|
|
March 10 · Issue #14 · View online
Investors Therapy is a newsletter, from the Silicon Valley Investors Club (svinvestorsclub.com), that helps investors understand their psychology so they can make smarter investment decisions. If you're ready to take the next step in your investment journey, subscribe!
|
|
Hey investors! It’s easy to get stuck in zero-sum game mentality. This mentality appears when you look at an opportunity as a fixed pie that can’t grow larger. We think in terms of what we can gain, and not what we are losing by squeezing our business partners for a few extra pieces of pie. As a result, people don’t want to share new pies with you because you’ll always try to eat the entire thing. Small company values I used to work at a family-run machine shop (a small factory that produces high precision parts). Back then, we were in the depths of the financial crisis and businesses were shuttering left and right. Being our firm had a great reputation, we still had vendors competing to work with us. One of these vendors, a small family operated shop, was so desperate for work, the owner of the firm dramatically cut his prices to secure a contract with us. My manager realized the vendor’s quoted price would lead to a profit windfall for our firm, however, the vendor would be losing money on the deal. He knew the vendor’s firm was struggling, so my manager told the vendor, “You can’t possibly be making money off of this deal, so I need you to sharpen your pencil and bid this out at a price that makes it worth your time.” The vendor rebid the job at a higher price, and we signed the contract. The vendor’s company survived the financial crisis and continued to work with us on different projects that led to a profitable relationship. Dividing the pie: One unfair slice or infinite fair slices? Found money is a new opportunity that’s only available through your partnership with another person. Found money can be finite or infinite due to how the financial rewards are shared. The problem with found money is once it appears people become concerned about their portion of the pie. No matter how the pie is sliced it’s a net positive for your bank account. You went from previously having no found money to the potential of earning found money. Unfortunately, once we see this pot of gold, we try to squeeze as much out of the deal as possible for ourselves. We fall victim to the annual investor’s mindset, so we decide to take as much from the deal as possible. By squeezing the deal you prevent future found money opportunities from arriving at your door, resulting in an infinite opportunity turning into a finite one. Who wants to share an opportunity with someone who is selfish? Found money comes in many different shapes and sizes:
- It could be an equitable business partnership that leads to future partnerships because both members were treated fairly.
- Fairly compensating a hardworking realtor that provides you with early access to off-market listings.
- Providing a consultant with a percentage of profits created by her work.
- Structuring a real estate deal so everyone takes part in the upside.
A series of games Business is a series of games played over many years. When you optimize for squeezing as much out of the deal as possible you hurt your reputation and decrease the chances of being offered future found money opportunities. People will never forget how you treat them in a deal, and if you’re fair, people will always come back for more, resulting in even more found money. Cheers, Jordan
|
|
Save us captain crypto! Courtesy of https://twitter.com/StockTwits
|
|
Can More Information Lead to Worse Investment Decisions? | Behavioural Investment
It is without question that investors now have easy access to more information than ever to guide decision making; optically, this surfeit of data appears to be a positive – who doesn’t want more ‘evidence’ to inform their judgements? Yet there are a number of potential drawbacks, most notably the challenge of disentangling signals from…
|
What Socrates Knows About Investing That You Don't...
There’s a strong case to be made that these two sentences are the most influential in the entire history of Western philosophy. “Although I do not suppose that either of us knows anything really beautiful and good, I am better off than he is–for he knows nothing, and thinks that he knows.
|
|
Quincy Florida: America's Coke Habit Made The Town Rich
Quincy Florida is a small town northwest of Tallahassee. It was once the richest town per capita in America because of Coca Cola.
|
Box plummets on revenue miss and weak guidance
Shares of Box fell after the company reported its Q4 2019 earnings.
|
Warren Buffett’s Letter To Berkshire Hathaway Shareholders: Highlights
Those who follow Warren Buffett as an investment guru would argue that every word of every line of his annual letter to Berkshire Hathaway shareholders is important. But that would amount to republishing the full letter. So here are the highlights.
