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Investing By Playing Offense and Defense at the Same Time

By March 14th, 2024No Comments

“The best defense is a good offense.”

– Jack Demsey

Did you know you can play offense and defense at the same time?

In any sport, that sounds crazy!

But think of the Heisman trophy.

The figure is holding the ball with one arm and sticking out his other to push people away (the stiff arm).

I think that’s pretty close to playing both offense and defense.

So, the question becomes: How do you hold onto the ball as well as defend against others?

This concept exists in investing, especially in 2024.

People are afraid right now.

You might be feeling it yourself!

Maybe you’ve had a multifamily deal go bad or a capital call.

Now more than ever we should talk about how to protect what you have while also taking advantage of opportunities.

I’m gonna go over how to do this in three easy steps.

I’ll also share my favorite offensive strategy.

Let’s jump into it!

1. Balancing Act – Offense and Defense in Investing

Creating an offensive and defensive strategy is a balancing act.

If you’re too focused on defense, you’ll be locked into no returns or low returns.

If you’re all offense, you can have a lot of losses while not protecting what you have.

In my opinion, investing involves two things.

The first is the idea of capital preservation.

Warren Buffett says if you do anything in investing, as long as you don’t lose money, you’ll do just fine.

This is easier said than done, though, according to this study on the role of capital in financial institutions.

Requirements for capital preservation can vary amongst different areas.

You should always pay attention to the requirements set forth by your industry before making any definitive preservation decisions.1

The second thing is capital growth.

This is more self-explanatory and can be achieved in a number of ways.

For a lot of us, once we’ve had some hits, we ask ourselves:

What can we do to protect ourselves?

2. The 2023/24 Struggles and Wealth Impact

Let’s talk about the struggles in 2023/2024 and wealth impact.

You’re probably feeling less wealthy right now.

Money isn’t as readily available as it once was.

Prices are going up for everything.

Maybe you had to lay some people off as a business owner.

Those are difficult hurdles to overcome.

There’s an idea floating around that holding back and preserving capital is good.

It’s important that your asset protection is in place so your investments are structured correctly if something happens.

That’s a very important strategy, especially if you’re actively involved.

If you’re more of a passive investor, make sure you’re asking questions and contributing how you can.

Warren Buffett talks about this, too:

Investing is not only about holding back.

You should also have control over your temperament.

A good temperament is what Buffett calls the number one trait of great investors.

According to this study on decision-making styles, people are more likely to invest if they are extroverted, independent, and have self-control.2

Most people will sell when prices have come down, when you should actually be buying more.

Fear and greed can lead to panic.

You and I aren’t like that, though.

We know there are ways to take advantage when others are afraid to double down.

When the market is really hot, we should be making our way to the exit, not buying more.

Again, most people will do the opposite.

This is why your temperament is so important.

Even though some things in real estate have come down, there are still great deals out there.

Protect what you have and keep your eyes open.

Look for new opportunities.

We’re seeing some opportunities now in several new areas.

2024 is shaping up to be a great year!

3. Playing Smart – Caution and Opportunities

The final thing you should do is play smart by using caution and opportunity.

Diversifying is helpful while you’re playing defense.

Warren Buffett says you don’t want wide diversification unless you don’t know what you’re doing.

If 50% of your wealth is in multifamily, maybe it’s time to consider diversifying.

You could invest in other types of real estate or even non-real estate assets in case your primary investment doesn’t go well.

One of our investments is an ATM machine fund.

The operation has been super solid on the monthly payments for 12 years.

There’s no debt involved with this deal as well as a lot of tax benefits.

I love this investment because it’s different from appreciation-type deals.

You should also monitor what’s happening.

Pay attention to the areas you want to invest in.

Look at macro trends happening.

The senior housing trend and seniors in healthcare is huge right now.

Over the next 5 to 10 years, there will be a huge influx of aging boomers.

They will need more healthcare and housing services.

In general, you should be open to opportunities so you can stay on the offensive.

We’re not only in ATMs, but also oil and gas and car washes.

Even if you don’t have money to invest, it’s important to look at deals every week.

There are deal lists and groups out there you can join.

Go crazy and get on 10 to 15 of them!

That way, you’re getting a constant flow of deals.

You can evaluate them based on your goals.

That’s your offense.

That’s your strategy.

You have a playbook and you’re playing to win.

I had this revelation in my recent Spartan Race.

I didn’t finish as well as I wanted to.

Instead of finishing in the top three or top five, I finished ninth.

That was embarrassing for me at the time.

But then I thought: I’ve been training to finish third rather than finishing first.

If I wanted to get better, I needed to do what a first-place finisher would do.

So, I shifted my mindset.

You can do the same thing in investing.

Ask yourself these questions:

What is your dream goal?

What will it take to get there?

Start making decisions based on your answers.

Keep paying attention to the evolving landscape.

Now, before we wrap up, I want to make good on my promise:

I want to share my favorite offensive strategy.

The best offensive strategy right now is buying businesses.

We’ve bought real estate, car washes, and many others.

In 2024, I want to keep up with this strategy.

It’s much more active in the beginning.

But there are still ways to become more passive.

Groups exist that specialize in business investing funds or private equity funds, like BlackRock.

I generally like the smaller groups better because they usually work with smaller businesses.

Now I want to hear from you!

How are you going to play offense and defense this year?

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.

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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

1. Allen N. Berger, R. Herring and G. Szegö. “The role of capital in financial institutions.” Journal of Banking and Finance, 19 (1995): 393-430.

2. E. Gambetti and F. Giusberti. “Personality, decision-making styles and investments.” Journal of Behavioral and Experimental Economics (2019).

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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