Occasionally I’m asked, “Where do you think the real estate market is going?” No one knows with certainty. If we had absolute certainty there wouldn’t be such a thing as a risk because all investments would be correctly priced. That’s why my lunatic detector goes on high alert when I hear people talk with certainty. Written in our DNA is our need to feel secure and sadly that need compels us to listen to charlatans that claim to have all the answers.
Once you become certain about investment ideas, you build a wall around your brain which prevents new information from reaching you resulting in knowledge entropy—the killer of wisdom, portfolios, and societies. There are very few things to be certain about in life, taxes might not be an issue anymore if you can escape to Mars and death might go to the wayside if bio science has anything to say about it. What I am certain of is our innate ability to trick ourselves into believing we aren’t susceptible to investment killing psychological traps, hence the name “Investors Therapy.” 😉
When it pertains to investing, I think about odds. What are the odds of my bet coming true?