Anti Cyclical Behaviour

Why do we see the bulk of people follow market trends by buying when the market is rising rapidly and selling when the market is in decline? These sometime artificial trends are the cause of supply and demand issues. The general public sometimes believe they have the expertise to pick the top and bottoms of the markets and know when to buy or sell even though many experts that study the market daily still can't pick the peaks and troughs. In my experience, most of the market doesn't know what hit it until about six months after the fact. The common investor holds on for the market to go up just that little bit higher but before they know it the market is in decline and their best opportunity has been missed. It is the same with the bottom of the market, they hold on like everyone else for the market to reach the bottom when in fact it has been on the rise for months without people knowing. Unfortunately, a lot of people rely on statistics to make decisions, which is in fact historical information and projects the last quarter or years activity, so by the time the statistics are published the market has moved on either up or down.

That is why we are a firm that believes in anti cyclical behaviour, meaning to buy when everyone else is selling and sell when everyone else is buying. Behavioural economics can make or break a market, sometimes without logic or reason, it's just panic, and the share market is a prime example of that.

To me real estate, and especially commercial property, is a long term investment, and you make your money on the buy rather than the sell. It's human behaviour you should watch not just historical statistics. Take a look at the current market, everyone is still panicked about the GFC and whether or not the commercial market will keep falling, mainly because they are looking at 2010 stats, but being in the industry, I have seen the astute professional investors back in the market for several months picking up bargains. These investors are picking up distressed buys and therefore the stats coming out are still showing some decline but, what they are not showing is that the eyes are getting picked out of the market and all of a sudden all this distressed, undervalued stock will be gone and before you know it the market is on the rise, and the public will be informed 3 to 6 months later when the next batch of stats come out.

I am personally in the buy mode, because everyone else is in the selling mood. I feel its basic economics - buy when supply is good and prices are low and sell when demand is high and supply is low.

For more information, please go to www.jbminvestments.com to stay abreast of current real estate market conditions.