Posted by: BayAreaComRE | July 28, 2010

Sourced: We Are All Just Monkeys

Kudos (or should I say bananas) to John Reeder at Marketwi.se for his commentary about investments and human nature (or primate behavior). As complicated as humans have made capital markets and real estate investing, fundamental human nature is still a large part of who we are.  Reeder pulled from a Forbes article profiling Barry Ritholtz who heads Fusion IQ a quant and technical data mining company. In the article Ritholtz goes on to say, “You’re a monkey. It all comes down to that. You are a slightly clever, pants-wearing primate. If you forget that you’re nothing more than a monkey who has been fashioned by eons on the plains, being chased by tigers, you shouldn’t invest. You have to be aware of how your own psychology effects what you do. This is why we as investors sell at the bottom, get panicked. All the other lessons I’ve learned have come out of that. As has the field of behavioral economics.”

Reeder’s commentary on the article is great and he likens the wisdom the Ritholtz extals to our world of Real Estate: “real estate investors have no way to protect themselves if their bet as to market direction turns out to be wrong.  In fact, real estate investors largely miss the point that a falling market is feedback that your investment meme may have been off base.  In football if you are losing at halftime you make adjustments in the locker room.  If real estate investors are losing at halftime they often come out with the exact same game plan in the second half.” His assessment is spot on which is why it’s important to have active advisors and management who have the ability to step back and take a hard look at the big picture that, we’re all just monkeys!

The full blog entry on Marketwi.se can be found here and the Forbes write-up can be found here.

Thanks to Nate Jones of Colliers for the tip.

Advertisements

Responses

  1. […] Bay Area CRE Blog: We Are All Just Monkeys […]

  2. […] The guys over a Bay Area CRE also weighed in. […]


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Categories

%d bloggers like this: