Why Successful Property investors fail in Share Market?

17^th October 2020

Why Successful Property investors fail in Share Market?

Dear Fellow Travelers,

Namaste! Last 5 days, we dealt with World Wide cheating with the masses. Today we are dealing with the other aspect of investing. This is applicable to most of the people. I can give 1001 reasons for the failure of successful property investors in the share market. But I am going to deal with the 2 basic reasons today.

Normal Investing procedure in a Property: -

Say you want to buy a Flat. Say you are staying in proper Mumbai. Now, just 500 Square ft flat may cost not less than 1 Cr up to Borivali. To invest this much amount – you will do a site visit / take your family / take your smart friends along with you / take help of seasoned Estate Brokers / to take help of Lawyers and Bankers.

After doing thorough research – they will go for the flat. Some smart people will take a loan against property, in spite of having money – so that bank does the proper background research with respect to legal issues.

The most important aspect here is that buyer will evaluate the property in his mind with respect to the details he studied and give his offer. The seller will quote his price. They will negotiate and settle to an acceptable price for the deal to go through.

In the big property investment deals, the investor knows the builder personally or they have strong references for each other. So, when the project gets delayed or when the investor money comes a little late – both the side takes care of each other.

Seasoned property investors have their own staff of lawyers / CAs / brokers and they invest in big time. Say they buy 5 to 50 flats in one go. The ticket size is Rs.1 Crs to Rs.250 Crs for an individual big property investor.

Now this guy comes to Share Market?

You can buy just 1 share of reliance by paying Rs.2200. You can invest in Mutual Funds by investing just Rs.500.

Now, with a ticket size of Rs.500 to Rs.25 lakh for the above kind of investors. Will he take an interest? If at all he doubles the money in a year – he will make Rs.25 lakhs only. He is earning Rs.2 Crs from his property as rents!! Where will he focus? Will he be willing to learn this in detail? Will he pay to consultants for this kind of amount?

The basic issue is – in the property market, they can evaluate the price and offer or sell. In the share market, the price is decided by the market. Prices change second to second and in the property market prices remain the same for a year or more. In fact, rarely, the prices come down. So, property investors become uncomfortable when share prices move down. They feel they have done mistakes.

How seasoned Share market investors operate?

They operate the same way. They do a detailed study. They also have a team of experts to help them. They also meet company people. They also decide the fair value and wait patiently for the market to come near to their price. Their ticket size is also big.

But the difference comes in the attitude. Buffett kind of investors says – “I am not right because the market agrees with me and I am not wrong because the market disagrees with me” Most property investor fails to have this attitude whether they invest big amount or a small amount.

Managing EGO is a big challenge in the share market: -

Thanks to the above two reasons of Ticket Size and Personal Evaluations – they get ego satisfaction when they do property investments. They get red carpet from their builder friends. They are in demand. They are welcomed at any time.

In share market - market care a damn for you. Whether you are Buffett or you are investing Rs.500. Your EGO goes for a toss in a market. This means property investor who wants to control the things – has to operate without any control. They get demotivated by this.

What happens due to this?

You will find that investor who has a property portfolio of Rs.100 Crs or more may not have an Equity portfolio of Rs.10 Cr.

Most investors have an EGO and they want to control the investment outcome. They miss the opportunity of life due to their ego satisfaction-based investment model.

What it means for Small Investors?

They may not have big money to invest but they do have a big Ego when they invest even Rs.500. Those who fall into the EGO- SATISFACTION TRAP – market takes them for a ride.

That’s the reason Lord Krishna has said the famous advice – “Karmanye Vadhikaraste, Ma phaleshou kada chana”.

Your right is in doing your KARMA. Do that KARMA with utmost EXPERTISE and LEAVE the RESULTS to the EXISTENCE.

Masses fails in this above.

What NOW?

Watch your thoughts and you will be able to see your EGO in them. When you see your EGO – you will have a chance to deal with it.

If you don’t deal with your EGO, you will be a failure in share market investments.

Have a Great Navratri.

Follow me on Twitter @hiteshmparikh Or on Whatsapp - +91-9869425399.

 

Live With Passion…Invest With Passion.

 

 

Hitesh Parikh.