|
10 Tips for Successful Long-Term Investing
Avoid common mistakes with these guiding principles.
|
|
Lyft's financials show a $911 million loss ahead of its IPO
In Lyft’s long-awaited IPO prospectus, the Uber archrival also says its share of the market has grown to 39 percent.
|
SoftBank's latest big real estate bet is in a start-up that's taking on the physical storage industry
SoftBank’s Vision Fund led a $200 million investment in Clutter at a $600 million valuation.
|
|
Private equity investors fret about managers overpaying for deals | Reuters
Some of the world’s biggest private equity investors raised concerns this week that the $3.4 trillion leveraged buyout industry is overheating, as more fund managers pay top dollar for acquisitions that could prove costly down the line.
|
|
Calculated Risk: MBA: "Mortgage Delinquencies Dropped to 18-Year Low in the Fourth Quarter of 2018"
A top ranked economics and finance blog with a focus on the housing market
|
What You Should Know About Real Estate Valuation
Accurate real estate valuation is important to mortgage lenders, investors, insurers, and buyers and sellers of real property.
|
The Major Challenge of Inadequate US Housing Supply - Freddie Mac
In the last 10 years, since the Great Recession, the economy has expanded greatly, but the housing market still has not recovered. Since 2011, residential housing construction has increased, but only gradually.
|
Appraisal waivers & the foreclosure wave
|
|
Why some Japanese pensioners want to go to jail - BBC News
Japan is in the grip of an elderly crime wave. Poverty and loneliness are two of the possible causes.
|
U.S. Economy: Big Cities No Longer Deliver for Low-Skill Workers - Bloomberg
Urban jobs that once offered a middle-class life to those without a college degree are disappearing.
|
Speed Summary – Social: Why Our Brains Are Wired to Connect | Digital Wellbeing
|
The Evolution of Anxiety: Why We Worry and What to Do About It
Humans are the only animal that experience chronic stress and anxiety. Read this article to learn why we worry and what to do about it.
|
Robots are being used to deter homeless encampments in San Francisco - Business Insider
A security robot has been put to work in San Francisco in an attempt to deter homeless people from forming tent cities along the sidewalks.
|
|
Paul Volcker & Ray Dalio | State of the US Economy & Government
I sat down with one of my greatest heroes, Paul Volcker, to talk about the state of the economy and U.S. government as well as learn about the principles tha…
|
Why 50 Million Chinese Homes are Empty
|
The Best Advice Ever for Succeeding In Record Time | Michael Ovitz on Impact Theory
|
Leaving Game of Thrones | Jack Gleeson
Jack Gleeson, best know for playing Joffrey Baratheon in Game of Thrones speaks at the Oxford Union. SUBSCRIBE for more speakers ► http://is.gd/OxfordUnion J…
|
Robot Tries to Escape from Children's Attack
This video is part of “Escaping from Children’s Abuse of Social Robots,” by Dražen Brščić, Hiroyuki Kidokoro, Yoshitaka Suehiro, and Takayuki Kanda from …
|
What simple invention ended the Wild West?
|
|
If you want to be notified of potential real estate opportunities I’m seeing in residential or commercial real estate, please fill out this form.
|
|
Recently I revamped our Silicon Valley Investors Club to allow all current or former tech employees to join, regardless of their company. Each day I’ll post a story in the group related to investing. So far we have almost 2,300 members! Feel free to join our Facebook group and/or our Linkedin group.
|
|
If you like what you read and you want it delivered to your inbox subscribe to my newsletter or share it with your friends. If you have any articles I should check out, please email me at jordan@jbtblog.com.
|
Did you enjoy this issue?
|
|
|
|
If you don't want these updates anymore, please unsubscribe here.
If you were forwarded this newsletter and you like it, you can subscribe here.
|
|
|