'Honey, I think we're lost'
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I don't know the exact numbers. But it is said that up to 95% of the population wake up in the morning, wash their face, brush their teeth and look at themselves in the mirror and silently think to themselves, "you're the man!"
Well, we may not exactly say the exact same phrase (with both of our hands forming as a hand gun "tsk, I am a rare specie of utmost beauty" ) no, maybe not that way (well, I hope).
But it occurs to me that Many times I catch myself being so sure of myself or my opinions,beliefs caused by, I hate to admit, pure bravado and all-too many times misplaced confidence (wiki: bravado) and then realize afterwards, "what foolishness,what was I thinking?!"
Basically, what I am saying is: 95% of people think of themselves as being invincible one way or another. We may not speak it, but our actions one-too-many times proclaim it. "a made up mind is impossible to change"
If you still don't believe me. Here, Have you ever been lost on your way somewhere far with a man who will not, under any circumstance, stop for a minute and ask for directions?
Ok, Ian. What are you trying to say? so much for 'RENO HOME BLOG' home/reno what does it have to do with this?
Ok, I am getting there.
Flashback: In 2005, I invested, with a couple of other people in a very 'promisingly equitable' new home North of Reno. Oh boy were we excited! Everybody was excited about the market, left and right there were 'reports' of 'investors' raking in $50,000 in profits flipping homes. Moneh moneh moneh! We were like that enormous bad creature in the ocean smelling our way to eternal bliss- early retirement babeh!
We were making a very good amount of money in our work as agents and thought, "hmm Let's be the Robert Kiyosaki's of Reno,NV. Let's invest!" Invest we did-Biggest financial disaster we've gone through. Read through the whole article here: Hard Lessons Learned
What happened? why was it a disaster? In a nutshell, we bought at the top of the market. Actually, to try to give you a clearer picture- when we were lining up for the new homes,literally (there were so many people wanting to get a home, they 'raffled' us) it was around July/August 2005. We got the home in November 2005. The market topped in July 2005. We weren't late for the party. THE PARTY WAS OVER...
Going back to the title of this post, (Pride and ego: why investing is difficult) You see my dear readers, before buying that investment property we were already warned of the impending bursting of the Real Estate Bubble and consequently our local Reno real estate market. His name is Dan Wyatt. That man is so full of wisdom, he's the only one I know that puts into being the famous saying, "you're alright the world is all wrong"
He was kind enough to show us through Statistics and Graphs what was happening in the market. We did not heed.
Thank God the story doesn't end there.
The inspiration for this blog was born out of that experience,but that's another story. Read: before you read this blog
By 2006, we woke up from our stubbornness. We finally listened to Dan. We researched about what was really going on. It wasn't hard to see that the Reno and most of the other states was at the birth of arguably the worst real estate market decline since the Great Depression.
By early 2006, after seeing that the market was on the brink of collapse we determined to sell all of our investments. Our focus was to unload three homes even it meant taking a loss. And we did lose tens of thousands of dollars.
But we had no choice. We had to cut our losses short. It was extremely hard to swallow our pride and admit to our foolishness. But we knew that the worst is yet to come. We needed to sell and fast.
As we look back. I am humbled to see what "could have been" if we did not cut our losses short. We would have lost at least twice what we lost in 2006. That's the power of cutting your losses short. But the most difficult thing we needed to do was swallow our pride and ego. We first had to admit that we made a mistake. That has made all the difference in the world.
We learned so much from that experience. It was not pleasant, to say the least but it gave birth to a new perspective towards the market. The market does not care who we are regardless of what we will feel. It will do what it wants to do. We learned that the hard way.
With so much information right under our fingertips. We can learn at a pace that was not possible as early as ten years ago. Utilize it. Ask questions. Know what you're getting into.
There lies the secret in investing: emptying ourselves. Listening. If you acquire these two gems, 'yours is the world...'
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