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Fix Your Investor Mindset

By March 14th, 2024No Comments

“The biggest risk of all is not taking one.”

– Mellody Hobson, CEO of Starbucks

I’ve seen a lot of people with the wrong mindset when it comes to investing.

People will sell at the worst possible time, like when Wall Street crashed in 2008-2009.

Looking back, that was actually the best time to double down and invest.

In contrast, we’ll see people piling on when things are expensive and the stock market has gone crazy.

Studies show that there can be up to three mindsets for investors.

According to a paper in Ageing Science & Mental Health Studies1 these include:

  •     The investors who choose to focus on the information’s source.
  •    The investors who focus on the information and the story that information provides.
  •    The investors who exclusively focus on the opinions of friends and math models.

It’s important to know your own mindset so you can focus and make the right choices.

When asked what the stock market will do, the great JP Morgan said it will fluctuate.

That’s how our own temperaments work as well.

But if we can have a steady temperament and approach things from a rational point of view, we can go far.

Today, we’ll go over how to do that in three easy steps.

Let’s jump into it!

1. Overcoming Fear and Greed

As I said before, most people will sell at the worst possible time.

They’ll also buy when things are hot like when an investment is featured in a magazine or on TV.

Maybe your Uber driver is talking about it.

When your Uber driver starts talking about buying crypto, maybe think twice about buying in.

Human psychology is a fascinating thing.

We fall prey to mania over and over again.

If you look back to the 1600s, there was tulip mania.

One particular tulip bulb went for as much as a house.

And then, the whole thing crashed and tulips were worth less.

But these manias are not for you or me, right?

We won’t be those panic sellers or those jump-on-the-bandwagon buyers.

We’ll be a contrarian.

How do you do that?

You first need to be someone who looks at the intrinsic value of an investment.

We’ll often look for out-of-favor investments.

But I’m getting ahead of myself!

Let’s move on to the next step you need to change your investment mindset:

2. Timing the Market

We need to talk about the elephant in the room:

Can you time the market?

I don’t think it’s wise.

Any expert would say that timing the market is very difficult or you cannot time the market.

However, I have a caveat to this.

You can find markets that make sense for you.

If it doesn’t look good in real estate or multifamily, find something else.

Look at businesses.

If it doesn’t look good in businesses, what about precious metals?

What about other investments?

If you find historical valuations, you can see how things are valued in the stock market.

Ask about the price earnings ratio.

The P/E ratio tells you how much you’re paying per share for how many earnings you’re getting per year.

It’s a great way to measure value.

Looking into those valuations, you’ll find all kinds of opportunities.

When interest rates rose a couple of years ago, we branched out.

We’ve raised over $16 million for ATM machine funds with the fourth largest operator in the country.

We also do oil and gas, car washes, senior housing, medical office buildings, and other businesses.

Personally, I also invest in precious metals.

While you’re finding other investments, you shouldn’t try to time the market, but look for the right markets at the right time.

3. Self-Coaching for Success

How do you coach yourself so you don’t panic and overthink every investment?

If an asset has dropped by 50%, it can be difficult to stop yourself from pulling out funds.

But it is possible!

Sometimes, you need to tell yourself that it’s going to be okay.

Take a deep breath.

Maybe it’s actually time to put more money in.

Is there an opportunity here to make more money?

If the underlying value is there, loss could be an awesome thing.

Warren Buffet says short-term uncertainty is okay when there’s good long-term uncertainty.

That’s a great way to get paid.

As individual investors, hopefully you’re already looking at the long term.

Wall Street only looks at the next three months for their quarterly earnings.

You should aim to deal with a bad quarter or feel unsure how the asset will perform

Warren Buffett made money because he was able to control his own temperament.

He said himself that’s the number one quality investors need to be a great investor:

You need to manage your own temperament.

Look at Geico.

Buffett paid $2.35 billion for the insurance company years ago.

On that one investment, he made over $45 billion.

That’s about a 25x on his investment.

At the time he bought it, there was some concern.

Will Geico make it?

Will they go out of business?

When you see an opportunity that you can understand to the point where it becomes an opportunity, seize that moment.

You should also be careful who you talk to.

Be wary of friends and family who aren’t informed in the investment space.

Speak with other savvy investors if you can.

But above all: You should make your own decision.

Before I go, I want to share with you my own personal mindset.

I ascribe to the idea of affirmations.

In the morning, I read my goals, I go over things I want to do, and I recite some affirmations.

One of my current affirmations is:

I have a great temperament, so even when things are not going well, I keep my cool so I might take advantage instead of panicking.

Your affirmations can be the same or different.

It may sound cheesy but it really works!

There have even been studies on the impact of affirmations.

This analysis2 talks about the positive effects of affirmations.

Some of them include: accepting the affirmation’s message and promoting intentions to change your behavior.

As I started to say these things, I started to feel and experience them.

In your own mindset, you can do really well by embracing your strengths or even having goals to intentionally work towards.

Having goals is imperative to developing a good investing mindset.

Now I want to hear from you!

How are you going to develop your own mindset?

Before you leave, make sure to check out our special report about inflation investing. It shares the best choices to invest during an inflationary environment.

If you are interested in investing with us, we are happy to answer any questions that you may have. Join our investment club today and we will be in touch.

Check out my new bestselling book on Amazon!

Disclaimer: I am not your investment advisor. This is for educational purposes only. I am not giving specific advice on what you can do. I am simply giving my opinions.

Works Cited

A. Gere and H. Moskowitz. “The Minds and Mind-Sets of Younger and Older Investors Regarding Information: A Mind Genomics Cartography.” Ageing Science & Mental Health Studies (2019).

Tracy Epton, P. Harris, R. Kane, G. M. van Koningsbruggen and P. Sheeran. “The impact of self-affirmation on health-behavior change: a meta-analysis..” Health psychology : official journal of the Division of Health Psychology, American Psychological Association, 34 3 (2015): 187-96 .

Bronson Hill

Bronson used to work as a consultant for a medical device company but switched to investing in apartment buildings to make his money work for him. He started with a single rental property that made good money and, after some advice from a family member, moved into bigger real estate projects. Now, he's all about helping others get into this kind of investment to earn money without having to work all the time. When he's not dealing with investments, Bronson loves to travel, write songs, stay active, and help fight modern slavery through his work with Dressember. He believes in working smarter, not harder, and wants to share how that's possible with everyone.

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