Danger - and Opportunity

[Les]

G'day all,

I started to reply to another thread with the following, but then decided it was worth its own place, in its own thread - so here ye go....


A lot of the current talk (and current events - another Bali disaster overnight) brings a particular RK tape back to my mind. Let me expand....

A few years back, I attended a Robert Kiyosaki presentation at Darling Harbour. Part of the deal was a cassette tape handed out to every attendee. The tape expanded on a time when the Cold War was a major talking point (sounds like the 50's to me) - and people were "investing" in bomb shelters built in their own backyards......

RK's "Rich Dad" was making hay as he owned construction companies that built these things. On questioning Rich Dad, RK heard that "the threat of war is very real - but it is only a threat" Over that period, Rich Dad made millions, supplying the needs of all those who heeded the threat.

So where are we today? Well, again, there are several threats out there. Some are more real than others, while some will only ever remain threats. Which is which? Well, I suspect that is a very personal thing. We all "see" things in different ways, and choose our own paths to suit our own circumstances, or our own education.

Somewhere on that same tape, RK mentioned the word "crisis" - and spelt out that word means two different things to the Chinese - "Danger" and "Opportunity" mixed in the one word.


Now, back to today - where are we at? As I see it, we have:-

1. The Oil crisis
2. Terrorism
3. Global warming
4. Looming recession/depression
.
.

Which of these are merely threats vs which are more-or-less guaranteed to become an actual immediate close-to-home disaster?

And I think it is THIS point that RK was making by his tape. While still just a threat, don't let the threat paralyse you. By all means plan to minimise the risk to you (which may, or may not, involve building an air-raid shelter ) But don't put the rest of your life on hold while you wait for the "event".

To me, education holds the key to a vast number of the world's problems. Thus, continuing to educate myself re the current "problem areas" is probably a worth-while exercise - but NOT to the exclusion of all other aspects of life.
I don't currently have all the answers, so please don't ask me - but I'm not planning on "spending up large" (in time or money) on threats, without first deciding for myself that the likelihood of such an event is imminent (thus becoming MORE than just "a threat").

And for you younger ones, I've lost count of the number of "end of the world" dates that have come and gone in the last 50 years - I've lived through more than a few......


All in all, mostly it is CHANGE that is the big upset - we tend to fight to maintain the status quo. But, at times, we are dragged kicking and screaming into a new dimension - and this will likely happen again, and again, into our futures. (e.g. Oil....)

I'm hearing today that some countries have vehicles running purely on Ethanol (which is produced from vegetation) - so why aren't we heading in that direction yet? This would tend to minimise one of the above "threats" wouldn't it?

Anyway, I'm interested to hear other thoughts on these dangers/opportunities - do YOU have something to say? If so, please do !!!

Regards,

 

[simonjulie]

Hi Les

This is Julie (not Simon)

Your post is fabulous and I heartily agree.

You made reference to an earlier post of mine on another thread where I referred to myself as an incurable optimist. I looked back and liked what I said so much I am going to repeat it here.

I think it is best to look at both best and worst case scenarios. Both the danger and the opportunity. Look at both because dreams are built on best and risk assessment is built on worst.

We need both to find a balance. Life is a balancing act and everyone's scales are different. Some people will feel more comfortable in a situation that others may perceive as risky or dangerous.

I have not always thought of myself as a risk taker but when I listen to other investors and people in general I realise that I am. Also, I find that the people who are doing better than me are even bigger risk takers.

I agree Les. Threats are around us all our life but many of them do not actually eventuate.

I, for one, will continue to enjoy my life ready to embrace challenge and change, understanding that risk and opportunity go hand in hand.

Audentes Fortuna Juvat
FORTUNE FAVOURS THE BOLD!

Julie

 

[Les]

G'day Julie,

Long time, no see. Hehe - it must be a helluva fight for the keyboard at your place ...........

Always good to hear from those doing it. I wanted to give you kudos for your reply, but I'd already done that earlier (probably for a Simon post) so I've got to "spread it around" some more. But I'll get to you again some time soon.

