Majority is NOT always right. Frankly, applies to most investments. That bluechip stock which majority (our friends, our uncles, our aunties and everyone) is buying is definitely no longer undervalued. If it continues to go up despite of this, it simply meant the stock’s price was speculative and we better be ready for sudden price fall. That so-called hotspot which has been rising for the past 6 years and eyed by everyone we know is definitely priced at the peak, over the peak or at least near the peak. Buying at the peak is NOT a strategy, it’s merely a gamble. Of course, as long as everyone continued buying even after the peak, then our purchase is still safe as long as we quickly sell when it’s already at the peak. Savvy?
16 years ago, I bought my first 700 sq ft apartment in Relau, Penang. Most of my Penang friends asked me this question, “Why Relau, why not in Gelugor or Greenlane?” Well, my 700 sq ft APARTMENT has a swimming pool and a gym and it was only RM123,000. For the same price, there are NO options in Gelugor or Greenlane. It meant that IF I did not buy my apartment in an unpopular area, I had to continue renting and I may not even have my current wife. (My father-in-law said I should HAVE a property before getting married) Anyway, I bought the place, enjoyed the apartment for many years and even gave my sister a room when she was studying in Penang and even rented out a room to my brother-in-law when he started working in Penang. Relau was also very close to my wife’s working place which fits our needs. I sold the apartment many years later for RM250,000 which is a pretty good return on investment.
A few years (2006) after that 700 sq ft apartment, I then decided to buy a condo in Sungai Ara and the same question came up. “Why not buy in Gelugor or Queensbay? Facts: My 1,258 sq ft condo was only RM247,000 and comes with 2 car parks and again, it’s close to my wife’s working place. There were NO options at RM247,000 in Gelugor or Queensbay. If I did not buy and decided to save the money in order to buy in those popular areas, I would have ‘lost’ RM200,000 easily because this condo in Sungai Ara appreciated to RM450,000 from it’s RM247,000 starting price as soon as it was completed. Anyway, after I sold the condo many years later for over RM600,000 nearly all my friends said they should have followed me to buy a unit. I have no comments.
Everyone tells me that LANDED is by far better than high-rise. Actually I agree that landed will be more valuable than high-rise. However, if we were to wait until we saved enough money for a landed home, we may never be able to buy. Let’s be serious yeah, not everyone will become a CEO in a MNC because every MNC needs just one CEO. I would think a CEO can buy a landed property easily. For the rest of the managers, a RM1.2 million price tag for a typical landed is definitely not within their capability. Oh yeah, they can buy much further away (cheaper landed) but based on the distance versus the convenience, it is NOT a certainty that a faraway landed property is better than a nearer high-rise.
I hope I have demonstrated enough examples to show that how we invest really depends on what we want to achieve. It does not depend on following what the majority thinks. A super true advice? “When everyone we meet are talking about the stock market like an expert, it’s time to sell everything we have and wait for the fall. If it does not happen, we just earn less profits since our selling price is high due to the huge demand. If the fall happens, we may lose money instead of profiting from our buy. As long as a property fits what we need and we can afford it, then it’s a good buy. After a few normal years, this property will be the stepping stone for our property investment journey. That’s what majority will never achieve. Happy investing.
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written on 22 Sept 2018
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