The one key habit of strategic investors

by REP06 Jul 2016
I am often asked, “What one habit do you use to help you stay calm in tough economic times?”
The answer might surprise you. It is not one of those usual ‘stay focused’ types of platitudes. In fact, the answer is a habit that I have been using for decades to help me see the world a little differently and, through it, seize opportunities when they arise. This habit has become increasingly more important recently with the advent of social media and its undertones of manipulation, as well as the polarization of our media and politics. When I see people being overly offended by simple discussions, when I witness the vitriol of the uninformed on social media, when I watch debates turn into name-calling, what I see is a whole lot of people who have lost real-life perspective.
So what is this habit? It is simply ‘find ways to keep perspective,’ whether in business, real estate or personal life. It sounds simple – and maybe even a bit naive – but give it a go, and you will discover that not only is it difficult in today’s world, but it is also incredibly powerful when you do ‘crack the code.’ You’ll know when you do because suddenly the world just seems to slow down, almost like you’re watching it at half speed, and at this speed, you see the important details that others are missing. You also hear the clues that others are leaving, you see the dangers more easily, and you see the opportunities much more quickly. It takes practice, for sure, but that practice provides tremendous results across your life.
Laughs, tears and questions
As part of this habit, at the start of each new year, and then twice more throughout the year, I look back at the good and bad that has occurred over the previous decades – in lives, loves and business. I remember where we came from, how bad things have led to major breakthroughs and how economics change (but don’t really). This ‘reminder’ habit has proven to be the foundation from which my perspective and analysis is built.
When I do this review, I find that some of the memories bring laughs, some bring tears, some bring the calmness of knowledge… and some just bring “What the heck was I thinking?” But all of it provides me perspective so that as I move forward, I do so with eyes and ears wide open.
Keeping perspective on real estate markets
Over the last 20+ years of keeping a close eye on the Canadian real estate market, this perspective has been one of the most important research habits I have adopted. And the best way to gain this perspective is to get out of Canada – literally.
While in the country, most people tend to head to their same sources of news and information – and increasingly, their own social media feeds. It is easy, it is quick, and in most cases, we end up choosing sources that agree with our own views. Most Canadians don’t know just how dangerous this bad habit can be to their financial health. Once you get out of the country and begin speaking to those who look at our country with a non-political, unbiased and financial eye, you begin to see the reality of our situation (good and bad).
Breaking the bonds of bias
Bias is a momentum destroyer, and perspective allows you to have the tools to break free from biases. For instance, there is a group of people who have been forecasting a large and dramatic drop in Canadian housing market prices – and they have been doing so since 2006. Based on their views and a tendency to head to sources that support that view, many have missed out on one of the longest and strongest market increases in history. This is not to say that some markets aren’t overvalued, but to miss out on a 10-year positive run has cost many their ability to retire early (or retire at all) – all because of bias.
The same goes on the opposite side of the equation for those who think that real estate is the one and only investment on the planet and always increases in price and demand. These people also search out information and data that only support this view, and that can be just as dangerous. Sure, it’s good to have a positive outlook on life, but not at the cost of unnecessary risk.
No matter where you sit in this discussion, you are wired to have biases. There are many well-known biases that come into play in most situations in life (recency bias, hindsight bias, framing effect, availability bias, confirmation bias … the list goes on and on), most of which you may not even know are directing your thought patterns.
Biases help us make quick decisions and feel good about them – even if they are not accurate. They often lead to hypocrisy, poor decisions and anxiety. My research shows that the most successful investors (and frankly, the most successful people in all aspects of life) analyze situations, investments, philosophies or beliefs from many points of view. They always challenge their assumptions, always looking for holes in their position. They never attack someone with a different opinion, which would immediately prove they have zero facts to stand on. Instead, they discuss the idea or point of view, they debate, they seek out actual facts (not Internet memes), and sometimes they celebrate when they do find facts that help them change their opinion to one based on a new reality.
And that is how one can stay above the fray, get to see the world quite differently from those all ‘caught up in it’ and find those key opportunities. We all know that the world is in constant flux, and change is the main constant in its formula – and only by finding ways to see the changes and adjust actions accordingly can we begin to have a modicum of control.
This is a slightly amended version of an article written by Don R. Campbell, a Canadian-based real estate investor, researcher, author and educator. He is a founding partner and senior analyst at the Real Estate Investment Network and owner of Cutting Edge Research. It has been shortened to make it suitable for web publishing.

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