An Investor's Greatest Enemy?

Question

I was reading a short article today that said something that I found interesting: "an investor's greatest enemy is not really the markets or lack of resources, but really the investor himself".

I do believe that those things (ie. lack of resources) can actually be real and serious reasons to impede progress but according to the quote, the bigger enemy is ourselves. I'm wondering what is it that makes us the biggest enemy? Is it simply fear or is there more to it than that?..

Lynn McGeein · Answer

I really dislike quotes like that, the ones that try to sound intelligent but really say nothing. Hesitation or fear in yourself are not enemies to battle or roadblocks to crash through.  They are a built-in alarm system, alerting you that you might need more information before making a decision.  Ask yourself, Why the fear or hesitation?  Then solve the problem.  If you don't know the market well enough yet, get to know it better.  Too risky for you right now?  Find a deal with less risk or build a bigger emergency fund.  When you've learned enough about your own market, narrowed down what you'd really want to invest in, understand your own risk level, finances, etc., then making decisions becomes much easier, and the fear and hesitation subside.  Does it fit your plan or not?  If not, walk away.  If yes, jump.  Likely, the only investors that are their own worst enemy are the ones that listen when other people try to tell them that.

Jon Klaus · Answer

So the obvious solution is to eliminate one's self. (Joke)

Many investors give up to soon. If you think of real estate investing as a slow, steady march forward for a lifetime, rather than trying to home runs now, you will be successful.

Paul Wurster · Answer

Ignorance.

I remember my first few investments.  I kept saying, "this seems too good to be true."  That slowed me down for a while.  Then we kept going and going.  Investing is slightly more comfortable now, but there is still that trepidation every time you buy a property or find a problem.

The difference between me and the big guys is that they have done more transactions or tried more things than I have.

Jon Klaus · Answer

The gambler's wife being a doctor may mean he has more $$ to risk and lose.  Sad. What does he say about your real estate investing?

Brian P. · Answer

Before you were born there was a comic strip called Pogo, and as Pogo said we have met the enemy and they are us.

I have found that to be true all across the board. Mindset is the driver of your bus. One investor revealed his mindset when he and his wife went to the casinos at Lake Tahoe with my wife and I. His idea of risk was to hit the roulette table and bet black while his wife bet red. Well safe enough, you didn't win, but every once in a while the wheel came up green, so over time you lost. So when I commented you know your never going to win any money so why not just watch instead of playing and you won't lose. His answer yeah but the free drinks make up some of our losses and being in the game is exciting. This explained his investing style, his mindset was to be in the game but to avoid almost any and all risks. Thank god his wife was a doctor, and his profits were not needed for living expenses.

I have known quite a few really rich people and when they went into an investment they were in the we are going to make a nice profit mode, their mind set question was how much, losing was not even a consideration when they placed their bet. They expected to put a buck in the slot machine and to hear the bells go off. I used to play high stakes poker and it was amazing how many players threw in a winning hand because I raised and acted as if I were going to keep raising until the cows came home and all of a sudden they were thinking they were going to lose. Want to make money in real estate use the law of attraction, practice it, draw winners to you, positive thought, negative thinking will make you a loser.

Tony Reyes · Answer

"As a man Thinketh in his heart, so is he..." - Proverb

Or as Tony Robbins would say, "Whether you think you can or you can't... Your Right!"

As Investors and Real Estate Entrepreneurs I believe its important that we nourish our psychology to remain positive and productive. Which I believe is the only have to fight Ignorance, Procrastination and bounce back from failure.

Myles Wisdom · Answer

@Jon Klaus  Hahaha I agree eliminating oneself does sound to be the best option

@Karen Margrave  Yes it is my last name but can be a difficult one to live up to at times :)

@Lynn M.   Your perspective is well taken! The more I think about the quote however, the greater the validity that I think it has. While I agree that fear and hesitation can be helpful in getting us to be more meticulous in our approach I think that humans can also end up falling into the trap of some other dangerous traits which do cause us to be our worst enemy. In particular what comes to mind as it relates to investors is Greed and Obsession. With greed comes the greater likelihood that we'll harm others and even ourselves in pursuit of whatever the objective is. With obsession we become more susceptible to hurting our profits as we quickly get caught up in the small market fluctuations that inevitably occur and end up in a day-trader type of thinking (and end up selling far too early). In addition, obsession can even cause us to get stuck in the "herd mentality" as we check every second to see what the news is saying and allow ourselves to believe all of the doomsday stories that are emerging about the state of the markets.

Great discussion everyone.

Timothy Trewin · Answer

@Myles Wisdom

I think without a doubt a person's fear is their greatest enemy when it comes to investing. This is why most REI never get started. It is the analysis paralysis mentality. They become so afraid of making a mistake or of losing money that they never pull the trigger. This can be the case with not just real estate investing, but also investing in the market. The fear of a crash in either sector also prevents most from doing anything.

I would also say on the other end of the spectrum, overconfidence could also be as big of an enemy as fear. Overconfidence leads to making poor decisions and not doing the due diligence necessary to make a wise decision. From what I have seen so far is that the overconfident investors get themselves into trouble in many cases while the grounded ones that are seasoned investors are less prone to that.

Jeff S. · Answer

Over confidence is an investors gateway to doom. Vacancies with leverage can be deadly too.

Andy Collins · Answer

When I read the headline I thought, I wonder if it will agree with me,,yes, an investors worst nightmare is himself.  That could include being too scared to take the first step, not properly checking out prospective tenants, not asking someone (mortgage broker, contractor etc) for what you want.

Anyone with a decent brain and good common sense can read the forums here, follow through and make some great money,,most won't because they are either too afraid to actually make a commitment, or not willing to do the things to put them in  position to make the first step (such as saving for a down payment on first rental)

andy

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