Thursday, October 07, 2010

greed and fear...

I considered myself to be somewhat lucky to have an interest in something that generates some passive income every month. I have to admit that I am still pretty new in property investments but several years on, I am starting to feel disillusioned with the growing crop of so-called 'investors'.

Over the years I've got to know some pretty good investors who I thought shared a common interest, but lately things seem to be getting a little out of hand. Generally I have no problems with how one manipulates his/her own financial tools to diversify their own investments. But I do have my reservations when a company is formed to 'train' new investors into jumping into the bandwagon.

Personally, I believe property investment is not the kind of activity where a huge group of people can just join and be a member. Surely there is something that benefits the core group of investors who formed the 'group' that gives such training and seminars, such as huge membership fees up front. While one can gather much knowledge through these activities, but to introduce ONE project to 300 registrants I think we are misleading a whole group of 'newbies' into the BUY BUY BUY trend.

Surely no one is obliged to join and buy but the situation now creates an army of mindless zombie-like 'investors' who would be more than willing to jump in with the rest of the crowd, and let's be honest, with thousands of like-minded 'investors' in the same project, do one still think it is a good investment? I have my conclusion on that, but I'm keen to know what these people are thinking.

In the end of the day, the core group of investors will be the main beneficiary. Hundreds of registrants will mean over a million ringgits of membership fee received, and no doubt these 'seed monies' will be distributed amongst themselves as 'bullets' for their own agenda, possibly other developments not known by commoners like me. Do one honestly think that a smart investor will buy something where thousands of others are investing into?

Think again.

By motivating a group of people to BUY unconditionally we're creating a bubble which will eventually burst in the near future, and when that happens who will benefit, again?

Things are getting a little out of hand, and you either join the bandwagon which will guarantee to make some profit IF you can predict the timing of the bursting bubble correctly; or you take a road which holds lesser risks and let others have make the money first.

You may be greedy when people around you are fearful, but be fearful when people around you are greedy.


tomatoinc said...

hey jason. nice makeover of the blog. i myself have stopped blogging for a long long time.

I can't agree more about this property bubble in Malaysia though. THough i am not too familiar with the market, but the general stats have shown much signals of overpriced, oversupplied market.

As for your friend's little grouping - it is quite obvious what they want to do right? pick the project, buy in, get people to drive it up, sell before everyone else does. :) Don't get scammed!

Livingmonolith said...

well, after much clarification, i guess the group just made a bad move to introduce a project in their first talk. i can't say that it's a complete cock-up though, naturally when you form groups like these, you're somewhat endorsing the developments you're presenting, or at least that's the impression you're giving.

i don't really know these people personally although we've got good discussions for several years through forums, but from a personal point of view i don't see why i should part with RM5k to hear a group of 'seasoned investors' telling me the stuff that i already know, or that can be read from various sources.

it's a good idea, not really a scam, but i feel that newbies tend to get sucked in without knowing what's in store. the likes of milan doshi and renesial leong have been doing this for ages, people just need to realize that they can't just 'buy' knowledge.