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The Four Investment Profiles

February 25, 2008

Today I was reading about the Four Investment Profiles – and I found it interesting when thinking about the current market.

The four profiles are :

1) Investor
Loves Opportunity
Buys the right thing
2) Collector
Loves Ownership
Buys Something
3) Speculator
Loves the Action
Buys Anything
4) Observer
Loves Ideas
Buys Nothing

I think we’ve had a bunch of speculators. Folks that love the idea and the action and really do just buy anything. And frankly, this works for a while. As long as the market was going up – everyone gained.

Now that we are having a correction, the speculators are getting caught. The wave of speculation has gone out and now we are finding who had their pants down.

The unfortunate thing is 1) most of these folks won’t take responsibility for their actions. They will blame it on banks or realtors or sellers – and they’ll lose. They’ll blame their irresponsible speculation on anyone else and not get the lesson. There are fundamentals of investment.
2) 3% of the mortgage market has affected the world monetary market. The responsible investors that only buy sustainable value – and have strong portfolios – are now paying more for their money. The speculators have made it more difficult for the rest of the market to buy.

I watched this last wave of speculators and I sometimes felt bad that I wasn’t working a bunch of crazy deals for speculators. It was hard not to jump on that bandwagon. But, that’s probably why I’ve been in the business for so long, I have a hard time selling what I don’t believe in. And I don’t believe in an investment that’s not sustainable.

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