April 1 is April Fools’ Day. People will play pranks of all sorts. Nobody knows for sure where this tradition started. There are similar traditions in many cultures and examples that go back thousands of years.
We’re all foolish from time to time. Most of us learn more by our mistakes than by our victories. Making an error is nothing special. Reflecting on it and leaning from it are how we acquire wisdom.
Folly is not learning from the error even though you’ve paid the price more than once. There are some kinds of investor foolishness that keep showing up again and again. Here’s a short list of the most frequent or costly errors I see too often.
* Investors who believe reality will change to fit their desires are foolish.
* Investors who let opportunities go by while they wait for the perfect property are foolish.
* Investors who want to teach the fellow on the other side of the table a lesson are foolish.
* Investors who think they can limit risk by researching a property extensively before putting the property in escrow are foolish.
* Investors who pay an expert for advice but not take it are foolish.
* Investors who drift with the current instead of setting a course are foolish.
We’re all foolish from time to time. I certainly am. Here are two ways I’m foolish more frequently than I like.
* Too often I’ve been foolish by forgetting other people think differently, communicate alternately, evaluate risk uniquely, have alternate ways of recognizing or weighting risk.
* I was foolish when I assumed I knew what someone meant or thought, or that certainly my communication was unmistakably clear.
How about you? Have you seen or maybe committed other kinds of blunders?
Terry Moore, CCIM, is the author of Building Legacy Wealth: How to Build Wealth and Live a Life Worth Imitating. Read his “Welcome to My Blog.”