How To Use Mind Hacks To Up Your Investment Game

GoodPlace.my

Soon you’ll realize that meeting me is not the best way to learn about business and property,” the Mentor had said to me over our meeting last Sunday at his sprawling Nilai estate. “You’ll only confine yourself with worn-out ideas and conventional dogma. Find insights elsewhere and apply them in your business. That’s how you gain an edge.”

I then reflected back on my own mistakes when I was starting out. Like the typical eager newbie, I would immerse myself with property investment books (with impossibly hype-y titles like “How To Make $10,298,107 Flipping Real Estate In Your Pajamas” and “How To Buy 100 Properties Before You’re 21 With No Money Down”) and joined ‘mastermind’ groups which held meetings at trendy cafes on the weekends. How naive!

“That’s so true. In fact, I have learned more about property reading Marcus Aurelius, Ayn Rand and John Kay than, say, Robert Kiyosaki and Donald Trump. Indeed, I have read Kay’s Obliquity cover-to-cover three times after Munirah gave a copy to me last year. I liked it so much that I bought five copies during the last Big Bad Wolf sale to give to my friends for Christmas,” I told the Mentor.

The Mentor smiled. “Khai Yin, you don’t get an edge by following the same advice that the herd follows.”

“And the herd reads Kiyosaki,” I said, to which the Mentor laughed.

“I do have a question though,” I continued, “About the investor’s edge. As we have talked the last time, I am building my own edge around my obsession with data. Malaysia property is practically swimming in data, but Malaysians don’t do much with that data which somewhat surprised me. I am building GoodPlace to consolidate all that data to do interesting things and uncover new opportunities.

The Mentor nodded. “Makes sense. Look at the stock markets. There’s lots of data, and there’s lots of people who do lots of things with that data. There’s also lots of data in property but its sources are fragmented, and that’s why there’s not a lot of people who use the data because it’s a pain in the butt to collect the data. And as such, whoever who can consolidate and make sense of that data will hold the keys to the kingdom.

I smiled. “That’s what I want to do. In fact, our little Walkability project was a small proof-of-concept of sorts. Now more than 5,000 people have downloaded our Walkability maps, and we have received coverage from magazines and newspapers like Property Insight, Focus and iProperty.”

“That’s encouraging.”

“Now back to the question of the investor’s edge. I have been wanting to know about your edge. What is it, and how did you build it?”

The Ultimate Investor’s Edge

The Mentor leaned back on his lazy chair. “Like you, once upon a time I made the mistake of trying to learn everything from books and meeting with people. As a result, I filled my mind with every little technical knowledge and trickery there is to know in property and business. I was like a walking encyclopedia, and I prided myself with the fact that I knew a whole lot more about the technicalities of property investment than the average Thomas, Richard and Harold.”

“And?”

“I’ve gotten nowhere, of course. A couple of quick flips made me some pocket money, but nothing spectacular. I had hungered for monstrous success which had eluded me.

I listened quietly, sensing that a punchline would soon come.

“There was this peer of mine who went to the same university as I was in London back in the 60’s. We were not close, but we kept in touch with each other since like me, he was also a professional investor and property developer. As I had struggled in my career, his trajectory was stratospheric in comparison. He was so far out of my league that I couldn’t help but to burn with envy whenever someone mentioned about him and his success.”

“What happened next?”

“I swallowed my pride and went to see him at his lofty office on Jalan Sultan Ismail. After some small talk I went straight for the jugular and asked him what you’re asking me now. I had wanted to know his edge. And then he told me… Forget all the technical textbook mumbo-jumbo. Learn how to hack your own mind.”

Hack… minds?

The Mentor smiled. “At first I was confused at his answer, and soon my confusion quickly turned into seething anger. He was clearly not going to share his secrets, I had thought, and worse, he tried to ridicule me with a silly answer. I stormed out of his office, as pissed as Donald Duck.”

I chuckled.

Once I regained my senses, I realized that the mumbo jumbo about mind hacking that he told more was more profound that it seemed. The more I thought about it, the more it made sense to me, and I soon noticing that most property investment big rollers whom I admired seem to have the same edge… the ultimate investor’s edge.”

