the number of home loans the bank is granting. In fact, I am getting data from him that will enable me to have a feeling for where the market might be going. Please note that I said “might”. I never convince myself that whatever data I read will really tell me what will definitely happen next or when.
In other instances, some of the agents I frequently work with also call me to ask about when the market will drop or improve. I tell them, too, that I don’t know. I believe they do not believe me either, given the frequency of calls I receive from the same agents in a short span of time.
Most people think timing the market is about sitting on the sidelines and actively observing until they identify the golden moment to jump in a make fortune.
They don’t understand that timing is about always being in the game, then, when opportunities show up, taking advantage of them. In other words, timing is not about being in the right place at the right time; it’s about always being in that place and then leveraging any opportunity.Warren Buffet once said: “We have long felt that the only value of stock forecasters is to make fortune-tellers look good.” I’m amazed at how many investors take market forecasters seriously, even when they have no credible track records of success. Warren Buffet also advises against trying to predict the direction of the stock market, the economy, interest rates, or elections. I hope you agree with me that no one has a crystal ball to time the market.
Learn More!
Get The Employee Millionaire Audio Book For Free With 30 Day Audible Trial
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