And G'day Simon too - hope to catch up with you two soon - it's been too long.....


Regards,

 

[Mr. Fabulous]

Lisa: Do you know the Chinese use the same word for crisis and opportunity?

Homer: Yes! Crisitunity!

Hhahahhahaha damn I love the Simpsons.

Les and Julie,

Top stuff eh! It kinda makes absolutely no sense to me that people are tutt tutted for being incurable optimists. It also makes me laugh a little that most of the people that tutt tutt incurabe optimists are the ones that look up to those incurable optimists for their achievements.

Hail to the incurable optimists! Cause they are the ones that make change possible.

Mark

 

[willair]

Hi Les,
This has made me look back in time,human nature forces us to follow many different
investment paths over the years,but is it any different today in 2005, as it was in
the recessions in 1974,1982,1990, and so on,you and i both know what follows the
overheating of the real estate markets,and as everyone purchases shares for a speculative shorterm profits,which only can have one ending .imho i think it was
worse in the 80s and 90s,but thats only my opinion,good post Les.......
good luck
willair.

 

[thefirstbruce]

Les, my 2 cents worth.

Despite my constant struggle with duality, I know the true power of optimism, of keeping one's attention on where one wants to go, rather then avoiding where one doesn't want to go.

Of accepting that mind is a creative tool. That what one thinks about tends to cramp out stuff one doesn't think about.

To understand how the mind works, how memory works, how habitual engrams are laid down in semi hard wired neural states, all affirms the importance of visualizing and focusing on what one wants to create, rather then what one wants to avoid.

The mind is a creative energy. If I say to you "don't think about elephants. don't visualize elephants in your mind. don't see how long their trunks are, and how big their ears". Can you NOT see elephants in your mind......????

Therefore, our minds work most efficiently when working towards building what is in our minds, our dreams..... It is like there is extra energy and happiness and harmony provided by our own bodies and minds when we focus on what we want, and not what we don't want. To try and work towards one vision, while also visualizing what we are trying to avoid, splits the mind's energy and potential into focusing on two opposed targets. Much less efficient.

Creating is a force of expansion. The human heart is happiest when expanding and creating. It feels most repressed when operating from fear, and restriction and legalese and political correctness, and 'the world is too complicated unless you consult with a specialist'.

Therefore, I agree with your sentiments.
'Boldness has genius and magic.'
'You are not what you think you are; but what you think, you are'.
'Whatever you place your attention upon, you become'.

There is so much truth in this stuff.

However, it must be qualified.

We must understand cause and effect. We must understand that ignorance and fear motivate many. And that we must interact with this consciousness, whether in the form of a greedy council town planner, or vendor, or REA. If we undertand this, we won't struggle against it. We might educate it, illumine it, express compassion and undestanding for it, let it complete its lesson in its own time, or prevent it from hurting anymore of life by taking a firm stance against it, or warning others of the danger there.

We must not forget that it is also human nature to be quiet about failures, and to be ever so more vocal about successes.
We must not forget that many have lost money on the stock market.
Many have been forced to sell PPORs and IPs in a soft market and make a loss. (I have met 3 people in the last 3 months who have just done this).
But do we hear about them on forums and in the news? I would argue we don't. People don't admit to failure readily.

Willair asks what's different about this period to the recessions of the past. I would say affordability of homes in Sydney is quite different, as it is in most cities. Traditionally a house could be got for 4x average household income. Today Sydney is 9 times....DSRs are often 40% of disposable income, Lo Docs have grown.....things aren't the same. home owners are deeper in debt, and therefore have less capacity to weather economic hardship.

So, IMHO, wisdom must prevail in tempering boldness with caution. My slant on it is when love and wisdom are combined, one finds solutions to problems, and one finds better ways of doing things per se.

Love and wisdom fuel adaptability. They fuel it through lateral thinking, through creativity, through sheer genius. To adapt, to use all the knowledge and experience at hand for better outcomes, is what helps us keep moving forwards, towards a more harmonious and sustainable world.