It’s All In The Mind

What the Mentor had said resonated with me well because as I would soberly remember from my mistakes, my investments would perform poorly every time I lose grasp of reality and start acting purely on emotions. Indeed, our emotions screw up our investments more often than not.

 “Over the years, I’ve honed my craft around mastering my own psychology. What my friend said to me when I saw him at his office some 30 years ago was true. The investment game is all in the mind.”

I nodded.

“As you already know, investments are made based on interpretation of facts. At any given time, it’s impossible to obtain ‘perfect information’ which means that you’re vulnerable to making errors in interpreting incomplete data. Here are some ways you can manage your own psychological imperfections in order to avoid making mistakes.”

 Hack #1: Go Opposite The Herd

During uncertainty, people have the tendency to “herd”, i.e. make decisions that mirror each other. If you seem to be making an investment decision which seems to be “in line” with the majority, it might be time to stop and take a hard look at your investment’s fundamentals.

Whenever you find yourself on the side of the majority, it is time to pause and reflect.
Mark Twain

This is the dude who became the richest man in the world by regularly betting against the herd:-

Warren Buffett

#illuminati

And of course, this also means that you should steer away from the latest hype-y trend which will probably die out by next Wednesday.

 Hack #2: Give Yourself A Fake Time Constraint

Humans have a bad ability to accurately perceive lengths of time. (That’s why some days seem to be a drag while others whisk by quickly). And as such, we tend to favour doing things that are in the “present” and “in your face” than to take action on something that will take years to bear fruit (read: property investments).

As far as property investments go, they can come across as “not urgent”, but this causes many to procrastinate, leading them to always on the lookout for a “better opportunity”. And of course, there’s no such thing. Thus, when an investment opportunity reveals itself, given yourself a “fake time constraint” to force yourself into taking action – go or no go.

 Hack #3: Think How Much You Can Gain, Not How Much You Stand To Lose

Psychologists tell us that humans are driven more by the fear of loss than the hope of gain. Indeed, we rather not lose something that we already have than to get something that we want. Unfortunately, we are all hardwired that way.

This means that we tend to delay taking action for fear of loss even if the potential gain is huge. Again, inaction is killer when it comes to property investing. Overcome procrastination by focusing on how much you get to gain, not how much you stand to lose.

 Hack #4: Focus On Foresight, Not Hindsight

As the popular saying goes, hindsight is 20/20. Psychologists tell us that we humans need a “hindsight bias” in order to feel better about ourselves because we need some degree of predictability in this world to be happy and comfortable.

“After the fact” rationalization (I should have bought that KLCC condo!) is useless. Focus on sharpening your foresight skills instead. In the context of property investment, the ability to spot upcoming hot areas is an asset.

 Hack #5: The Kumar Principle

In the 2004 stoner comedy Harold & Kumar Go To White Castle (admittedly one of my all-time guilty pleasure favourite), the main protagonist Kumar had spectacularly mucked up (on purpose) his medical school interview with a side telephone conversation with Harold about plans on smoking ganja later that evening. And when asked about his less-than-enthusiastic desire to go to med school despite having perfect grades, Kumar retorted, “Just ’cause you’re hung like a moose doesn’t mean you gotta do porn.”

Ponder about Kumar’s statement for a moment. It’s really more profound than it’s funny.

The Kumar Principle says that just because you’re hung like a moose doesn’t mean you gotta do porn.

The Kumar Principle says that just because you’ve got lotsa dough doesn’t mean that you gotta live a baller’s life partying on yachts with supermodels.

The Kumar Principle says that just because you’ve got some extra cash lying idle in the bank doesn’t mean that you gotta be an investor.

Now don’t get me wrong – some people do make big bucks buying and selling properties for a profit, all day, every day. But property ‘investments’ as we know (i.e. buy to sell or to rent out) are by far not the only way to make money.

About Khai Yin

When I am not writing for GoodPlace.my and helping my readers find properties though the DealMatcher service, I spend time doting on my three kids: Wenyi, Qinyi and Eian. My personal stuff, some published essays and contact details can be found at khaiyin.com

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