I love investing, especially the sport of it.
Investing in real estate or stocks or bonds or whatever is merely hunting for bargains that people have for sale, no difference really than stopping at garage sales on a Saturday morning and looking for castaways and other cheap but really great merchandise being sold for pennies on the dollar. I love shopping in thrift stores for the same reason. It's the thrill of the hunt, a safari for super deals.
Getting the best deal is always simple too.
Always buy great merchandise at fair prices, not fair stuff at great prices.
Understand the difference.
You always want to buy the best, the very best, of everything you want to own, from clothes to electronics to stocks to rental properties. Blue chip, quality, ultra high end everything. Who doesn't want to wear the best suits, drive the finest car, and eat the best food? So why buy lesser grade or even mediocre stocks? Or dingy apartment buildings in war zone neighborhoods?
You want to buy the best at fair prices, because the best almost never comes super cheap. It gets discounted a little bit, called a "haircut" in the trade, because owning the best gives you lots of downside protection. You can buy many average businesses and real estate properties at deeply discounted prices because, let's face it, average is average. But the best, the market leaders, the highest rates of return, the cream of the crop, can often be found at "fair" prices, but not ridiculous ones. You can't buy a genuine Rolex for $25.
The most common mistake investors make is buying average stocks or real estate properties instead of waiting for the great deals to come around. In other words, settling for the ordinary and not waiting for the extraordinary. This error can't really be faulted much because it is human nature to spur towards action, waiting somehow seems like being lazy. Investors invest, don't they? Isn't not investing in something, anything, just procrastination? Fear?
Investing is not about writing checks and committing funds. It's preparing for the process, much like a runner trains himself for a marathon race. There are months, perhaps years of preparation for just one important race. Investing at its core is really only about one thing, and that is undeniably making money, and it is easiest to do when you are well-disciplined, in shape, and gearing for action. In other words, live frugally, keep physically fit, build (or rebuild) your credit rating, save all the cash you can, invest the maximum in your 401(k), never stop learning new things, and all the rest, all that are obvious but occasionally tough, seemingly impossible.
Everyone is searching for the "Deal of a Lifetime" or that one lucky break that puts you up on Easy Street. The next Microsoft or Berkshire Hathaway. The quick ticket to the Hamptons. What I can tell you from being around investors for nearly two-thirds of my life right now is that incredible deals happen all the time and really aren't all that rare. They can be found in bull markets and bear ones, in the U.S. and elsewhere, and are pretty much everywhere you can look.
There is no rush. Calm down. You can take a breath and relax. The Next Great Thing is not an endangered species. There isn't a finite number of super deals being hunted out there in the marketplace and extinction is right around the corner. Great deals on just about everything from stocks to properties to the best candy you will ever eat can be found if you just look, and look hard, with knowledge and intuition backed up with some cold hard cash and borrowing power.
You just need to be more knowledgeable and perceptive than the next guy. And that takes knowledge, training, education, and expertise. It doesn't come naturally. You have to work at it. Think of how great athletes never stop training, working out, watching their diets, and all the rest. Those are also the attributes of great investors, the absolute winners of the financial gamethat Tom Wolfe called "The Masters of the Universe."
Investing is simple. You really just study large sets of numbers and facts. It's very academic and fun.
Being a successful investor, on the other hand, unfortunately isn't simple, it's hard. Very hard. Lots of hard work. Often dirty, rotten, nasty, awful, gross, petty, terrible work. Real estate investing especially is the worst type of investing since you get your hands dirty. You bleed---literally blood sometimes. But that's just part of the game.
I study history, especially economic history, and how wealth has been created in the United States for centuries. Even during the Gilded Age of the 1890s when Carnegie, Rockefeller, Gould, Morgan, and others dominated the financial world.
Great fortunes are built steady over time. By constantly compounding capital at extremely high rates of return. Not quickly, but steadily, relentlessly.
Those investors and empire builders that were prudent, even conservative, were prepared at all times to buy quality assets and make superb investments when others were in crisis.
Investing fundamentally is not about having a little bit of money now.
It's about having tons of money later, when you really and truly need it, like when your kids are headed to college, when you want to retire, or for living your own personal dreams.
Fundamentally, investing for many people like me is fun. It's more like a hobby than a chore. I enjoy the process, the game, and all it entails. For many others I know investing is more like part of their daily routine, like brushing one's teeth or taking out the trash. It's not fun but necessary, unavoidable. I know quite a few very educated people that just view investing as crass, too materialistic. Different strokes for different folks.
I guess the more fun you find investing, the more you know you are in the right business.
Robert J. Abalos, Esq.
