Justin Core: for another week of real estate playbook happy to be here chat with you guys about what we've been talking about which is money money is a part of our deals of thinking about money today. We're going to talk about the of investors and the game in which play because it's critical for us to understand how people view the game that they are playing. whether we are on their side or on a different side if we cannot comprehend how different people understand and invest in real estate then we're not going to be able to serve them. Well, let me kick off with a story. A story not about real estate at all, but about the mindset of investors. It's 1999 Cisco Systems, the company that makes the routers and the switches the entire Internet runs on essentially closes up the year up 300 % not over a decade, but in a 12 month period, Yahoo hits $500 a share and AOL is worth more. than General Motors. Pets.com runs a Super Bowl ad before it has ever had a profitable quarter in its existence. And on the trading floor in lower Manhattan, we're going to look at the story of two traders. The first is a day trader. He's 28 years old. He's been in the market for 14 months. He doesn't know what Cisco actually does. quite frankly, he doesn't care. What he does care about is that the chart is moving up into the right. He buys Cisco at 935 AM. He plans to sell it by 11 if it's up 2 % he wins. The fundamentals are irrelevant. The price earnings ratio are irrelevant and the only thing that matters is momentum the momentum is ⁓ The second is a portfolio manager at a pension fund. He's 54 years old. He manages retirement money for tens of thousands of public school teachers. His job is to think in decades. He looks at Cisco's prices and he runs the math. And at this valuation, the company would have to grow its earnings 40 % per year for 15 straight years just to justify the price that's being paid today. That has never happened. Never not once not in the history of capitalism He looks over at the day trader. The day trader is up forty thousand dollars on the morning. And here is where it gets dangerous because the pension manager starts to wonder what am I missing? Am I missing something? His clients are calling the press is calling his brother-in-law just bought a new boat. ⁓ ⁓ ⁓ starts adjusting. He buys a little tech then a little more. He raises his targets. He shortens his time horizon. And by the spring of 2000, the average mutual fund funds that are run by long term professionals managing long term money had 120 % annual turnover. Now the translation on that is the long term guys had stopped being the long term guys. They had changed the game. until the music stopped the NASDAQ fell 78 % Cisco dropped 86 % Yahoo went from $500 to $8 per share pets.com was bankrupt nine months after running the Super Bowl and trillions of dollars disappeared. In the book, Psychology of Money, Morgan Housel puts it like this. An idea exists in finance that seems innocent, but has done incalculable damage. It's the notion that assets have one rational price in a world where investors have different goals and time horizons. So the price wasn't crazy. The day trader wasn't crazy. The pension manager wasn't crazy. They were just playing very different games and the pension manager forgot which game he was playing. Because when you take cues from someone playing a different game, you don't lose because you're wrong. You lose because you're answering the wrong questions. Now, why do I tell you this? It's a real estate podcast. We talked mostly about real estate and the business of real estate. But I tell you about the pension manager and the day trader because how's all goes on to say in his book ⁓ things matter more with money than understanding your own time horizon and not being persuaded by the actions and behaviors of people playing a different game than you are. That's it. That's the episode. That's what we're talking about understanding who we are the game we play understanding that we can't then compare ourselves every day in and out to the game other people are playing. You cannot contrast the two in that way. because every investor who walks the door is playing a game and it's almost never the same game as the buyer or the investor before them. every buyer every seller we are playing with has different goals and objectives different time horizons and different ways in which they look at the real estate industry. So the difference from a flipper to a buy and hold investor to someone doing the burr method ⁓ where they're to buy rent remodel refinance pull money out the syndicator who's going to go and pull money from 12 different individuals to make a purchase. The things that must line up for these different investors to be able to make a decision are different. And so the way in which they look at the house you're presenting to them is different. The way in which the important factors for a flipper are not what kind of countertops there are. It's what of margin is there after my renovation? That's going dictate the buy. Nothing else. They're not going to be they're not going to be swayed by by the paint and the upgrades that your buyers done because the numbers still must also work. I want us to take this same mindset because it's important for us to go deep and understand the different investors. I want to take the same mindset and apply it to you and your business. Before we wrap this episode up, I want you to think game am I playing in my business? Let's say you're a new into the real estate industry. You're in your first year. and you're starting to do what everyone does and they run around and they compare. We compare and we know comparison is the thief of joy because you got to know the game you're playing. You don't know the game other people are playing. And I didn't know this for a very long time that there's so many different ways to go about doing this business. There's so many different ways to make this work or not work. Going property management and investor minded is a very different game than being in the pocket managing traditional sales. But now you can navigate the sub components of traditional sales into how you go about getting your business. Are you ad spend because that's a whole animal to unpack. Are you warm business. If you go really deep in the warm business you become an expert in that space and you can't see anything else. Why would you spend money on leads. And so when you hear somebody say I would never spend money on leads, that's perfectly reasonable for them to say based on the game they're playing. If you're dealing with someone who has mastered building, you know, online funnels with ad spin that drives business to you, whether it's through YouTube or Google ads, right? And they've mastered that and they are teeing up opportunity after opportunity after opportunity. They can't see doing it in another way because they've built something they believe is is is manageable and scalable. And maybe the lead flow matters when you start looking at. People who are building brokerages and they're building ancillary businesses around their brokerage. Sometimes the ancillaries become the more profitable component of the business and then the actual thing that you think is their main thing. And so you've got to understand you've got and these aren't wrong things to ask questions about and try to understand. But what race are you running now? And if you're unsure about that in any facet, if you're unsure about where I need to be spending my time day in and day out, you need to get clear on that. You need to get really clear on that. Let me leave you with the quote one more time. Few things matter more with money in your business how you manage your family and family time and how you manage your calendar and how you manage your money and how you manage your your leads and your ads and all the things you can put anything in that money category. Few things matter more that than understanding your own time horizon. Are you young and looking at an old person's playbook? Not very good idea. They have a different time horizon and not being persuaded by the actions and behaviors of other people playing a different game than you are. you on that for a little bit. Have a great day.