So, in this current climate of uncertainty, my approach is to regularly get in tune with what is happening in the world (without letting it shut down options), try my best to understand cause and effect, then incubate it in meditation. then focus on providing a better solution. And better solutions are often found in win/win outcomes, in solutions based in love and compassion, where trust and cooperation win out.

And why is this? because there will always be so many decisions made from a consciousness of self interest, and greed, and close mindedness.

There will always be room in the world for those who dare to dream big, and use calm logical intelligence and determination, to bring about those dreams....especially dreams that build love and trust in the world.

I agree with Zig Ziglar....
"YOU CAN GET ALL YOU WANT IN THE WORLD, IF YOU HELP ENOUGH OTHERS GET WHAT THEY WANT"
Man that says so much.....

The world after all, is what we make it. We all play a part in making it a heaven or a hell..........NO EXCEPTIONS..... WE ARE ALL DESIGNED AS CREATORS.

 

[Bill.L]

Hi all,

Les, I was looking at your 4 looming threats and it reminded me of the '70s.

The exception being replacing "Global Warming" with "Nuclear War"

I always get a chuckle out of people who claim they are waiting for the uncertainty to clear before investing in ***** (fill in your own blank). There is always the uncertainty, and the opportunity is always clear with hindsight.

The big BUT though, is that fortune does not always favour the bold. You can think you have identified a brilliant new strategy/investment whatever, that is the opportunity of a lifetime, only to discover later that the world disagreed because something else was chosen instead. (Ask those who invested their lifes savings in a Betamax video business, because it was the better technology).
In hindsight those who invested in the sucessfull enterprise look brilliant and it seems so obvious.

If we fast forward 10 years, there will be some obvious plays we should have all been involved with. But the path to choose today has many different roads. I am willing to bet that in 10 years time we will here a lot more from those that chose the right path, than those that chose the wrong ones.

bye

 

[topcropper]

Good posts everyone.

Bill, by waiting until there were absolutely no uncertainties left, [not that it will ever happen] you would probably guarantee that top price was paid. It's the uncertainty that's keeps investments at a price that an investor can profit at. Keep reminding us of what a possible worst case could be. It's good to keep things in perspective, from someone who has seen the very bad times.

See ya's.

 

[keithj]

There’s danger/risk in virtually everything we do starting when we get out of bed every morning. Our major task is to gasp the opportunities while mitigating those risks - look both ways before we cross the road. The blinkered attitude of having a positive view on life just doesn’t cut it as a way of mitigating risk. Try crossing George St relying solely on a +ve attitude. As Bill pointed out Fortune favours SOME of the bold. The bold accept higher risks, and consequently many of them fail.

As tfb mentioned having a positive attitude undoubtedly helps some people, but it takes great luck if it’s the only factor in success.

As Julie mentioned – life is about finding a balance – there are bigger risk takers who are doing better – they are bolder and are either luckier or take more care in mitigating the risks.

We also need to decide which risks are important to us – either the ones that are most catastrophic or those that are most likely.

• Terrorist bombs are catastrophic but currently unlikely
• Oil crisis is/will happen, but is more of an inconvenience
• Global warming the same.
• Recession may happen & may be catastrophic in $ terms.

These risks can mostly be mitigated, buy oil futures, buy farm out west – avoid restaurants/airports, diversify – keep some cash. Global warming is trickier.

I agree with Les that education is part of the solution, but a balance must be maintained. I also chose not to spend up big on threats, but spending a little on insurance to mitigate big/likely threats is prudent, especially when combined with other benefits.

Another of my favourite topics is diversification – that’s a good example of reducing risk while returns are no worse than not diversifying. Another is buying IP/PPOR away from likely terrorist targets. And oil futures are currently v. profitable.

KJ

 

[RichardC]

I envy you optimists

Life is so simple, people like you because you are good to be around. You made a motza during the dot.com boom and then compounded it in RE over the last few years and you are admired for doing so.

Me? I made one late, damaging foray into tech stocks because I knew nothing about them and was waiting for the bubble to pop. I made a little on RE but certainly not enough to retire on and I am now making defensive investments in gold. The joke is, if these investments pay off big time I still won't be admired, more likely revilled for taking advantage of other's misery.

Of the list of threats, peak-oil is the most dangerous because it will lay bare the greatest threat of all which Les failed to mention..... The population time-bomb.

The resident grouch signs off!

 

[simonjulie]

Excellent post Thefirstbruce

It's all a balancing act and finding win/win situations along the way makes the journey ever more rewarding.

Regards
Julie

Audentes Fortuna Juvat

 

[simonjulie]

Try crossing George St relying solely on a +ve attitude. As Bill pointed out Fortune favours SOME of the bold. The bold accept higher risks, and consequently many of them fail.
KJ

Keith et al

An adult who works in the city and crosses George St 10 times a week is in a very different position to say an 8yo child who is still learning to cross a street on their own. Only a fool would cross a street with just a positive attitude but an adult has knowledge and experience on their side just as does the experienced investor.

When it comes to being BOLD or Adventurous or a risk taker, the best way to approach it is to regularly take small managaeable steps outside your comfort zone. If you are in the habit of doing this then you become incredibly resilient and adept at solving problems and moving on.

Be BOLD in small measured regular steps. You will make mistakes along the way but your learning curves will build your confidence up to new levels. Again it is all a balancing act. Focus on the OPPORTUNITY (your dream) while keeping a watch on the RISKS/Dangers along the way.

Take big risks too quickly and your likely to get flattened.
Take regular manageable steps OUTSIDE YOUR COMFORT ZONE and your life will definately get more exciting.

Cheers
Julie

Audentes Fortuna Juvat

 

[MichaelW]

Guys,

Great work! Particular round of applause to Les and TFB.

Your thinking is precisely where mine is at today. I even posted something similar (if a lot briefer and less well thought out) as a response to another thread.

Fortune favours the brave, but principally because the brave also have the fortitude to pick themselves up from failure and try again! You won't necessarily get it right first time, but if you can visualise that end-state then your resilience and guts will get you there in the end.

Fight the good fight!
Michael.

 

[Mr. Fabulous]

The bold accept higher risks, and consequently many of them fail.

Keith,

To my way of thinking, the ones that fail are the ones that fall down and don't get back up again. Just my personal way of thinking.

Mark.

 

[keithj]

When it comes to being BOLD or Adventurous or a risk taker, the best way to approach it is to regularly take small managaeable steps outside your comfort zone. If you are in the habit of doing this then you become incredibly resilient and adept at solving problems and moving on.

Be BOLD in small measured regular steps. You will make mistakes along the way but your learning curves will build your confidence up to new levels. Again it is all a balancing act. Focus on the OPPORTUNITY (your dream) while keeping a watch on the RISKS/Dangers along the way.

Take big risks too quickly and your likely to get flattened.
Take regular manageable steps OUTSIDE YOUR COMFORT ZONE and your life will definately get more exciting.

Julie,

I agree almost entirely. If I had the inclination to argue about semantics I'd say that being bold in small timid steps, isn't being bold at all. Although to the timid the end result may appear to be bold. I think we agree on the rest.....

To my way of thinking, the ones that fail are the ones that fall down and don't get back up again.

Mark,

I agree, although it really depends on your timescale - many don't have the time or inclination to fail.

So the tag line is -
Fortune favours a small percentage of the persistant & bold and a larger percentage of the less bold and the timid not at all.

Unfortunately my latin ain't what it used to be......

KJ

 

[simonjulie]

Julie,

I agree almost entirely. If I had the inclination to argue about semantics I'd say that being bold in small timid steps, isn't being bold at all. Although to the timid the end result may appear to be bold. I think we agree on the rest.....

KJ

Keith

I may be nitpicking but measured and manageable does not equate to timid. To step outside one's comfort zone in any way normally takes some courage which kinda rules out timid. The trick is to do it on a regular basis.

Cheers
Julie

 

[markp]

G'day Julie,

Long time, no see. Hehe - it must be a helluva fight for the keyboard at your place ..........

Simon and Julie don't fight, do they?